2.

Essay on a cause of homelessness by economic hardship

In November 2017, the technology giant Amazon announced that a yearlong search for
the location of its second headquarters was over, and that Long Island, New York would
be the location of Amazon’s ‘HQ2’. This decision ignited a storm of protest, especially
by homelessness advocates, amid concerns over gentrification, worker exploitation and
the influence of large corporates. Eventually, Amazon cancelled its decision to set up a
second headquarter office in New York, in a move that the democratic socialist
Congresswoman Alexandria Ocasio-Cortez hailed as a victory for the people. The case
demonstrates the tricky relationship between unsustainable development by large
corporations, and rising rates of homelessness. Oftentimes, large corporations such as
Amazon, Shell and Walmart setting up shop in an area will drive many to be homeless.

Homelessness driven by economic hardship has many specific causes, ranging from a
lack of job training and education to the impacts of a recession. This essay will examine
a cause of homelessness driven by economic hardship, specifically the cause of
unsustainable development in residential neighbourhoods by large corporations. This
essay will outline five scenarios where unsustainable property development in
residential neighbourhoods by large corporations such as Walmart, Amazon and Shell
led to economic hardship and therefore homelessness. These five scenarios are entry
by high-wage sectors, resource commodity booms, technology headquarters, state
development efforts and franchise expansions. Each of these scenarios will contribute
to a holistic understanding of how large companies entering various residential areas
eventually lead to economic hardship and homelessness.

The first scenario where unsustainable development by corporations leads to

homelessness is through the impact of workers from high-paying sectors such as
finance, consulting and the technology sectors. Young urban professionals, or ‘yuppies’,
from these industries typically bid up housing rent levels as they move to their new
neighbourhoods, and end up displacing existing tenants and communities. Property
developers also begin to bid preemptively for land in order to create high-income
housing projects, so as to pre-empt demand from incoming yuppie populations.[1] This
causes economic hardship for existing tenants, who can no longer afford rent, food and
other necessities in the area as they have risen to unaffordable levels. As a result of
such a scenario, tenants in Los Angeles’s Koreatown, San Francisco and New York
have become homeless.[2]

The second scenario is the case of a resource commodity boom. Oil booms, such as
the shale oil boom in North Dakota, or the gold rush boom in San Francisco, typically
leads to the entry of large corporations who create logistics centers, production facilities
and employee housing in the area of interest. This bids up land rents, creating
economic hardship and causing homelessness to rise for the existing population.[3]
Temporary migrant workers are also vulnerable to economic hardship and to
homelessness through such booms, as these companies typically find themselves
unable to construct enough housing for these workers.

The third scenario is that of unsustainable entry by companies in the technology sector.
The technology sector is a powerful and highly valued sector with much venture capital
at its disposable. Upon moving to an area, technology corporations such as Amazon
begin to rent office space, and landlords raise residential rent in order to keep up with
the bids of these corporations for space in the area. Renters therefore face economic
hardship and are displaced by land and apartment rents that rise faster than their
incomes, and in so doing, become homeless. Furthermore, tenants in the area typically
lack the level of education and skill required to obtain jobs as software engineers and
computer programmers in these companies, and are unable to earn the supernormal
wages that employees in these technology companies earn. The lack of sufficient
wages to keep up with the rent bidding power of technology company employees
causes additional economic hardship to local incumbent tenants, which is also a
significant contributing factor to homelessness.[4]

The fourth scenario is development efforts by state governments and multinational

corporations. State governments are often under pressure from federal authorities and
their own local electorates to pursue high rates of economic growth, and often launch
well-meaning investment drives to attract multinational corporations to come and invest
in their state, in order to boost growth. However, unsustainable development efforts by
local governments partnering with multinational corporations often lead to the
gentrification of an area, and the displacement of local residents and local businesses,
as was the case for downtown Los Angeles.[5] The government, alongside multinational
corporations, will exert pressure on the local population for a certain type of individual,
such as one with no criminal record, a stable income, a wealth of previous job
experience, and a college or GED certificate at minimum, to be residents and
employees in a neighbourhood. Such pressure is exerted through the influence of
discriminatory housing laws, which prevent individuals with a criminal record, or without
a certain set of qualifications, from living in a certain area.[6] This excludes many,
including existing tenants, and they are displaced as a result. This creates economic
hardship and causes homelessness to rise rapidly in an area.

