[OPE-L:5245] rent control and real wages

Gerald Levy (glevy@pratt.edu)
Thu, 12 Jun 1997 06:32:24 -0700 (PDT)

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Three days from now, barring a legislative compromise in Albany, the rent
control laws for New York City tenants are due to expire. Millions of
working-class families who rent controlled or stabilized apartments are at
risk of skyrocketing rents and, thereby, eviction. I.e. the rent control
laws establish limits to which rents can be increased by landlords;
without such laws, rents would soar to "free market value."

Does anyone know of some specifically Marxist analyses of the subject of
rent control which not only examine the specific historical
and class relationships but also the meaning of this subject from a
theoretical perspective?

This subject, it seems to me, is not only important to the extent that it
is a question which directly affects the lives of millions of
working-class families, but also because it is a subject which relates to:

a) the relationship between capitalists, landowners, and the working-class
in urban areas;

b) the role of the state in establishing and limiting the rights of
capitalists, landowners, and the working class.

c) the extent to which the real wage and standard of living of
working-class families is affected by:

i) workers' self-activity and organizing (which led to the passage
of rent control laws);

ii) the different housing conditions of workers in urban areas. I.e.
the interests of workers who *own* their own homes are different,
at least in the short-run, from workers who rent housing from

iii) the "value" of urban land property for landowners (and
real-estate developers and banks);

iv) state policy.

v) the relationship between capitalists and landowners.

One such question could be posed as follows: suppose the rent control laws
are eliminated _in toto_. This would then allow landlords to increase rents
to "market value." This would mean that some working-class tenants who
would then be unable to afford the higher rents would, in due course, be
evicted. Some would become homeless, some would move outside of the urban
area where rents are cheaper, some might try to squat abandoned buildings,
and some would move in with relatives or friends (i.e. the amount of
people sharing an apartment would increase). Some of these options would
not be realistic given the changed circumstances (e.g. the "value" of
abandoned buildings would be increased, thereby, leading to an increased
shortage of abandoned buildings and a greater incentive to "develop" those
buildings by evicting squatters) or would involve increasing costs for
working-class families (e.g. if they moved out of the city, transportation
costs could be expected to increase, thereby, lowering real wages and one
might also anticipate that rents _outside_ of the urban area would
increase as well). Homelessness might also not be an option for many
(especially, given the hostility of the state to the homeless and their
eviction of homeless encampments). This would suggest that most
working-class tenants will either have to pay higher rents (and, thereby,
experience a decrease in real wages) or increasingly share apartments
(which would lead to a decrease in their customary standard of living).

If workers then pay higher rents, does this mean that real wages have been
depressed below the value of labour-power? Couldn't this then be expected
to lead to additional conflict between workers and capitalists (and
between workers employed by the state and the state) over wages?

For those workers who now increasingly share apartments, how would this
decrease in their real standard of living be expressed in terms of real
wages? I.e. their nominal wage remains the same, but they are now able to
only purchase a percentage of a housing unit (an apartment), whereas,
previously they could afford the rent for the entire apartment.

While the above questions are of general concern, our "New York City
contingent" (Andrew K, Anu, David, Duncan, John, and myself) will find
them to be of more immediate concern.

Any thoughts?

In solidarity, Jerry

PS: In a class on "urban economics" yesterday, I asked my class what would
be the best response if rent control laws ended. A majority of students
said that the best response was to RIOT! This should give you some idea
of the extent to which tenants feel strongly about maintaining rent
control laws and, also, the pressure that the state is under to work out
some sort of "compromise" (btw, the most likely compromise is "rent
de-control", which would [supposedly] only hurt higher-income rent control
tenants [who earn over $175,000/yr] and would "de-control" an apartment
when it became vacant [when someone voluntarily vacates or dies]. Such a
"compromise" would protect _for now_ must low-income tenants, but it would
mean -- basically -- that they could not afford to move to other
apartments in the City and, of course, it would offer no protections for
those who don't currently have apartments, including those who will move
to the City in the future).