Low Income Housing: A Cog in the Corporate Welfare Wheel?

Does pushing people into poverty to make a few people wealthy make any sense?

How does the low income housing, corporate welfare game work? First you push people into poverty. Then you give them a taxpayer funded housing handout that is made possible through a developer kickback. 🤯

How are people pushed into poverty?

South Dakota has a favorable tax climate and has been close to full employment for many years (except during the Covid shutdown). Yet, the state continues to push economic development and use taxpayer dollars and tax credits to bring companies to South Dakota.

Not surprisingly, companies can’t find workers because there is more labor demand than supply. This imbalance generates an outcry from companies. They beg the governor and their congressman and senators to get South Dakota more foreign workers.

The governor and our Washington DC representatives deliver. They bring in refugees and get foreign worker visa allocations. The refugees must get jobs and the foreign workers must keep their jobs to remain in the country.

The flood of workers means there is more labor supply (which is exacerbated because foreign workers don’t leave jobs) than demand, so there is downward pressure on wages. With real inflation running at about 10% per year, the citizens and foreign workers are caught in a situation where stagnant or dropping wages make it impossible for them to stay ahead of living expenses.

To survive they are forced to draw on cash assistance through Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF), health insurance through Medicaid (much of which will eventually be covered directly by the South Dakota taxpayers), food assistance through the Supplemental Nutrition Assistance Program (SNAP), subsidized housing, and subsidized transportation.

Sadly, the taxpayers are caught holding the bag (the employer has no responsibility) which reduces everyone’s standard of living.

Subsidized housing is an interesting racket. The more downward pressure we put on wages, the more people qualify for low income housing and the more opportunities there are for low income property developers. There are all kinds of shenanigans that go on in the low income housing business, including people donating land to get tax write offs, Federal Government tax credits, grants... The bottom line is the tax credits and grants make it possible for developers to make very good tax-free income without having to invest much money, which is a ticket to wealth.

So once again, the incentives are wrong. Rather than using economic development to put people in poverty and increase the taxpayer burden so a few people can become wealthy, we need to let our economy work on its own. It’s functioning extremely well right now. Let it do its job.