History Lessons for Today’s Housing Policy

Joint Center for Housing Studies Harvard University

History Lessons for Today's Housing Policy The Political Processes of Making Low-Income Housing Policy

Alexander von Hoffman August 2012 Wl2-5

The research for this paper was conducted with the support of the Rockefeller Foundation. ? by Alexander von Hoffman. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including ? notice, is given to the source. Any opinions expressed are those of the author and not those of the Joint Center for Housing Studies of Harvard University or of any of the persons or organizations providing support to the Joint Center for Housing Studies. This is a preprint of an article whose final and definitive form has been published in Housing Policy Debate ? 2012 copyright Taylor & Francis:

Table of Contents

I. Introduction..................................................................................1 II. Housing Policy in the Great Economic Crisis..........................................2 III. The Postwar Housing Crisis...........................................................10 IV. Housing Remedies for the Urban Crisis.............................................17 V. Policy Crisis and the Long Winding Road to a New Approach..................27 VI. Some Lessons from History for Promoting a New Rental Housing Policy.....41

I. INTRODUCTION

History offers valuable lessons to policy makers. Among other lessons, it teaches us the reasons that the government adopted the programs that constitute the current housing policy landscape. The political strategies that succeeded in the past illuminate the possibilities for winning approval for and enacting new policies today.

In recent American history, four crises related to housing led the United States government to initiate large-scale housing programs for low-and moderate-income Americans. During the economic crisis of the Great Depression, Franklin Roosevelt`s New Deal produced the public housing program. In response to the acute housing shortage at the end of World War II, the government took a couple of wrong policy turns before finding a winning formula in the housing component of the G. I. bill. To help solve the urban crisis of the late-1960s, the Johnson administration set a high goal for national housing production and enacted two large low-income housing production programs based on subsidizing private industry. When these programs careened into crisis in the 1970s, Richard Nixon inaugurated a new approach of vouchers, although it would take almost a generation before that policy was fully accepted.1

The following pages examine the political processes that led to the adoption of new housing policies. They identify the conditions, political alignments, and ideologies that prevailed in each period and trace the actors and strategies that led to the ultimate adoption of new policies.

II. HOUSING POLICY IN THE GREAT ECONOMIC CRISIS

The Great Depression was the worst economic emergency the United States has faced, and as with virtually all economic slumps, it hit the housing sector first. So severe was the crisis that both the Herbert Hoover and Franklin D. Roosevelt administrations felt obliged to erect new governmental structures to solve the problems of the housing sector. Most of this effort aimed at buttressing the private housing industry, especially the financial institutions that supported it.

But during the Roosevelt presidency, the government made a small but significant effort to serve low-income Americans. The Congress in 1933 introduced public housing in trial form as part of a public works bill and in the U.S. Housing Act of 1937 set up the permanent program that still exists today. But as much as the public housing program stands today as one of the

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pillars of the Roosevelt`s New Deal social program--the last piece of major domestic legislation passed during Roosevelt`s second term--it arose outside the administration and the president did not particularly like it. Indeed, perhaps the greatest lesson of public housing is that during a crisis determined activists can, with skill and luck, impose an unorthodox policy on a government that under ordinary circumstances would reject it.

CONTEMPORARY CONDITIONS Today it is common to compare the economic and housing problems facing the United

States to the conditions that existed during the 1930s and to seek solutions to present-day challenges in the Roosevelt`s administration`s responses to the Great Depression. There is indeed much to be learned from the New Deal housing policies, but we should keep in mind the differences as well as the similarities between the two eras before applying actions of the 1930s to our time.

To begin with, large portions of the United States in 1930 were, by today`s standards, under-developed. Vast stretches of the American countryside had no electricity, and more than half of non-farm households lacked telephones.2 Poverty and isolation were endemic to the South and common in rural areas across the country.

In general, the financial condition of average Americans was far more precarious then than now. Even before the Depression hit, wages for American workers tended to be low, partly as a result of the weakness of labor unions in the industrial sector. As a group, African Americans and members of other minority groups were paid more poorly than others, so that even educated professionals of minority background suffered from high unemployment or low wages. Furthermore, the limited safety net of various forms of social insurance was available primarily through voluntary associations of one sort or another (not employers or government), and hard times revealed the brutal inadequacies of such a system.

The quality of housing in the 1930s was a far cry from what it is today. Since the early twentieth century the worst overcrowding in urban slum neighborhoods had abated, but cities still contained large numbers of substandard dwellings as a byproduct of the old and increasingly obsolescent building stock. In large cities such as St. Louis a great number of existing units built in the previous century contained outhouses instead of indoor toilets and provided only cold water or no running water at all. In contrast with the United States today, the

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