How The Idea Of Affordability Is Shaping Our Politics

0:07No matter where you live in the US, you've probably heard stories or have your own about not being able to afford to live. The couple in their 30s who can't buy a home. The 20-something who can't afford rent without living with several roommates. The family of five who feel pinched every time they visit the grocery store or the retirees struggling to pay their health insurance premium. Whatever the situation, these stories are increasingly central to how Americans are experiencing the economy. Regarding housing, oh my lord, I've begun looking into other places because I'm afraid I'm being priced out of where I currently live.

0:46Rent has increased by 75 % in the last 20 years. Finding a place is harder and harder. All the new housing that is being built, which is great, there's so much more housing available, but it all starts at that 75 % increase. Also, I've never received a rental increase, but I've received one every single year since COVID. So between the price of groceries, the price to fix your car, to afford rent, to pay bills, heating, energy going up, it's just untenable and something's got to give. And this experience of not being able to live comfortably is shaping politics. The word affordability is a Democrat scam.

1:33They say it and then they go into the next subject and everyone thinks, oh, they had lower prices. I have many disagreements with the president, and I believe that we should be relentless and pursue all avenues and all meetings that could make our city affordable for every single New Yorker. That was President Trump at a press conference on Tuesday and New York Mayor-elect Zoran Mamdani last month. A CBS poll from October suggests inflation and the economy are now the top concern among Americans. According to the Urban Institute, 52 % of U.S. families don't have the resources to cover what it costs to live.

2:12The average monthly cost of groceries has also risen 32 % since 2019. But what do we mean when we say something is affordable? And how do we achieve that goal when the target keeps moving? Later, we speak to a food price expert, but first housing affordability and how Americans are being affected by the affordability crisis broadly. I'm Jen White. You're listening to the 1A Podcast. Back with more in just a moment. Stay with us.

2:42Joining us in studio is Jared Bernstein. He was chair of President Biden's Council of Economic Advisors. He's also a policy fellow at the Stanford Institute for Economic Policy Research. His substack is called Jared's Substack, where he covers economic policy. Jared, welcome to the program. Great to be here. Also with us in studio is Mike Kinsella. He's the CEO of Up for Growth. That's a national cross-sector member network focused on solving the housing shortage and affordability crisis. Mike, it's great to have you. Thanks for having me. And Annie Lowry. She's a journalist covering politics and the economy for the Atlantic.

3:16She's also the author of Give People Money, How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World. Annie, welcome. Thanks for having me. So, Jarrett, let's just start with the basics. Affordability is this big catch-all term. What do we mean when we say something is affordable or unaffordable? Well, I think it relates very closely to all the examples you hit in your introduction, Jen. When we say something is unaffordable, we don't mean that we can't buy it. We mean that buying it causes a level of economic stress in our lives that is making people, you know, really pretty unhappy with the overall economy.

3:54So you mentioned housing, child care. It's not that people necessarily can't pay their rent or their mortgage. It's that after they do so, they don't have enough left to do the other things that they want to do in life. Maybe they can't save for a vacation. We've all experienced going to the grocery store and looking at our receipt and getting a bit of a shock there. So I think that broadly speaking, it means not being able to as comfortably or as easily as you expected to get by given your level of income. So Annie, that's sort of the economic definition. But what about how affordability is being used in a political context?

4:34I think that it absolutely relates to what Jared was pointing to, which is that there is this almost emotional component to affordability or a sense of norms, right? What should I be able to afford and how should I feel when I'm able to afford it versus my income? Because we could talk about real income and real disposable income and all of these ways to measure. And I think it's important to note that there is absolutely a real and measurable and definable economic component to this. But it's also just about people's sense of how their own life is going. And that's why I think it's politically so important.

