Thursday, May 22, 2008

Why are people homeless?

Why are people homeless? Is it the economy? Bad luck? Illness? A series of stupid decisions? The selfishness of relatives who won’t take them in? The greed of corporations who lay them off from good jobs? Landlords who are quick to evict tenants in order to raise rents even higher?

Friends and I have been debating the situation in Santa Barbara, where homelessness is so bad that the city has 12 overnight parking lot shelters for people reduced to living in their cars. Including one for women only.

It seems that some people in our society have no support system that can come through for them in bad times. Or maybe they are constitutionally unable to get along with others. Otherwise, why is a 67-year-old mother of several grown children living in a car? What’s wrong with this picture?

Homeless people living in cars usually have jobs. But what they don’t have is enough cash in reserve to rent an apartment, or enough steady income to keep it. Shared living situations are the obvious solution for homelessness. They shouldn’t even be so difficult, given that most homeless people have pared down their possessions and thus could easily fit them into one bedroom of a shared home. (Some have more possessions stored with friends, but they’re able to live without them and can continue to do so.) But for various reasons, shared living conditions are pretty much intolerable to many Americans. The successful TV series “Kate and Allie,” in which two divorced women with children shared a New York City brownstone (a town house), ran from 1984 to 1989. But it apparently did not spark a national movement of house-sharing by single mothers. Which is a shame, because blending families to acquire larger and better housing and reduce each family’s costs makes great economic sense.

But can people live together anymore? Today we’re seeing stories about how college students no longer know how to share dorm rooms because they were all raised to have their own enormous rooms at home instead of sharing a bedroom with a sibling. Siblings sharing rooms was an improvement over sharing a bed, which was common for centuries. Today, that’s almost unheard of. The question about adults sharing living space is a real one. Do people know how to share anymore? Yes, we hear about immigrants and gypsies living ten to a room. But if your family got off the boat a century or more ago, are you predisposed to expect vast private living space? Even despite the reality that you cannot afford it?

There is plenty of statistical information available about homelessness. We know that it usually occurs because of health issues or job loss. What interests me most about this particular report is how violently my friends responded to the article about these homeless women in Santa Barbara, a very expensive town in which to live, but one which, nevertheless, they won’t leave. Some said these women were being stupid, that they should move to Nebraska or somewhere else where accommodations are cheaper. Housing in California is historically very expensive, thus making this a situation in which the homeless have very little likelihood of recovering if they stay. Others said the relatives of these women were neglecting their duty. Why else would a mother of three grown children have no couch to sleep on? And all of us showed our fear that homelessness could happen to us.

One of my friends has been homeless, and that friend had the least patience with the woman who kept two big dogs in her car all day. That friend felt that stupid decisions led the woman to an even more stupid life in a car, when presumably the dogs could have gone to a better home, possibly even been sold, thus providing income for the woman (or at least less outlay on dog food) and stability and humane conditions for the dogs. And meanwhile the woman herself is living in an unstable situation under conditions that aren’t good. But another friend pointed out that big dogs sent to shelters are the most likely to be euthanized. Selling one isn’t very likely, either, given the sheer cost of feeding a large dog. The woman would have to give the dogs away, and friends with limited income or living space themselves would find it hard to accept such a gift. But why have two big dogs in the first place?

People make stupid decisions every day (and certainly on the face of it, owning multiple expensive pets is one of them), but don't end up paying for them in this extreme way by losing the very roof over our heads. But we fear it could come to that. Still, do we change anything about our lifestyle, hold back anything in reserve in case of bad times, resist spending up to and over the limit? Not usually. Even the dog issue is increasingly an example of bad judgment. How many people in economic trouble also have multiple pets? Not just one, but many? Where’s the good sense in acquiring them? Where’s the true kindness?

Our country used to be full of miserable little shanties, tiny shacks where poor people lived. Dogs weren’t pets there. They were warning systems and blankets for cold nights who got rewarded with scraps or had to feed themselves by scavenging. Life in shanties was unsafe and unpleasant. But at least people had a roof over their heads. Today, zoning laws have forced most of those shacks to disappear. In most states, you must at least have a trailer and running water and so on, and many localities have banned trailers. So poor people face a very uphill battle to attain housing, because its cost is so disproportionately high compared to their income. But then, most everybody from limited financial circumstances faces this challenge. I'd agree that paying too much for rent was crazy, except that that is exactly what people always do unless they are wealthy. The rent on my first apartment in New York City was more than 50% of my take-home pay, for instance. I’m not even sure why the landlord rented to me, except that I was young, just getting my start, and probably would increase my income soon enough. Which I did. Apartments in New York City are notoriously expensive, and there are no rules about the percentage of income rent can be the way there are about mortgages (not that those rules mattered during the recent real estate greed party, where people bought houses on which they couldn’t even afford to make the first payments). People insist on living under these conditions anyway, because it’s a city of great opportunity. I am not sure why Santa Barbara has a similar hold on Californians.

