The 2024 legislative session so far: A series
Despite promising a short to-do list, the 2024 legislative session is off to a busy start. Over 500 bills have been introduced in the House first week of the session,…
Last week, the St. Paul City Council voted to amend the city’s strict rent control ordinance. While the law still caps rent hikes at 3 percent, it will exempt new construction for up to twenty years and allow landlords to raise rents up to 8 percent plus inflation when a tenant moves out.
As to be expected, renters and renter advocates strongly opposed the change. But one City Council member, Nelsie Yang — who opposed the amendment, brought up an especially interesting point, citing that amending the rent control ordinance will do harm to racial equity.
Yang said the amendments go much further than the changes recommended by the mayor’s 41-member stakeholder task force this summer.
“It will be making so much more harm for renters, for people in our community who we know have been taken advantage of historically,” Yang said.
“We need both growth and racial equity,” Jalali said. “We shouldn’t sacrifice racial equity in the name of growth. … Simply put, I don’t support removing rent stabilization protections from people who already have them.”
Racial equity itself has come to mean different things to different people. But the idea that rent control can somehow help alleviate the burden faced by people of color — who tend to rent at higher rates and also have lower incomes — and thereby eradicate or alleviate racial disparities is not new. And lately, the support for the idea has only intensified.
But is there merit to the idea that rent control is of big help to people of color?
Luckily, there is a lot of evidence that can help us answer this question. A couple of studies especially stand out when it comes to the impact of rent control on people of color, or other disadvantaged renters.
According to a lot of studies, in cities where rent control — or in this case rent stabilization — has been enacted, middle- and high-income renters tend to be overrepresented in controlled units while poor people and people of color tend to be underrepresented in such units.
A report published by American Experiment in 2020, for example, shows that
In Stockholm Sweden, between 2011 and 2016, individuals in rent-controlled apartments were found to have incomes 30 percent higher than the metropolitan average.
In San Jose, 62.1 percent of renters in rent-controlled units in 2013 were middle and higher-income earners. Additionally, low-income renters only made up just 27.7 percent of all renters in rent-controlled apartments in cities of Los Angeles, San Francisco, and Oakland.
In Cambridge, Massachusetts — a city that had rent control between 1970 and 1994,
only 26 percent of renters in the bottom quintile of the household income distribution were in rent-controlled apartments. Additionally, while Hispanic and Black residents were 25% of the city’s population, they were only 12% of the residents in rent-controlled units.
Landlords preferred to rent their units to higher income tenants, not those receiving
only 35 percent of the tenants in controlled units had incomes of $10,000 or less.
Some studies do estimate that apart from being underrepresented in rent-controlled units, low-income renters may have also been disproportionately harmed under rent control in some cities.
In Cambridge, Massachusetts
Rent control ultimately led to the displacement of large, disadvantaged renter populations by a younger, higher income, better educated, singles population.
In Santa Monica and Berkeley
The proportion of “low-income households, college students, elderly persons, families
with children, and disabled persons” declined, and was displaced by high-income renters, managerial and professional employees, and highly educated individuals at a higher rate compared to other cities.
Certainly, in some places — like New Jersey — people of color did make up a significant share of renters in controlled units, but rent control in New Jersey also increased the isolation of the poor. Similarly in San Francisco, rent control led to gentrification and worsened inequality.
Ultimately, however, regardless of who makes up the population of renters in controlled units, the evidence concludes that benefits from rent control seem to be concentrated among wealthier and whiter households.
Advocates for rent control as well as racial equity might find this hard to grasp, but the evidence is clear. Rent control does not primarily help the poor and it is not an effective solution to eradicating racial disparities. In fact, in most instances, rent control does more harm than good to the most disadvantaged renters.
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