5:13And I think that we have been in this place where since, you know, roughly 2020 when inflation began really spiking during COVID, that this has been really top of mind for people. And I think that we have seen campaign after campaign succeed if they can convince voters that, you know, politician A will do well on this issue. And, you know, campaign against campaign fail if voters believe instead that politician B should be held to account for not making life affordable. I want to bring in the housing question here because, Mike, this is a major part of the conversation around affordability. Nearly three-quarters of Americans polled say housing in their communities has become unaffordable in recent years.

5:59It's according to a recent YouGov poll. Broadly speaking, how would you describe the current housing market? Well, Jen, the bottom line is we haven't been building enough homes, period. From young adults entering the workforce to seniors trying to downsize, Americans are struggling to find a home that they can afford reasonably. And the data backs that up, right? Beyond the polling data, we track the economic deficit of housing relative to housing needs around the country. And our number is that as of 2024, America has fallen 3.8 million homes short of meeting housing needs. And just really quickly, when we talk about building housing, are we specifically talking about single-family homes?

6:39Are we also including middle housing, things like, you know, townhomes that maybe wouldn't be useful for a larger family but could be a good starter place for someone? It's absolutely right. Think of it as a ladder, right? And we used to have a ladder with every rung on there so people can move from a starter rental place in college all the way into home ownership. And now that ladder is missing a whole host of rungs. So, you know, the realtors produce a study, I think every year, on average age of a first-time homebuyer. In 81, the year I was born, it was 29. Today, the average age of a first-time homebuyer is 40.

7:16Think about that. That's an entire decade of life deferred. So what do you think this lack of affordable housing means for the cost of renting? So if people can't afford to buy, what does that mean for the rental market? Well, it means that you have more renters in the market than you otherwise would, right? Those would-be homebuyers are in the rental market for 10, 11 extra years. And so at the same time that we're not building starter homes, we're not building nearly enough rental homes. And so that price pressure, that fierce competition, the rent increases. I have a colleague at our office who just got hit with a 30 % rent increase from, I think, 3 ,500 to well over 4 ,000 per month.

8:00You know, there are no options for her to go elsewhere, right, as we heard the caller earlier in the program say. So those are the very real pressures that people across this country are facing. Well, we got this from Sarah who writes, my husband, or rather, it's from Sarah who writes, my husband and I live outside of D.C. We have an above average household income and two children. The cost of child care makes it impossible for us to save money in any meaningful way. We're fortunate to own a home with a very low interest rate and mortgage payment, but if there was an emergency or broken appliance, we wouldn't be able to pay for it.

8:34Now, Jared, you'll sometimes here, what we're discussing, described as a housing or affordability crisis. Do you think that's accurate framing? I kind of do think that's accurate framing, although it's a slow-boiling crisis. I mean, Annie, who's with us here, was writing about this, you know, 15, 20 years ago. So it's not like we just discovered it. But inflation spiked in 21-22 because of the COVID pandemic and the fiscal support therein. And that spike led to price levels that were much higher than they were prior to that. So prices grow gradually, typically, a percent or two per year. That's inflation.

9:21But if they start growing 6, 7, 8, and its peak, it was 9 % in 22, that's kind of a shock. And so I think what happened there is that this slow-boiling problem became a crisis. And, you know, you really see that very clearly in the dialogue, in the politics. President Trump himself, as we said earlier, is on one side of the issue one day, the other side the next day. We've seen candidates campaign very successfully, as Annie mentioned, certainly we saw that in early November. So at this point, I would, I think crisis is probably an appropriate title. Well, Annie, and in Sarah's message there, it's interesting, they talk about not being able to prepare for an emergency.

10:03So what kind of uncertainty does that create more broadly for Americans when they're trying to figure out how to navigate this economy? Sarah seemed to be indicating that she and her husband are employed, that they're making decent wages, that they have a home in their chosen city. So in some sense, things seem to be going pretty well for them. But it's that feeling of anxiety and fear of what if something happens, right? What if we have a large medical bill? What if something breaks in our house. We're working so hard. You know, when I talk to folks, they'll say stuff like I'm working so hard and I still feel like I just never get there.

