Housing costs are spiraling in many parts of the world, with obvious consequences for inequality. A recent study from the University of Cincinnati highlights how high rental costs contribute to various social ills in Los Angeles.
The researchers found that the general unaffordability of rent in LA has forced residents to cut back on a wide range of other things, including healthcare and education.
“It’s hard to not see the importance of real estate when we are looking at some of the social ills,” they explain. “Among people who are struggling to pay their bills, their largest bill is their housing cost.”
In 2019, a survey was carried out in Central and South Los Angeles, involving 794 people. The survey discovered that when folks are struggling to afford their rent, they use various tactics to keep a roof over their heads. This challenge, known as “rent burden,” occurs when a household spends over 30% of its income on rent. Surprisingly, almost half of the households surveyed, about 48%, were dealing with an even tougher situation, where they were spending more than half of their income on rent.
“In California, we know that 1.2 million households, right before the [COVID-19] pandemic, paid more than half of their income in rent,” the researchers explain. “In [Los Angeles] County, that’s 700,000 households. That represents a pretty big group of people.”
Making cutbacks
Almost 85% of the people surveyed, whether they had trouble with rent or not, said they had to cut back on spending to make ends meet in the two years before the survey. But for those who struggled with high rent, they reported making bigger and longer-lasting cuts to their essential expenses.
“What we saw that was especially striking was that in our sample, 25% of families had almost institutionalized these trade-offs,” the authors continue. “They’d been cutting back for more than a year, and an important subsection of them had been cutting back for five years. The level of strain and therefore the cascading effects for a good chunk of the families had the potential for pretty long impacts.”
While some people cutting back on clothing shopping might not face major problems down the road, others have had to skip important medical care, which can lead to serious issues.
On the other hand, when people reduce their spending on transportation, it can limit their job options and make it harder to earn more money, making their financial situation even tougher.
Extra work
In addition to spending less, people struggling with high rent costs often took on extra jobs, had more people living with them, and borrowed more money. Interestingly, a quarter of those surveyed both accommodated more people in their homes and reduced their spending in three or more areas.
“In many cases, these families had already done a lot of different things to make a budget,” the researchers explain. “For instance, the people who were paying more than half of their income as rent already had been working extra hours.”
At first, people tried to save money by cutting back on what they spent. Then, they did things like working more hours or having more people live with them. Even with these changes, many still couldn’t make enough money to afford their housing costs. This shows how hard it is for households to find a stable housing situation.
