Eight years ago, a New York resident and long-shot gubernatorial candidate named Jimmy McMillan became briefly, rightfully famous on the internet and the late-night talk-show circuit, and not just because of his immaculate facial hair. “The rent is too damn high,” his campaign slogan, inspired memes and a now-defunct political party, but it didn’t just resonate because it was funny.
That slogan, still quoted regularly in news outlets around the country, is as true as ever. And while McMillan’s policy prescriptions were sometimes impractical—he called for reducing all rents to 2001 levels—the issue has recently received more serious treatment from aspiring politicians. In New York, gubernatorial candidate Cynthia Nixon and state Senate candidate Julia Salazar, both Democrats who have affiliated themselves with democratic socialism, are running on expanded rent control policies. And in California this fall, voters will have the power to repeal a law restricting rent control on newer units.
Many American renters are in crisis: The Pew Charitable Trusts found that the share of “rent-burdened” households—those which spent at least a third of pre-tax income on rent—rose from 19 percent in 2001 to 38 percent in 2015. Meanwhile, multiple factors—including the Great Recession, still-stagnant wages, and demographic trends—have caused a steady increase in Americans who rent, to a 50-year high (and a concurrent decline in homeownership). With several of those trends showing no sign of slowing, the percentage of renters likely will continue to rise—and so will the political importance of rent policies.
Both Nixon and Salazar are calling for an expansion of rent stabilization and to close loopholes that undermine the few protections that already exist. They both call for the end of vacancy decontrol, which allows landlords to deregulate an apartment’s rent after a tenant vacates, and preferential rent, which allows landlords to drastically increase rent on units that have been rented below the legal maximum. Nixon, who calls her rent platform the “most progressive and expansive tenant protection program in the country,” also supports the passage of just cause legislation, which would prevent landlords from evicting tenants without providing reason to do so.
Rent control is illegal in 27 states. Even in cities and states that enforce some version of rent regulation, affordable homes have become an endangered species, due to legal loopholes and landlords who deliberately break the law. New York City recognizes two categories of rent regulation: Apartments can either be rent-controlled or rent-stabilized, with the latter being far more common than the former. The distinction between the two depends largely on the date and size of the building. Rent-controlled apartments are located in buildings constructed before February 1, 1947, and have been occupied continuously by tenants since before 1971. Apartments in buildings of six or more units built before January 1, 1974, are rent-stabilized. But as The New York Times reported in May, New York City has lost 152,000 rent-regulated apartments since 1993 because landlords have used legal loopholes to raise rents, and it has lost another 130,000 apartments because they were converted to co-ops and condos.
The loopholes that Nixon and Salazar want to close have directly contributed to the crisis. Preferential rent, which allows New York City landlords to charge tenants a rate below an apartment’s market value, sounds like it should be a benefit for renters—and sometimes it is. But as a 2017 ProPublica investigation noted, “Increases in preferential rents aren’t subject to city-set limits governing other rent-stabilized apartments. Landlords can revoke the preferential rates, and hike rents to the legal maximum, whenever leases come up for renewal. That can mean spikes of hundreds or even thousands of dollars.” Some landlords entice renters with low preferential rents, only to spring a massive increase to the legal rent—which sometimes has been illegally inflated—once the lease is up.
Los Angeles, California, also enforces a version of rent control, but it’s limited. It only applies to multi-family buildings, and, as in New York City, it doesn’t apply to buildings built after a certain date. The city’s rents, meanwhile, have steadily increased. Writing for The Nation this year, Bryce Covert reported that over half of Los Angeles renters pay at least 30 percent of their monthly income in rent, and the city has “the severest shortage of affordable housing for its poorest renters, with just 17 homes for every 100 extremely low-income families.” The Costa-Hawkins Rental Housing Act prohibits California cities from placing rent caps on buildings built after 1995, which prevents cities like Los Angeles, or its northern neighbors in the Bay Area, from regulating rents on newer units.