10:37Right. Like I'm swimming and swimming and I never reach the shore. And I think that people across the country just feel like they're making these trade-offs or feeling these pressures that they shouldn't. And whether that's in terms of housing or medical bills or child care or sending a kid to college or taking care of an elderly parent, it really shows up everywhere. Let's head to a quick break. We'll be right back.

11:06We got this email from Kathleen who says, I've been so lucky in my housing situation. I moved to the heart of downtown Frederick, that's in Maryland, eight years ago. My landlord has never raised the rent. He's amazing. Frederick has been offering developers a choice, pay a fee in lieu of building affordable units. I think the fee is around 16%. This is laughable. Of course, they'll pay the fee. I worry all the time that my landlord will decide to sell his property, and I will be left with nowhere to go. I'm a disabled, late middle-aged woman who lives on the cusp of low-income and middle class, too poor to afford any of the high rents, but not poor enough to qualify for housing assistance.

11:46Mike, you've spoken to dozens of people across the country who can't afford housing. What are you hearing from them? I'm hearing the same thing, right? A great deal of frustration, a sense of helplessness, a lack of agency in terms of finding a home in a community that you want to be a part of or that you have been a part of. I think clearly there is an imperative for solutions. I think this ties into Annie's analysis around the political currency of focusing on affordability. It is not just a political mandate, it's a policy mandate. Look, housing is the foundation of everything, right? And if you cannot find a place to live that's quality, that is something you can afford, you're going to feel like the system has completely failed you because it has.

12:35And so now is the time we need to move to solutions, think outside of the box, and apply a whole-of-government approach to really tackle the core drivers behind unaffordability. I want to get to some of those solutions, but I'm thinking about the narrative around American prosperity and how it's always been tied to homeownership. That's been a major way to build wealth in this country, even though it wasn't accessible to all people equally. The way we wrote our laws about accessing financing for housing. There were all kinds of language in there that made it more difficult. Covenants. Covenants for black people specifically to tap into the housing market.

13:14There was redlining, right? Absolutely. But I wonder if we have to rewrite the narrative around home ownership to a degree. People work differently now. They may not live in the same communities for as long. Some people want to be more mobile and renting is just a better option. So is part of it about adjusting our understanding of what it means to build wealth in today's economy? Yes and no. Yes, in the sense that when I grew up and I'm older, owning a home was considered absolutely where you wanted to be because that's how you built wealth. And I still think that's a germane part of the solution to the problem.

13:58But for a lot of people, as you suggested, simply being able to afford a rental in a place where they want to live, where there's jobs, where there's good jobs, is a completely reasonable goal. So, yes, perhaps there's definitely some framework issues. And I do think there's some basic foundational barriers that we have to get across if we're going to build more housing, which, as Mike correctly said, is the solution here. But I don't want to make this too complicated or suggest that there's some real paradigm shift here. If you're spending more than a third of your income on housing, you are housing cost burden, meaning you just are going to face the kind of affordability stressors we've talked about.

14:39And that describes half of all renters in America today. So you could say, look, renting may be more of a realistic option for people, but it's still the foundational point that if you're spending more than, you know, a third or half of your income on rent, you've got a real problem. So it's the cost of housing regardless of whether you're renting or... buying. Absolutely. So let's talk about some of these solutions, Mike. I mean, if you could change maybe two policies or implement two policies that would help address this crisis, what would they be? I would say people need choice. People need much better choices than they have today.

15:14And the exclusionary zoning, right, in our history of redlining is a big reason why today we have this barbell. You either have a big apartment building or you have a large lot, single family or single detached home, right? Not much in the middle. And so by creating, by creating permission for builders to meet that middle, we're going to create jobs. We're going to create the opportunities for folks to move into a duplex or a triplex or an internally converted former single family home with a number of units. And all of these strategies will bring down that cost of rent and create the opportunity to live in a high-opportunity neighborhood with a great school, with parks, with community resources.

