Hurricanes can increase inequality in the US – but not in the way you think

Hurricane Irma hits Florida, 2017. Image: Getty.

Hurricane Lane, which last year drenched Hawaii with four feet of rain, is a reminder of the devastation hurricane season can bring.

Only one year earlier Hurricane Harvey ravaged Houston, followed closely by Irma and Maria, which left a trail of destruction across Florida and Puerto Rico. Despite the private and government aid provided after these disasters, thousands continue to struggle even today.

However, not everyone is struggling. In fact, some actually benefit economically from these extreme weather events.

In a new study that I co-authored with James Elliott, a fellow sociologist at Rice University, we found that populations that are privileged in terms of education, race or homeownership gain wealth in the aftermath of natural disasters, exacerbating already wide economic inequities.

Not only that, how the government delivers aid is partly to blame.

Disasters on the rise

Natural disasters from hurricanes to wildfires are on the rise, both in terms of frequency and severity.

And they take a heavy toll. In 2017 alone, the United States suffered $260bn in direct damages from natural disasters. While that’s a devastating figure, it fails to encompass the full extent of the impact – such as a loss in income or uncovered expenses such as medical bills – that can last for months and even years after cleanup begins.

Previous research has shown the aftermath of disasters is more devastating for less privileged residents as they are more likely to lose their job, have to relocate and pay higher rents due to reduced housing availability.

In our recent paper in the journal Social Problems, we found that the effects are even more profound: white people, the highly educated and homeowners actually improve their relative financial situation after a disaster, while African-Americans, those with less education and renters are worse off compared with their peers.

Whites make gains while others lose

We combined nationally representative data from the Panel Study of Income Dynamics on nearly 3,500 families with government figures on natural hazard damages, Federal Emergency Management Aid and local population demographics in every U.S. county.

We then explored how extreme natural disasters influenced changes in family wealth from 1999 to 2013. Throughout our analysis, we controlled for race, education, age, homeownership, family status, residential mobility as well as neighborhood and county demographics with the aim of comparing households that were similar. We also only compared families who started out with similar wealth in 1999.

Overall, we found a surprisingly strong correlation between the scale of damage a county experienced and an increase in average wealth. That is, people who lived in counties that suffered extreme disasters tended to accumulate more wealth over the period than those who lived in mostly unaffected parts of the country. And the more damage a county experienced, the more pronounced the relative gains in wealth.

Greater wealth, however, was not experienced by everyone. Using a statistical technique called interactions, we were able to see how these changes affected different segments of the population depending on race, education and homeownership.

First, we considered the effects of race and found that whites who lived in counties that experienced extreme natural disasters accumulated $100,000 more wealth than their peers with similar characteristics who did not.

For people of color, on the other hand, this effect was reversed. Specifically, black residents living in disaster-prone counties lost $46,000 in wealth compared with their counterparts elsewhere. And Latino residents in affected counties lost $101,000 relative to similar peers.

In other words, while whites benefited financially by living in areas hit by hurricanes and other disasters, people of color were clobbered.

We then examined the impact of education, holding other factors constant. We found that higher levels of education were also associated with a tendency to benefit from natural disasters, while those with less experienced devastating losses.

Finally we focused on homeownership. Similarly, our results showed that those who owned emerged a lot better off than those who rented.

Our findings suggest that natural disasters are worsening wealth inequality, especially along racial lines. For example, in Monmouth, New Jersey – a New York City suburb that experienced the most natural disaster damage in the U.S. from 1999 to 2013 – $111,000 of the increase in the white-black wealth gap during the period can be attributed to the impact of the disasters.

This map visualises these rising inequalities across the largest metropolitan areas.


FEMA aid plays a role

This evidence is depressing in its own right. Yet, what is arguably even more disturbing is Federal Emergency Management Aid is further exacerbating these inequalities.

FEMA aid is distributed to mitigate the negative repercussions of hazards. In the best of worlds this federal assistance would reduce inequality – or at least curtail its expansion. What we found is quite the opposite.