Opponents of Costa-Hawkins collected enough signatures to get a proposition to repeal it on November’s ballot. Voters and legislators in Illinois, where rent control is illegal, may soon have their own chance to deliberate the future of rent in their communities. In March, voters in nine Chicago wards affirmed a question asking if the state should repeal its prohibition on rent control. This is not the equivalent of voting to repeal the law, but it indicates a well of public support for rent control. A bill to lift the ban stalled in the Illinois state legislature this year.
Rent control has its opponents—not just landlords, but many economists. “Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand,” Times columnist Paul Krugman argued in 2000. A 2017 study by Stanford University economists purportedly found that while San Francisco’s vestigial rent control law increased the likelihood that a long-term tenant would be able to stay in their home, it reduced housing supply.
J.W. Mason, a fellow at the Roosevelt Institute, concedes that many economists disdain the concept of rent control, but it isn’t a sentiment he shares. “What is the reasoning behind it? Is there some sort of sophisticated analysis or historical data? No. The reason is very simple. If you limit the price of something, then it won’t be as profitable to produce it, so people will produce less of it,” Mason explained. “But when you take a step back and you think about it, this is an argument against price controls in general, because that’s really what the argument against rent controls is.”
Housing, he noted, lasts a long time, especially in cities like New York. “When you’re talking about a decision about producing housing, typically that’s a decision that was made a long time ago,” he said. “The fact that you you can’t charge as high a rent as you might otherwise want to doesn’t change your decision about how much housing to produce out of that building this year, because that’s fixed by the size of the building.”
Samuel Stein, author of the forthcoming Capital City: Urban Planners in the Real Estate State, told me that while rent control is only one way to reduce housing inequality, it plays a vital role. “I think it’s the best way to protect tenants from a certain kind of gentrification, and that’s the gentrification that results from something happening to your neighbor,” he said. “If a big luxury building goes up right next to you, in theory it should have no impact on your rent. But it always does, unless there’s a mechanism to prevent that from happening or if the government makes some sort of positive intervention in your neighborhood. You shouldn’t suffer as a tenant because your land values are higher and the landlord has been able to pass that benefit to the public onto tenants as an extra cost.” Stein also cites public housing and an end to land speculation as other means to increase the availability of affordable housing.
Other economic trends indicate that the question of rent control will only become more important. The U.S. Federal Reserve, citing falling unemployment, has increased interest rates and indicated it will probably do so again, which is certain to increase the cost of home mortgages. And while the unemployment rate is at 4 percent, wages remain largely stagnant. A July 12 report from the Bureau of Labor Statistics found that average hourly earnings for American employees grew by only 0.1% from May to June. For production and non-supervisory employees, hourly earnings decreased by 0.2 percent from June 2017 to June 2018.
The federal minimum wage provides another stark example: It hasn’t been raised since 2009. Because it hasn’t kept pace with inflation, the Pew Research Reports, the minimum wage has lost around 9.6 percent of its purchasing power. An American worker making minimum wage for the last ten years earns less money per hour now than they did in 2008. And if wages stay stagnant while interest rates go up, American workers will find it increasingly difficult to buy homes and will remain in the rental market. There’s some evidence that this is already happening. According to the Census Bureau, the number of American homeowners has decreased from a high of 69 percent in 2005 to 64 percent in 2018.
With more Americans dependent on rentals, while their wages barely rise, rent control isn’t just an issue for residents of New York City. It will instead become more relevant to voters everywhere. Nixon’s and Salazar’s proposals might make sense politically, since rent is a reliable pocketbook issue, but they also make sense economically—even morally.
“At least one of the major purposes of rent control is to recognize the right of a longtime tenant to remain in their home,” Mason said. “And there’s an economic reason behind that, because people who have security are going to take better care of the place, and they’re going to be more invested in the neighborhood. A lot of the value of housing and of the value of urban land comes from the activity of the people who live there, and from the very things they do to create a community where other people want to live.”