15:59And so policies at the local level all the way to the federal level have been proposed and are gaining momentum. So that would be my first magic wand. And do you do that through incentivizing the builders or is this a requirement? We heard from our listener earlier who said they're giving builders in her community a choice. You can build more affordable housing, or you can just pay this fee. And these policies can be tough, right, to wrangle with. And I also don't want to overcomplicate things, but the math has to work, right? These programs are fundamentally public-private partnerships. And so what we need to do is encourage, through sticks and carrots, builders of housing to deliver a broader range.

16:40There is a huge market. And as the realtors have shown, there's a huge demand for smaller apartments, for smaller homes, casitas in the backyard, to duplexes and triplexes. And so let's give communities what they want. I mean, people want a fair chance. People want to have a fair shot in an affordable home. And so we're not going to make real progress until communities add homes at all price levels and of a broader range of types. I want to hear another policy solution, but I'm going to come to you on this. Yeah, I'm going to give you two that you asked for. One is upzoning, which Mike just got into a bit.

17:19It's too expensive to build. It doesn't pencil out to build affordable housing for developers. So making a lot more land available. Okay, I'm going to give you three. Second, you know, we haven't talked enough about the do-no-harm principle. Trump's tariffs are making it very expensive to build. So simply taking those down would reduce the cost of building a house by$11 ,000 right now. That's real money. But three, and this hitchhikes on what Mike just said. But this is really something that isn't well-known enough. There are programs, dozens of programs throughout this country that are successfully building affordable housing, right?

17:54We don't know enough about them. They are not national. They're subnational. They're community, town level. The federal government needs to play a role in both evaluating those programs, picking out the ones that are getting great bang for the buck but are undercapitalized. capitalized. And we have one right near here up in Montgomery County that's doing a great job in precisely the space that Mike just mentioned, a revolving public-private fund building affordable rental housing. And use the resources of the federal government to help capitalize these programs so they can build more units. Those three ideas would get you a good chunk of the way.

18:27I just want to mention Montgomery County is located in Maryland for folks listening to other parts of the country. I want to come to you on this, Annie. We got this from Jay who writes, it's important to put this conversation in context of income inequality, which has steadily risen for decades as taxes for the very rich have fallen and price gouging has risen. There's enough money in our economy for everyone to afford their basic needs and more, but it's all siphoned to the top. We can't solve the affordability crisis until we solve this disparity. Your thoughts? I think that that's absolutely right, right?

18:59We need to look at both sides of the ledger, right? What are people earning and what are they spending it on? In housing, I think that there's a case that there is truly a shortage and that just giving everybody cash is not going to... Imagine that we used our magic wand to give everybody more money as a subsidy for their mortgage, their rent. We'd still have a really big problem because there just aren't enough homes. That's not exactly true in other markets and other parts of the economy. So if we gave every parent money for child care, I think that we would see more child care centers open and more people go into child care, early education work.

19:45So I think that we need to think about both absolutely. And we had this really nice period of time starting in roughly 2018 that we actually saw wage compression. We saw wages rising eight times as fast for the lowest income workers as for the highest income workers. It was a very unusual moment. Since then, wage growth has slowed down a lot. And we're still in a very, very, very high inequality society. And in a lot of ways, that amplifies all of the affordability problems that we're talking about here, right? You know, because a wealthy person can go and bid up that single family home or even purchase two or three homes or apartments.

20:21Whereas people on lower incomes feel very, very stuck. They can't buy. They're stuck renting for long periods of time. And it's not just housing. It's all of these other things that become unaffordable for them. And we'll talk about groceries in a moment. But, Mike, I asked you for two policy decisions, so I wanted to make sure we got back to you on a second. Right now, and this gets at Annie's point on the politics of this. Right now, as we sit here today, the House Financial Services Committee is having a hearing on housing affordability and barriers to more affordable homes. There are two huge packages pending in Congress right now that could potentially still move across the finish line before end of year.

