Landlord-in-chief President Donald Trump dispatched top federal officials to Los Angeles on Sept. 10 to organize a crackdown on homelessness, which has been caused by gentrification. His administration cruelly aims to use unilateral federal force against homeless people in Los Angeles and throughout the state of California.
This plan highlights the harm the real estate industry has caused poor and working people, both housed and unhoused. In New York, Los Angeles, Seattle and cities across the U.S., the multinational working class is under siege. Workers are being displaced by skyrocketing rents imposed by big real estate.
Rents have more than doubled in the past two decades, while wages remain stagnant. There is not a U.S. county where a full-time minimum-wage worker can afford rent for an average two-bedroom apartment. Rent burdens in African-American neighborhoods average 44 percent of a household’s income, while in Latinx neighborhoods, it is 48 percent.
In response to this assault, rent control is becoming a working-class demand across the country, with noteworthy struggles in New York and California and the beginnings of one in Seattle. In the spring, demonstrators won legal protection for tenants after blocking the New York State Legislature’s doors to demand rent control and tenant rights.
As manufacturing industries have left many big cities, industrial capital has been replaced by real estate capital, which is more profitable these days. Global real estate was worth $217 trillion in 2015, said Savills, a global British real estate advisory company in January 2016. It makes up 60 percent of the world’s assets. Residential property is worth 75 percent of the value of global property.
Home ownership in the U.S. is at a 50-year low. In fact, 37 percent of home sales were to absentee investors in 2016. Hedge funds and private equity firms, like Blackstone, the world’s biggest landlord, are major buyers. Today, real estate and high finance interests are very closely linked.
Workers lose homes, the rich get bailouts …
Since the recession of 2008, 10 million working-class households in the U.S. have lost their homes due to mortgage foreclosures and evictions. Those who lost houses were disproportionately Black and Latinx. But while workers lost homes, the federal government bailed out the banks or compensated them for the full amount of toxic, bloated mortgage loans.
The current wave of rent destabilization, homelessness and racist removals of Black and Latinx residents is reminiscent of Hurricane Katrina’s aftermath during the George W. Bush administration. The New Orleans public school system was closed down and replaced by charter schools. Public school teachers, many with years of experience, were replaced. Public housing was shut down and so was Charity Hospital. To this day 100,000 people, many of them Black, have been unable to return.
Meanwhile, the Department of Homeland Security is going into immigrant communities around the country, seizing people to deport and ripping their families apart. DHS forcibly evicts workers just like landlords and police officers.
… and massive tax breaks
The Trump administration is spurring on gentrification with its misnamed “opportunity zones” program — which grant massive tax breaks to the rich. It was inserted into Trump’s 2017 tax “reform” — tax cuts for the rich — bill. Advertised as a chance to pump construction money into poor neighborhoods, the opportunity zones would supposedly gain new housing, businesses and jobs.
But the benefits of the opportunity zones will go to rich investors like Pershing Square Capital, former New Jersey Governor Chris Christie and financier Anthony Saramucci, a chief promoter of the plan. Over 200 opportunity zone plans have been designed for real estate companies and banks, such as Goldman Sachs. No surprise: They are all exempt from paying federal taxes on their profits. This is a reason why Wall Street supports Trump’s presidency.
The money’s already flowing for 8,000 opportunity zones. But since the investment is mostly for luxury housing, such as condominiums and hotels, it is promoting increased rents in poor neighborhoods, while providing few jobs. It’s another attack on poor and working-class communities.
Seattle vs. big realtors
In Seattle, as in other cities, luxury real estate represents 95 percent of new, private housing. There, as elsewhere, capital flows to the most profitable areas for investment. The city is overshadowed by 45 Amazon company towers in the downtown area, which dominate this real estate market.
Rents there have shot up 155 percent since 1998 to an average monthly cost of $2,000. Seattle’s character has been altered due to the escalating rents and evictions. There has been an exodus of working-class and oppressed people. African Americans, who comprised 12.3 percent of the population, now make up only 7 percent of the city’s residents.
Meanwhile, due to outrageously high rents and low wages, homelessness has increased. There are over 11,000 people living in tent camps, with a disportionate number African Americans, who comprise one-third to one-half of them. In this war against the homeless, they live under constant threat from city bulldozers and excavation equipment.
But the fightback is growing. Community and tenant organizations are organizing for rent control in Seattle and in Washington state. African-American churches are working to get more affordable housing built in their communities without big real estate’s involvement. City Councilperson Kshama Sawant is campaigning against Amazon and other corporate realtors.
Workplace organizing by labor unions has the potential to reach even further into apartment buildings and housing complexes to push this demand. It is becoming clearer that capitalism is unworkable for the majority of working and oppressed people and must be abolished.