Unlike what you might think, FEMA aid is not distributed solely based on damage or need. In fact, when we compared the amount of natural disaster damage in counties across the U.S. from 1999 to 2013 with how much aid FEMA allocated to them, the correlation is weak. This suggests factors other than need, such as politics, are primarily driving FEMA aid decisions.

However, statistically, this means we can isolate the effect of FEMA aid from natural hazards. When we did this, we found that FEMA aid also exacerbated inequalities. In New York County, for example, which received nearly $8bn in FEMA aid from 1999 to 2013, we found that $105,000 of the increase in the white-black wealth gap is attributable to FEMA aid.

In short, much like natural disasters themselves, FEMA aid is exasperating wealth inequality.

Lingering questions

The obvious question after all this of course is why?

In this particular study, our aim was to identify the patterns of inequality and thus we are unable to specify the reasons why natural disasters and FEMA aid are exacerbating inequality.

That said, we do know from previous research that privatised aid as well as community reinvestment efforts are disproportionately concentrated in privileged communities, especially those that are white and middle-class.

Given the increasing frequency of natural disasters and their role in exacerbating wealth inequality, it is imperative that the U.S. reconsiders its responses to them. Immediate recovery aid is essential but equally important is ensuring this aid does not worsen entrenched inequities.

The Conversation

Junia Howell, Professor of Sociology; Rice University Kinder Institute Scholar, University of Pittsburgh.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

How the pandemic is magnifying structural problems in America's housing market

Justin Sullivan/Getty Images

Long before Covid-19, the United States suffered from a housing crisis. Across the country, working class and low-income Americans struggled to pay rent, while the possibility of home ownership receded into fantasy. In hot markets, affordability became a struggle for even the middle class: In California, 41 percent of the population spends over a third of their income on housing costs. 

The coronavirus pandemic will only make these trends worse as millions are unable to work and the economy dives into a recession. Building could slow down in the medium term, as construction loans (risky bets in the best of times) become harder to come by. Unsubsidised affordable housing is often owned by small landlords, who are more likely to struggle during recessions, prompting flips to home ownership or sales to rental empires. 

New York Times reporter Conor Dougherty documented America’s longstanding housing crisis – and California’s efforts to battle it – in his book Golden Gates, which debuted just before the pandemic hit. “My sense is that right now coronavirus is magnifying a lot of things that were already happening,” Dougherty says.  


While Covid-19 adds new pressures, he says that many of the same issues we were facing still loom over the issue, from developers crowding the higher end of the market, to escalating construction costs, to stagnating wages and vulnerable service-sector jobs that leave ordinary Americans struggling to keep a roof over their heads. “That’s my larger message,” Dougherty says. “I think the structural problems continue to be a much bigger deal than the cyclical problem in housing.”

CityMetric spoke with Dougherty about how his thinking has changed since Covid-19, Donald Trump’s pro-suburban rhetoric, and the apparent exodus from San Francisco. 

I’ve really been struck by how strong the housing market seems to be despite the epic economic crisis we are facing. Costs seem to be higher everywhere. I've heard realtors talk about bidding wars like they haven't seen before in Philly, where I live. But perhaps that's just pent up demand from the big shutdowns?

What you have is an economy that has bifurcated. You have fewer middle-income jobs, more lower-income service jobs, and more higher-end jobs in software and finance. That's how our economy looks and that's a problem that is going to take the rest of our lives to solve. In the meantime, we have this housing market where one group of people have so much more money to spend than this other group. Cities reflect that. 

What's important about this bifurcation isn't just that you have gross inequality, but that these people have to live next to each other. You cannot be someone's Uber driver and telecommute. You cannot clean someone's house remotely. These lower-end service workers have to occupy the same general housing market as the super-high-end workers. 

All the pandemic has done is thrown that even more out of whack by creating a situation where one group of people is buying and expanding homes or lowering their home cost by refinancing, while another group are at income zero while trying to live in the same housing market with no demand for their services. When you see home prices booming and an eviction tsunami coming in the same newspaper, that tells you the same thing the book was trying to show you.

