Americas Working Homeless
It’s the late summer of 2008, Lehman Brothers and Bear Stearns have already failed and the Great Recession of 2008 is starting. But the real impact of the recession has not become a huge story in the media yet. Still many people are starting to either lose their jobs or have had their hours cut back drastically. You are a renter and you have a job. Not rich and not poor. You make enough to pay all of your bills including health and life insurance and even manage to add to your companies 401k plan. Basically living paycheck to paycheck with just a bit left over.
Then one of two things could happen, your landlord’s house that you are renting is foreclosed on or you lose your job or both. This is the summer of 2008 when the government isn’t doing much of anything to help the economy and there certainly weren’t any programs put into place to help renters who were evicted because the landlord’s house was foreclosed.
So you have to move. But move where. Rental prices for a comparable home are still very high and moving costs a lot of money actually. You are not in a position to take time off of your job if you still have one. To move you need to consider the cost of moving, finding another home quickly and when you do find another suitable home you have to come up with the first and sometimes last months rent and the damage deposit and if you should have a dog, then you need that deposit as well. And if you have children sometimes that increase the damage deposit as well.
Well one thing you might do is to take some money out of your 401k.That hurts because the market is already down about 40%. And if you take money out of your plan and you are under the age of 59 ½, you will have to pay taxes and penalties on that money. Okay, you will worry about that next April. The government talked about suspending the penalty on this money, they seemed to either have forgotten about that or dropped it. Probably doesn’t matter since for some reason you probably wouldn’t be in the right category to be exempt from this penalty anyway.
The day comes and you have to move, you still haven’t found a new place to live. You have taken time off of work to prepare for this day, which takes more money from you. Unless you have sick or personal days you can use. You have movers move the big furniture and you have to pay them. But the big problem remains, where are you going to live. Do you have friends or relatives you can stay with or maybe you are new to the city. You decide to stay in a motel for the night thinking this just cannot last that long. Most of the tolerable extended stay motels will cost between $50 and $70 per night in major cities. That is a lot of money. Hopefully you can find a new home, pass the credit check and pay the first and last months deposit and the damage deposits before you run out of your money. Not to mention you had to put all of your belongings into storage, which is about $100 per month.
At this point, you have a job and maybe your spouse still has a job. You have health insurance, life insurance but no more 401k. And you are truly homeless. Now what do you do. You have been suddenly forced out of your home and you still have to go to work, but doing that while living out of a suitcase is a real challenge. Your pay isn’t enough to have covered the moving and now the huge expense of living in a motel for very long. And thought of actually having to go to a homeless shelter or actually living in your car is now becoming a real possibility.
Most think of the homeless as people who have a mental illness, drug addicts or alcoholics, but 25% of the homeless in the US are employed and are not addicted to drugs or alcohol. The working homeless are not usually counted in the official homeless counts since they are living where they can, like extended stay motels, with friends in basements and garages.
In a report dated January 23, 2009 there will be 866,000 additional Americans who will become homeless in the next year, and in two years that figure will be an additional 1.5 million. The main reasons for these new homeless are foreclosure and job loss. There are still jobs out there, but the wages are so low that it is very hard to save any kind of money making between $8 and $10 per hour. Still many of these new homeless are considered middle-class by the government standards and because of this they usually don’t qualify for any type of the assistance programs unless they do have children.
The working homeless are the people who have been working and paying their taxes all these years, just not high enough wages to get out of the paycheck to paycheck life and too high of a wage to ever qualify for any type of assistance from the government.
Getting Worse in 2010
The unemployment problem remains, a real problem that goes underreported is the large number of Americans who are underemployed. More Americans working for less pay and or less hours, and still not able to meet their basic needs, like rent or mortgage, especially with some mortgages resetting to higher interest rates. Will this be another wave of working homeless in America.
Is this the new American middle-class?
© 2009 Sam Montana
National Alliance to End Homelessness
Cover photo by Respres