Escaping the Poverty Trap

Most people, given the choice, would like to live in a neighbourhood that boasts a sense of community. The poor are no different. A stake in one’s own community and a sense of belonging are crucial to generating social capital and good relations between neighbours.

Public housing, in which those with no or very little income are provided with an apartment whose rent is heavily subsidized, is a feature of social welfare programming in all Canadian cities.

While the squalor and ghettoization that characterizes housing projects in major American cities is hard to find in western Canada, it can be seen to a lesser extent in Toronto. Even if cities like Winnipeg, Regina and Calgary have avoided the worst problems that plague public housing elsewhere, though, there are better models for providing the poor with appropriate homes, such as rent vouchers and the promotion of home ownership.

New Zealand and Britain, for example, both radically changed their public housing in the 1980s as discussed in a new Frontier Centre paper called .The Right to Buy: From Public Housing to Home Ownership. In Britain under Margaret Thatcher, long-time tenants of public housing were allowed to purchase their homes at a significant discount. As a result, a whole generation of low and middle income earners was transformed from perpetual tenancy, paying rent to the state, to owner-occupiers, who took pride in their homes, and became both more financially stable and more invested in their communities as they built equity for the first time.

New Zealand’s public housing dependents were offered the option to buy their homes starting in the 1950s. One key to the success of this programme was the philosophy that underpinned public housing there. Rather than being concentrated in large blocks of units, apartments and homes developed by the state for public housing were dispersed throughout neighbourhoods, and built to the same standard of quality as nearby residences.

The last thing a Canadian city should be doing now is building or buying new public housing units. Two policy innovations exist, however, than can do a great deal to improve the quality of life of those who depend on public housing without requiring major new expenditures. The first is to encourage ownership on the model of Thatcher’s Britain. If dependents of public housing were allowed to make their subsidized payment towards a mortgage, instead of as rent, they would over time build a financial cushion that could make permanent escape from poverty easier.

A second option, for those who may not want or be able to buy their housing unit, is a rent voucher. Vouchers that can be applied against market rent on the home of the tenant’s choice would grant families in need of assistance a high degree of autonomy, and the ability to make basic choices to make their lives better. Parents could choose a home near the school they wish their kids to attend, the working poor could live close to their jobs to cut down on travel time and costs, and nobody would be stuck in a public housing ghetto. Vouchers would also be cheaper than maintaining the status quo, since the current high costs of administering and maintaining (poorly, at that) public housing would be transferred to the private sector. That means that with the same budget, even more families could be given the chance to live in housing that meets their needs, and doesn’t make their problems worse.

There is a concentration of poverty, as well as many attendant social pathologies built into the structure of housing projects. Drug abuse, both petty and violent crime, and unemployment are all higher in public housing than in the broader community, and these behaviours tend to be self-reinforcing; it is very hard for an individual to lift himself or his family out of these circumstances if everyone else in the neighbourhood is exhibiting dysfunctional behaviour. And a significant majority of clients of public housing have children, who are not helped by daily exposure to gangs, substance abuse, and truancy.

Not only are housing projects very bad for their residents, but they also harm their surrounding communities. Property values tend to drop in areas close to large groups of public housing units, which further reinforces the concentration of poverty, as all those who can afford to move to more desirable areas do so. The crime that often accompanies social housing is partly responsible, but so is the low level of upkeep that usually characterizes these units. The occupants of public housing don’t particularly want to live there, and have no stake in improving or maintaining their quarters, and the local governments responsible for the buildings can’t keep up with the graffiti, vandalism and general deterioration that inevitably occurs.

Most people, given the choice, would like to live in a neighbourhood that boasts a sense of community. The poor are no different. A stake in one’s own community and a sense of belonging are crucial to generating social capital and good relations between neighbours. These benefits are arguably even more important for tenants of public housing, who are more likely than average to be unemployed, undereducated and part of a single parent household.

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