Does America writ large have the same housing shortage crisis as California and the Bay Area more specifically? There are other super hot markets, like New York City, Boston, or Seattle. But in Philly, or in Kansas City, is there really a lack of supply? 

There are three kinds of cities in America. There are the really out of control, fast-growing, rich cities: the Bay Area, Seattle, New York. There are declining Detroits and Clevelands, usually manufacturing-centric cities. Then there are sprawling Sun Belt cities. This book is by and large concerned with the prosperous cities. It could be Minneapolis, it could be Nashville. But the housing crisis in places like Cleveland is much more tied to poverty, as you pointed out. 

Those kinds of cities do have a different dynamic, although they still do have the same access to opportunity issues. For instance, there are parts of Detroit that are quite expensive, but they're quite expensive because that's where a lot of the investment has gone. That's where anybody with a lot of money wants to live. Then you have Sun Belt cities like Dallas and Houston, which are starting to become a lot more expensive as well. Nothing like the Bay Area, but the same forces are starting to take root there. 

I think that the Bay Area is important because throughout history, when some giant American industry has popped up, people have gone to Detroit or Houston. Now tech, for better or for worse, has become the industrial powerhouse of our time. But unlike Detroit in its time, it's very hard for people to get close to and enjoy that prosperity. There's a certain kind of city that is the future of America, it has a more intellectual economy, it's where new productive industries are growing. I think it's an outrage that all of them have these housing crises and it's considered some insane luxury to live there. 

A recent Zillow study seemed to show there hasn't been a flood of home sales in the pandemic that would signify a big urban exodus from most cities, with the glaring exception of San Francisco. Do you think that could substantially alleviate some of the cost pressure in the city proper?

On the one hand, I think this is about the general economy. If unemployment remains over 12% in San Francisco, yes, rent is going to be a lot cheaper. But is that really the reality we're all looking for? If restaurants and bars that were key to the city's cultural life remain shut, but rent is cheaper, is that what everyone wants? I bet you when this is all over, we're going to find out the tech people left at a much lower rate than others. Yes, they can all work from home, but what do you think has a bigger impact on a city: a couple of companies telling people they can work from home or the total immolation of entire industries basically overnight?

I don't want to make predictions right now, because we're in the middle of this pandemic. But if the city of San Francisco sees rents go down, well, the rent was already the most expensive in the nation. It falls 15%, 20%? How much better has that really gotten? Also, those people are going to go somewhere and unless they all move quite far away, you're still seeing these other markets picking up a lot of that slack. And those places are already overburdened. Oakland's homeless problem is considerably worse than San Francisco's. If you drive through Oakland, you will see things you did not think possible in the United States of America. 

Speaking of markets beyond San Francisco, you have a chapter about how difficult it is to build housing in the municipalities around big cities – many of which were just founded to hive off their tax revenues from low-income people.

That’s why you see Oregon, California, or the Democratic presidential candidates talking about shaking this up and devising ways to kick [zoning] up to a higher level of government. We've always done this whenever we've had a problem that seems beyond local governance. Like voting rights: you kick it to a higher body when the local body can't or won't solve it. 

But for better or for worse, this suburban thing is part of us now. We cannot just undo that. This notion of federalism and local control, those are important American concepts that can be fiddled with at the edges, but they cannot be wholesale changed. 

The first time I ever met Sonja Trauss [a leader of the Bay Area YIMBY group], she told me she wasn't super concerned about passing new laws but that the larger issue was to change the cultural perception of NIMBYism. We were living in a world where if you went to a city council meeting and complained about a multifamily development near your single-family house, you were not accosted for trying to pump up your property values or hoard land in a prosperous city. You were seen as a defender of the neighbourhood, a civically-minded person.

What is significant about YIMBYism is that the cultural tide is changing. There is this whole group of younger people who have absorbed a new cultural value, which is that more dense housing, more different kinds of people, more affordable housing, more housing options, is good. It feels like the tide is turning culturally and the movement is emblematic of that. I think that value shift will turn out to have been much more lasting than anything Scott Wiener ever does. Because the truth is, there are still going to be a bunch of local battles. Who shows up and how those places change from within probably will turn out to be more important. 

