How to Reduce Inflation-induced Costs for Low-income Families
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Policymakers at all levels can implement solutions that help families in the short term while battling the long-term problems, according to the Urban Institute.
Inflation is rising due to the pandemic, a rocky recovery from the Covid-induced recession and the war in Ukraine, impacting low-income families, which are disproportionately people of color, in particular, according to the Urban Institute.
For U.S. residents, the recent historic surges in gas prices and rent have increased the costs of daily life at a quicker rate than wage growth, the organization says. Moreover, families under the federal poverty level are more likely to rent their homes than own them, exposing them to fluctuations in housing costs as landlords raise rents.
Housing affordability has been a critical public policy issue since the start of the pandemic. In fact, 49% of those surveyed by the Pew Research Center in October 2021 said the availability of affordable housing in their local community is a major problem.
The Effect on Low-income Families
The U.S. inflation rate reached 7.9% in February, the highest level since 1982, according to Trading Economics, a company that tracks economic data and produces forecasts.
While inflation affected prices across the board, rent and gas were the "major areas of concern," and the rise in gas prices is likely to exacerbate the situation, shrinking families’ budgets for other daily needs, like rent or food, the Urban Institute says. Likewise, rising rents could mean a higher likelihood of evictions while rising gas prices could reduce access to employment, recreation, education and more, according to the institute.
Although U.S. residents could pivot away from cars toward cheaper forms of transportation like walking, biking and public transportation, the reality is that most people live in communities where those options are limited or not available, the research shows. Moreover, many families with low incomes cannot afford to live in communities where walkability and transit access are easily available.
How to Combat Cost Burdens
Policymakers at the local, state and federal levels can identify solutions that help families with low incomes in the short term while battling the conditions that expose them to inflation-related problems in the long term, the Urban Institute says. Here are steps policymakers should consider that could ease the cost burdens:
- Find tools to help renters remain in place by passing policies to reduce evictions.
- Reduce local transit fares, increase bus service and create temporary street improvements that give people alternatives to driving.
- Expand the federal government’s housing choice voucher program that assists low-income families, the elderly and the disabled.
Long term, policymakers can create tools to ensure stability for families in housing and transportation costs. This means:
- Creating new tools to promote rent stabilization and prevent displacement.
- Redesigning local zoning codes to encourage more housing construction to reduce the pressures of demand on limited supply.
- Investing in transit options like better bus and rail service by leveraging federal funds from the infrastructure law
- Planning for land use and transportation together while providing easy-to-use, comfortable and safe walking and cycling options.
For more information from the Urban Institute on this topic click here.
Andre Claudio is an assistant editor at Route Fifty.
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