Essay on a Cause of Homelessness by Economic Hardship

In November 2017, the technology giant Amazon announced that a yearlong search for the location of its second headquarters was over, and that Long Island, New York would be the location of Amazon’s ‘HQ2’. This decision ignited a storm of protest, especially by homelessness advocates, amid concerns over gentrification, worker exploitation and the influence of large corporates. Eventually, Amazon cancelled its decision to set up a second headquarter office in New York, in a move that the democratic socialist Congresswoman Alexandria Ocasio-Cortez hailed as a victory for the people. The case demonstrates the tricky relationship between unsustainable development by large corporations, and rising rates of homelessness. Oftentimes, large corporations such as Amazon, Shell and Walmart setting up shop in an area will drive many to be homeless.

Homelessness driven by economic hardship has many specific causes, ranging from a lack of job training and education to the impacts of a recession. This essay will examine a cause of homelessness driven by economic hardship, specifically the cause of unsustainable development in residential neighbourhoods by large corporations. This essay will outline five scenarios where unsustainable property development in residential neighbourhoods by large corporations such as Walmart, Amazon and Shell led to economic hardship and therefore homelessness. These five scenarios are entry by high-wage sectors, resource commodity booms, technology headquarters, state development efforts and franchise expansions. Each of these scenarios will contribute to a holistic understanding of how large companies entering various residential areas eventually lead to economic hardship and homelessness.

The first scenario where unsustainable development by corporations leads to homelessness is through the impact of workers from high-paying sectors such as finance, consulting and the technology sectors. Young urban professionals, or ‘yuppies’, from these industries typically bid up housing rent levels as they move to their new neighbourhoods, and end up displacing existing tenants and communities. Property developers also begin to bid preemptively for land in order to create high-income housing projects, so as to pre-empt demand from incoming yuppie populations.[1] This causes economic hardship for existing tenants, who can no longer afford rent, food and other necessities in the area as they have risen to unaffordable levels. As a result of such a scenario, tenants in Los Angeles’s Koreatown, San Francisco and New York have become homeless.[2]

The second scenario is the case of a resource commodity boom. Oil booms, such as the shale oil boom in North Dakota, or the gold rush boom in San Francisco, typically leads to the entry of large corporations who create logistics centers, production facilities and employee housing in the area of interest. This bids up land rents, creating economic hardship and causing homelessness to rise for the existing population.[3] Temporary migrant workers are also vulnerable to economic hardship and to homelessness through such booms, as these companies typically find themselves unable to construct enough housing for these workers.

The third scenario is that of unsustainable entry by companies in the technology sector. The technology sector is a powerful and highly valued sector with much venture capital at its disposable. Upon moving to an area, technology corporations such as Amazon begin to rent office space, and landlords raise residential rent in order to keep up with the bids of these corporations for space in the area. Renters therefore face economic hardship and are displaced by land and apartment rents that rise faster than their incomes, and in so doing, become homeless. Furthermore, tenants in the area typically lack the level of education and skill required to obtain jobs as software engineers and computer programmers in these companies, and are unable to earn the supernormal wages that employees in these technology companies earn. The lack of sufficient wages to keep up with the rent bidding power of technology company employees causes additional economic hardship to local incumbent tenants, which is also a significant contributing factor to homelessness.[4]

The fourth scenario is development efforts by state governments and multinational corporations. State governments are often under pressure from federal authorities and their own local electorates to pursue high rates of economic growth, and often launch well-meaning investment drives to attract multinational corporations to come and invest in their state, in order to boost growth. However, unsustainable development efforts by local governments partnering with multinational corporations often lead to the gentrification of an area, and the displacement of local residents and local businesses, as was the case for downtown Los Angeles.[5] The government, alongside multinational corporations, will exert pressure on the local population for a certain type of individual, such as one with no criminal record, a stable income, a wealth of previous job experience, and a college or GED certificate at minimum, to be residents and employees in a neighbourhood. Such pressure is exerted through the influence of discriminatory housing laws, which prevent individuals with a criminal record, or without a certain set of qualifications, from living in a certain area.[6] This excludes many, including existing tenants, and they are displaced as a result. This creates economic hardship and causes homelessness to rise rapidly in an area.