As you said, we've been seeing a lot of Democratic candidates with proposals around reforming zoning. How does Joe Biden's plan compare to the scope of the ambition in the field? 

There are two big ideas that you could pull from all the plans. First, some kind of renter's tax credit. It is obscene that we live in a country where homeowners are allowed to deduct their mortgage interest, but renters aren't. It is obscene that we live in a world where homeowners get 30-year fixed mortgages that guarantee their house payment pretty much for life and renters don't. If we think that it's a good idea to protect people from sudden shocks in their housing costs, that is as good of an idea for renters as it is for homeowners. 

I tell people that in this country, homeowners are living in the socialist hellscape of government intervention and price controls. Renters are living in the capitalist dream of variable pricing and market forces. Homeowners think they're living in this free market, but actually they're in the most regulated market – there are literally price controls propping up their market mortgages. 

Then there is Section 8 housing. Right now homeowners get access to the mortgage interest deduction. That programme is available to as many people as can use it, yet only about a quarter of the people eligible for Section 8 can get it. I think rectifying that is hugely important and a lot of the plans talked about that. 

The second big idea is using the power of the purse to incentivise people to more robustly develop their regions. You should have higher density housing in fancy school districts, near job centres, near transit. We're going to use the power of the purse to incentivise you, within the bounds of your own local rules, to do this right. Of course, that’s what Donald Trump is running against when he talks about Affirmatively Furthering Fair Housing (AFFH). 

When I was a local reporter in Philly, the city went through with that AFFH regulation despite Trump and HUD Secretary Ben Carson not being interested in enforcing it anymore. The city produced a fat report that maybe a few people read, but I don't think it changed policy. It's this phantom that Trump is running against, an ideal version of the policy that did not exist. It's also a phantom no one's heard of until Trump started tweeting about it. 

It’s been bizarre to watch. But Trump does seem to recognise that suburban politics don’t neatly fit into a red or blue construct. People who live in Texas and claim to want a free market system will turn around and erect local regulation to make sure nobody can build apartments near them. People in the Bay Area who claim to be looking for a more diverse place will use different logic, anti-developer logic, to keep apartments being built near them. 

People like that regardless of how they feel about things nationally. The bluntness with which Trump is doing it is discordant with the electorate and quixotic because people don't know what he's talking about. But the basic things he recognises – can I make voters feel like their neighbourhoods are threatened – he's onto something there. As with many things Trump, his tactics are so off-putting that people may ultimately reject them even if under the surface they agree.

You hear people on the left say the scary thing about Trump is that one day a good demagogue could come along. They're going to actually tax private equity people and they're actually going to build infrastructure. They're going to actually do a lot of popular stuff, but under a racist, nationalist banner. I think the suburban thing is a perfect example of that. There's a lot of voters even in the Bay Area who [would support that policy] in different clothing.

The world has changed completely since Golden Gates debuted just a few months ago. Has your thinking about housing issues changed as a result of the seismic disruptions we are living through?

The virus has done little more than lay itself on top of all of the problems I outline in the book. Whether we have an eviction tsunami or not, a quarter of renters were already spending more than half their income on rent. There's a chapter about overcrowded housing and how lower-income tenants are competing with each other by doubling, tripling, and quadrupling up for the scant number of affordable apartments. We now know that overcrowded housing is significantly more of a risk [for Covid-19] than, say, dense housing. If you live in a single-family home with 15 people in it, that's a lot more dangerous than 40 apartments in a four-story building.

Housing is just a proxy for inequality, it's a way of us building assets for one group at the exclusion of another. It is an expression of the general fraying of American society. I don't feel like that larger message has been affected at all, it's only been enhanced by the pandemic. With the caveat that this can all change, it just doesn't seem to me like there's some uber housing lesson we can learn from this – other than having a bunch of people crowded together is a really bad idea. 

Jake Blumgart is a staff writer at CityMetric.