McKinsey & Company has again weighed in on solving homelessness amid a community conversation on progressive taxation, and while we can disagree on details, one thing is clear: Solving homelessness is going to take a lot of money.
This is because homelessness in King County is mostly about the lack of affordable housing. While addiction and mental illness have recently been at the center of a toxic community debate, these issues are not why homelessness is growing.
That’s a lot simpler. People are homeless because they can’t pay the rent.
In 2018, more than 22,500 King County households and 4,300 Seattle Public School students were unhoused. Ninety-eight percent of those households were Extremely Low-Income (ELI), or earning less than $23,000 annually. They need apartments at $600 a month or less. Those apartments don’t exist on the private market.
Since 2010, King County has seen 21 percent job growth, 12 percent population growth and 8 percent housing growth, with most of that built at the affluent end of the market. That’s where the profit is.
While King County has added 67,000 units of housing, 112,000 units of housing were lost over the same period that were affordable to those at 80 percent of median income or below. Rents have risen by 52 percent in less than 10 years.
The authors of the McKinsey report note that housing last year’s homeless alone would require building an additional 15,700 homes that rent at $600 a month or less. Fully addressing vulnerability to homelessness for people enduring ELI would take 37,000 new homes.
There are just 5,000 homes in the current pipeline, spanning the whole range of “affordability.”
The housing market does not build homes for those most in need. With federal dollars unlikely to increase, that means finding more state and local funding and the revenue sources to get there.
McKinsey estimates that solving the homeless crisis will cost between $4.5 to $11 billion over the next decade, or three to five times the total current spending.
While the report’s authors talk about a “portfolio of initiatives” and public-private partnerships, and say business “bears some of the responsibility” for homelessness, they are mostly silent on the specifics of who pays.
Happily, that conversation is well underway elsewhere. Vancouver, British Columbia, for example, has taxed speculative development and vacant luxury apartments. More recently, New Yorkers started a campaign to tax second homes costing $5 million or more.
Here in Seattle, there’s a growing Tax Amazon initiative headed by Councilmember Kshama Sawant. There’s state legislation from Rep. Nicole Macri, D-Seattle, working with the mayor and county executive, allowing a King County Employee Hours Tax that raises up to $120 million annually.
Somewhere off to the side is Seattle University professor Sara Rankin and Third Door Coalition, quietly talking about private-public partnership and raising a lot more.
And we can be sure that this cabinetful of variously baked proposals does not represent the last word. The time to talk about this is now.
So, how much is $4.5 to $11 billion over a decade? That’s $450 million to $1.1 billion a year. The lower end of that is about what the new downtown tunnel and waterfront park costs.
So, doable, but only with a lot of political will. It’s not going to be easy. We’ll need each other.
The Downtown Seattle Association has expressed support for Macri’s bill (HB 2907), but only if the county preempts Seattle’s own employee taxing authority. This would take a Seattle employee hours tax off the table.
This initiative seems aimed directly at Sawant and the movement behind her. We’re stronger together, and should resist concessions that divide us.
While an earlier version of the bill contained the controversial pre-emption language, that has been removed. If the Downtown Seattle Association have their way, that is almost certainly coming back.
Change takes a movement, and limited progressive revenue alternatives should not be bargained away. Supporters of HB 2907 — and Real Change is among these — need to be vigilant that one solution does not undermine another.
Tim Harris is the Founding Director Real Change and has been active as a poor people’s organizer for more than two decades. Prior to moving to Seattle in 1994, Harris founded street newspaper Spare Change in Boston while working as Executive Director of Boston Jobs with Peace. He can be reached at director (at) realchangenews (dot) org
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