21:00One is the Home Reform Act. The Home Reform Act would make an existing federal program called Home Investments possible to move money into first-time homeownership opportunities, starter homes, and small and medium apartment buildings. So this is a bill that is important because it's not just good policy, but it's bipartisan, and it has four-corners support across Congress. So that's something to watch. And the road to housing, which is a 40-provision package that boosts resources for production that helps cities drive these solutions forward. So we're in a moment where, you know, This can be a tough conversation, can be a depressing conversation, but there are very real opportunities.

21:45And finally, the politics are here to support this type of transformational work that we all need to see. That's Mike King-Sella. He's the CEO of Up for Growth. That's a national cross-sector member network focused on solving the housing shortage and affordability crisis. Mike, thanks so much for speaking with us. Thank you for having me. We'll head to a quick break here. Back with more in just a moment. Stay with us.

22:13Now let's bring a new voice into the conversation to talk about food prices. Richard Volpe is a professor in the agribusiness department at Cal Polytech. He was formerly an economist at the USDA Economic Research Service. There he researched topics like food price formation and competitiveness in the food industry. Professor Volpe, welcome to the program. Hi, thanks for having me. Professor Volpe, there's a lot of nuances around food prices, but they are broadly speaking up right now. So, for example, the average price for orange juice is up 29%. Prices for ground beef are up nearly 14 % from where they were a year ago.

22:47That's according to NBC News Grocery Price Tracker. But paint us a picture of the current food price landscape right now. Sure. Food prices are up, regardless of how you measure it. You know, I'm a big fan of taking a look at the Bureau of Labor Stats and their CPI calculations. that's the consumer price index, which are federal indices of average price changes. That's where I recommend everybody go and take a look and read the monthly news releases there to see sort of what's been going on with food prices in the aggregate. And whether you're looking at month over month, year over year, or year to date, yes, food prices are up.

23:25Now, right now, food prices on average are behaving pretty much within the bounds of historic norms. They're up close to 2 % on the year on average. But an average is a statistic that sort of forgives a lot of sins. It covers a lot of variation from soaring prices to falling prices. The president is claiming that food prices are down. That's not true. But he could be standing on a message that food price inflation is fairly normal right now. It's fairly average. But again, that's masking some pretty serious pain in selected categories in the supermarket. You know, we're talking about, like you said, orange juice, coffee, meats, eggs, a lot of protein sources.

24:09We have seen food prices going up substantially in the last six months to a year. Well, we got this from Pamela who says, Regarding the cost of groceries, one thing I don't hear much about is how manufacturers have not only raised the price of goods, but the size of the packaging has also gotten smaller, meaning a family of four or five must now buy two of the items they need. My grocery bill has doubled. What used to cost$450 for a big family shopping trip now costs$800. The cost of electricity went from 6.5 cents per kilowatt hour to over 9 cents practically overnight. We make less than$75 ,000 per year combined income.

24:47It's becoming more difficult to make ends meet. So, Professor Volpe, what Pamela's referring to there is shrinkflation, which doesn't necessarily involve higher prices. Instead, it's smaller portion sizes at the same cost. How does that fit into this conversation? I think that shrinkflation, you know, for lack of a better term, is real. I think we have seen retail—well, I shouldn't say retail. I should be careful. food manufacturers, the sort of upstream food companies, sort of engaging in this practice in a way to, it's actually, you know, ironically kind of an attempt to limit food price inflation because as I think you and a lot of listeners understand, the idea is that the price doesn't necessarily go up.

25:26It's the package size that changes. So it's a challenge and it's a lot harder to spot for consumers than, for example, food prices shooting up. My understanding based and the limited research that's been done on this so far is that it is somewhat limited in scope, but it is real, it affects food prices, and we have to be a little bit careful in terms of how we describe it and how we label it because to some extent, what we're calling shrinkflation is actually a response from food companies to concerns and criticisms about soaring package sizes, soaring serving sizes, and the growing calorie count of products.