Class Segregation and the Housing Market

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Part I -- Class Discrimination

There are many forms of discrimination, but one that Americans seem to have a high tolerance for is that based on class. Class discrimination is a natural outcome of capitalist ideology. That ideology, in turn, has been assimilated into American culture to the point that even the poor accept it on the assumption that they or their children might someday become rich.

Thus, unlike race and sex discrimination, that based on class has gone largely underregulated. Eventually the result is a number of embarrassing instances of abuse that become hard to ignore. That is what has happened in New York City's housing market, as testified to by an expose on the front page of last Sunday's (18 May 2014) New York Times real estate section.

Part II -- The Situation

Since 1943 New York City has sought to protect the income diversity of its population by classifying a percentage of its housing market as "rent-controlled" or "rent-stabilized." There are technical differences between these statuses, but we will refer to them both as part of a regime of "rent-regulation." Landlords and developers who provide a certain number of such "affordable housing units" (particularly rent-stabilized units) alongside of apartments renting or selling at market rates can qualify for city-or-state-subsidized low-interest loans and tax breaks. Even though the landlords and developers are thereby benefiting from publicly provided money, they still complain that the rent-regulation regime is a burden. While, with some exceptions, it does not prevent them from making a profit, it can prevent them from maximizing their profit. And that, of course, is what capitalism is supposed to let the businessperson do.

The piece in Sunday's New York Times real estate section is all about how the landlords and developers are trying to make life unpleasant for their rent-regulated residents, who, as of 2011, have a median income of $51,000 and pay a median rent of $1,321 a month. Ultimately, as Mark Zborovsky, "a broker who sells bundles of rent-regulated apartments to investors," put it, "his [the landlord's] goal is to get him [the tenant] out of the apartment." If these tenants do leave, their dwellings cease to be regulated and can be rented anew at market rates -- which can be as high as $7,000 a month for a two-bedroom flat.

Part III -- Some Examples

The tactic now being employed by the landlords and developers is to add amenities to existing buildings -- things like roof gardens, gyms, playrooms for children, added storage areas and the like -- and then prevent those tenants in rent-regulated apartments from using them. It is an interesting fact that in this game of class discrimination the doormen and other building staff become the ones charged with enforcing segregation for the owners.