Finally, franchise expansion is a key mode of unsustainable development by

corporations that leads to economic hardship and homelessness. For example, Walmart
entered many Midwest communities in the past decade, and rapidly became the major
employer in these small counties, employing most of the county’s population in lowing
paying jobs.[7] However, as Walmart enters and bids aggressively for rental space,
rents rise. This displaces a segment of the population, who are poorly paid by Walmart,
yet cannot afford the rents that were bidded up by Walmart.[8] As a result, this segment
of the population faces economic hardship and homelessness. Walmart’s cheap prices
and efficient supply chains also drive many mom-and-pop or brick-and-mortar stores out
of business, thereby decimating the local business sector, as was the case in Oriental,
North Carolina.[9] Afterward, when an economic recession strikes, Walmart exits due to
a lack of consumer demand and leaves most of the county jobless. As a result, they can
no longer afford the elevated rents and become homeless.

These scenarios illustrate a variety of ways that unsustainable development by

corporations leads to economic hardship and homeless, typically by bidding up rents in
a community and causing the area to become gentrified and unaffordable to its original
tenants. High-paying employees, franchise expansions, development efforts by state
governments, and resource commodity booms may all serve as causes of
unsustainable development that leads to economic hardship and homelessness. This
specific cause continues to be a serious cause of homelessness in America today, and
has sparked much anger against the corporations who have been responsible for these
impacts. It is therefore necessary for these corporations to reexamine their role in
society, and their responsibilities to the communities whose lives they impact.

Endnotes

[1] Angotti, Tom, and Sarit Platkin. "Walmart and Gateway Estates II: A Predator is
Poised to Destroy Jobs in East New York." Center for Community Planning and
Development, Hunter College. Retrieved on August 16 (2011): 2012.

[2] Flaming, Daniel, Halil Toros, and Patrick Burns. "Home not found: The cost of
homelessness in silicon valley." (2015).

[3] Florida, Richard. The new urban crisis: How our cities are increasing inequality,
deepening segregation, and failing the middle class—And what we can do about it.
Basic Books, 2017, 104.

[4] Ibid., 150.

[5] Marcuse, Peter. "Gentrification, homelessness, and the work process: Housing
markets and labour markets in the quartered city." Housing Studies 4.3 (1989): 214.

[6] Marcuse, Peter. "Gentrification, abandonment, and displacement: Connections,

causes, and policy responses in New York City." Wash. UJ Urb. & Contemp. L. 28
(1985): 195.
[7] Rao, Hayagreeva, Lori Qingyuan Yue, and Paul Ingram. "Activists, categories, and
markets: Racial diversity and protests against Walmart store openings in America."
Categories in Markets: Origins and Evolution. Emerald Group Publishing Limited, 2010.
237.

[8] Ibid., 240.

[9] Ibid., 245.

References

Angotti, Tom, and Sarit Platkin. "Walmart and Gateway Estates II: A Predator is Poised
to Destroy Jobs in East New York." Center for Community Planning and Development,
Hunter College. Retrieved on August 16 (2011): 2012.

Flaming, Daniel, Halil Toros, and Patrick Burns. "Home not found: The cost of
homelessness in silicon valley." (2015).

Florida, Richard. The new urban crisis: gentrification, housing bubbles, growing
inequality, and what we can do about it. Oneworld Publications, 2017.

Florida, Richard. The new urban crisis: How our cities are increasing inequality,
deepening segregation, and failing the middle class—And what we can do about it.
Basic Books, 2017.

Gale Holland, "L.A.'s homelessness surged 75% in six years. Here's why the crisis has
been decades in the making." Latimes.com, Los Angeles Times, 1 February 2018.
https://www.latimes.com/local/lanow/la-me-homeless-how-we-got-here-20180201-
story.html

Marcuse, Peter. "Gentrification, homelessness, and the work process: Housing markets
and labour markets in the quartered city." Housing Studies 4.3 (1989): 211-220.

Marcuse, Peter. "Gentrification, abandonment, and displacement: Connections, causes,

and policy responses in New York City." Wash. UJ Urb. & Contemp. L. 28 (1985): 195.

Rao, Hayagreeva, Lori Qingyuan Yue, and Paul Ingram. "Activists, categories, and
markets: Racial diversity and protests against Walmart store openings in America."
Categories in Markets: Origins and Evolution. Emerald Group Publishing Limited, 2010.
235-253.