In discussing the plight of these women, we obviously veered into blaming them. That’s typical of our country, the “can do” nation full of energy and opportunity. We always wonder why people can’t get themselves out of a jam. The question is, are we showing heartlessness by blaming them, or are we trying to show the way out of their fix? Getting rid of the expensive dogs is a fix. Moving to a less expensive locale is a fix. Making nice with friends or relatives who might take you in is a fix. But once life moves you into your car, can you ever move out?

Tuesday, May 13, 2008

Cheap Gas Opportunity Cost

Should people drive out of their way by several miles in order to buy cheaper gas? I recently drove 10 miles to get gas that was 22 cents a gallon cheaper than what was available at any of the five gas stations in the town closest to me. (Which is a 12 mile drive to begin with. I live in the boondocks.) By pump price comparison, I saved $3.05 on the gas I bought. Since I get 22 miles per gallon, I figure I spent $1.65 in gas to get this savings. Was saving a net of $1.40 worth the additional wear and tear on my vehicle? Or worth the extra time it took me to drive somewhere I otherwise had no reason to go?

Here are a couple of ways to calculate it. The Internal Revenue Service allows self-employed persons to deduct mileage costs. So let’s suppose I went to that gas station on business. How much could I have deducted? In late November, 2007, the IRS issued the 2008 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. These figures include insurance, maintenance, and depreciation, operating costs that many of us do not consider when driving a little out of our way to obtain a bargain:

• 50.5 cents per mile for business miles driven;
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.

(In a moment of irony, considering how medical costs keep going up, the IRS actually dropped the rate for medical miles from last year. But let’s just talk business miles. ) At some point later this year, the IRS might be pressured to raise this number as not realistically reflecting rising gas prices. It has happened before, so it might happen again. Meanwhile, take 50.5 cents per mile as a plausible figure for the cost of running my car. Multiply it by the 10 extra miles I drove, and the cost to my car was $5.05, not the $1.65 in straight gasoline cost I came up with above. And it far exceeds the dollar savings at the pump. In fact, by driving 10 miles out of my way to obtain cheaper gasoline, I just lost $3.65. Ouch.

The second part of the calculation is how much time I lost by stretching out this mundane errand, time out of my life that can never be regained. Let’s say it took me a half an hour, including time spent pumping the gas as well as driving to and from the gas station. I won’t include the time I wasted going inside and looking for a newspaper, which I gave up on when I saw a line at the cash register. And I was lucky, because I only had to wait behind one car before pulling up to a pump.

What is my time worth? There are a lot of ways to calculate this one. But let’s suppose that instead of being a writer who sometimes barely clears a profit each year, I am a person who is employed. And then let’s further suppose that if I hadn’t spent a half an hour getting gasoline, I would have had the opportunity to be paid for an additional half an hour at my job. A big local employer is Wal-Mart, which claims to pay $10.40 per hour on average. Part-time employees don’t get that much, but the $10.40 figure is easily halved to show that if I could have worked an extra half hour, I could have earned an additional $5.20. Far more than the imagined gas savings of $1.40, and also more than the cost of wear and tear on my car.

To be fair, to figure my true half hour earnings, I’d also have to subtract the commuting cost of getting to my Wal-Mart job, which in my case would be 34 miles round trip, and prorate it against the number of hours I worked that day. But to keep the calculation simple, I’ll just consider the gross cost of working. Using the IRS figures, it costs me $17.17 merely to show up at Wal-Mart to work, or $85.85 per five-day work week, or $171 per two weeks, which if I drove nowhere else would be the time between fills at the gas station, or 340 miles. Do I want to add another $5.05, the cost of getting the supposedly cheaper gas, to my commuting cost? No, but it’s not much by comparison to the commuting cost itself. And that is why Americans will continue to drive to work, because there aren’t many alternatives and even Wal-Mart wages will cover the outlay for the gas. Still, paying more for supposedly cheaper gas makes no sense.

Now let’s say that I earn roughly $50 per hour or $104,000 per year. Lots of families and individuals earn that much. It still costs me the same to get the gas. But compared to a gross weekly income of $2,000, the difference in the gas price is too small a percentage to be worth calculating. What the well-paid individual needs to consider is how to avoid wasting time seeking a phantom bargain. But then, so does the poorly paid person, since my calculations above clearly show that driving 10 miles to save 22 cents per gallon on gas does not save any money at all.

Clear as mud?

There’s one other angle to consider. The reason I drove the extra 10 miles today was not just to test this theory. It was also because I really could not face the newest high numbers at the local gas stations. I needed to feel that I had outsmarted the international oil machine. But all I did was spend my money differently by putting more miles on my car and denying myself a half-hour of working time. Time out of my life. Think about your time, not just the money, when you consider what a bargain costs.