Finally, franchise expansion is a key mode of unsustainable development by corporations that leads to economic hardship and homelessness. For example, Walmart entered many Midwest communities in the past decade, and rapidly became the major employer in these small counties, employing most of the county’s population in lowing paying jobs.[7] However, as Walmart enters and bids aggressively for rental space, rents rise. This displaces a segment of the population, who are poorly paid by Walmart, yet cannot afford the rents that were bidded up by Walmart.[8] As a result, this segment of the population faces economic hardship and homelessness. Walmart’s cheap prices and efficient supply chains also drive many mom-and-pop or brick-and-mortar stores out of business, thereby decimating the local business sector, as was the case in Oriental, North Carolina.[9] Afterward, when an economic recession strikes, Walmart exits due to a lack of consumer demand and leaves most of the county jobless. As a result, they can no longer afford the elevated rents and become homeless.

These scenarios illustrate a variety of ways that unsustainable development by corporations leads to economic hardship and homeless, typically by bidding up rents in a community and causing the area to become gentrified and unaffordable to its original tenants. High-paying employees, franchise expansions, development efforts by state governments, and resource commodity booms may all serve as causes of unsustainable development that leads to economic hardship and homelessness. This specific cause continues to be a serious cause of homelessness in America today, and has sparked much anger against the corporations who have been responsible for these impacts. It is therefore necessary for these corporations to reexamine their role in society, and their responsibilities to the communities whose lives they impact.

Endnotes

[1] Angotti, Tom, and Sarit Platkin. “Walmart and Gateway Estates II: A Predator is Poised to Destroy Jobs in East New York.” Center for Community Planning and Development, Hunter College. Retrieved on August 16 (2011): 2012.

[2] Flaming, Daniel, Halil Toros, and Patrick Burns. “Home not found: The cost of homelessness in silicon valley.” (2015).

[3] Florida, Richard. The new urban crisis: How our cities are increasing inequality, deepening segregation, and failing the middle class—And what we can do about it. Basic Books, 2017, 104.

[4] Ibid., 150.

[5] Marcuse, Peter. “Gentrification, homelessness, and the work process: Housing markets and labour markets in the quartered city.” Housing Studies 4.3 (1989): 214.

[6] Marcuse, Peter. “Gentrification, abandonment, and displacement: Connections, causes, and policy responses in New York City.” Wash. UJ Urb. & Contemp. L. 28 (1985): 195.

[7] Rao, Hayagreeva, Lori Qingyuan Yue, and Paul Ingram. “Activists, categories, and markets: Racial diversity and protests against Walmart store openings in America.” Categories in Markets: Origins and Evolution. Emerald Group Publishing Limited, 2010. 237.

[8] Ibid., 240.

[9] Ibid., 245.

References

Angotti, Tom, and Sarit Platkin. “Walmart and Gateway Estates II: A Predator is Poised to Destroy Jobs in East New York.” Center for Community Planning and Development, Hunter College. Retrieved on August 16 (2011): 2012.

Flaming, Daniel, Halil Toros, and Patrick Burns. “Home not found: The cost of homelessness in silicon valley.” (2015).

Florida, Richard. The new urban crisis: gentrification, housing bubbles, growing inequality, and what we can do about it. Oneworld Publications, 2017.

Florida, Richard. The new urban crisis: How our cities are increasing inequality, deepening segregation, and failing the middle class—And what we can do about it. Basic Books, 2017.

Gale Holland, “L.A.’s homelessness surged 75% in six years. Here’s why the crisis has been decades in the making.” Latimes.com, Los Angeles Times, 1 February 2018. https://www.latimes.com/local/lanow/la-me-homeless-how-we-got-here-20180201-story.html

Marcuse, Peter. “Gentrification, homelessness, and the work process: Housing markets and labour markets in the quartered city.” Housing Studies 4.3 (1989): 211-220.

Marcuse, Peter. “Gentrification, abandonment, and displacement: Connections, causes, and policy responses in New York City.” Wash. UJ Urb. & Contemp. L. 28 (1985): 195.

Rao, Hayagreeva, Lori Qingyuan Yue, and Paul Ingram. “Activists, categories, and markets: Racial diversity and protests against Walmart store openings in America.” Categories in Markets: Origins and Evolution. Emerald Group Publishing Limited, 2010. 235-253.