Jeff Bezos, founder and chief executive officer of Inc., center, smiles while touring the Spheres during opening day ceremonies at the company’s campus in Seattle, Washington, U.S. (Photographer: Mike Kane/Bloomberg)

Jeff Bezos Homeless Pledge Follows Amazon Fight Against Housing Tax

(Bloomberg) -- Inc. Chief Executive Officer Jeff Bezos’s pledge of $2 billion for homeless families and preschools has little chance of addressing the root cause of a problem often blamed on big technology companies: the shortage of affordable housing.

Bezos announced the plan Thursday in a Twitter post, offering with his wife, MacKenzie, to support nonprofits that provide shelter and food to young, homeless families as well as to launch and operate preschools. The pledge came three months after Amazon helped overturn a proposed tax on large employers in its hometown of Seattle that would have raised about $50 million per year to fight homelessness and create more affordable housing.

As the world’s wealthiest man who mostly employs hourly warehouse workers, Bezos has become a symbol of wealth inequality and a target of a campaign by U.S. Senator Bernie Sanders of Vermont to boost wages for the working poor and reduce the benefits companies get from governments. Tax breaks have fueled Amazon’s warehouse expansion around the country and some of its workers receive government assistance for food, making it a target.

“What is the responsibility for large corporations like Amazon to address the affordable housing crisis when they contribute to the lack of affordable housing,” said Elizabeth Bowen, a social work professor at the University of Buffalo. “The lack of affordable housing is a huge problem and it’s not the responsibility of Jeff Bezos or any other philanthropist to fix it.”

Amazon fought hard against Seattle’s proposed per-employee tax for homeless services and affordable housing. The e-commerce giant accused the city of wasting money and threatened to slow hiring there if the tax went through. There have been similar tensions in San Francisco between those benefiting from the tech boom and people fighting to survive in the wake of skyrocketing rents.

A decade after the financial crisis, the U.S. is facing a massive shortage of affordable housing, researchers say. It’s most acute in cities like Seattle, where rising rents fueled by the technology boom have strained the finances of working people. About one-sixth of U.S. renter households spent at least half their monthly income on housing in 2015, a 42 percent increase from 2001, according to a report this year from the Pew Charitable Trusts. Another report from the National Low Income Housing Coalition found that a worker in Seattle would need to make $36.12 an hour to afford a two-bedroom unit in the city. The minimum wage is $15.

Rising rents have also contributed to a widening homelessness crisis in some places. A Zillow Group Inc. study last year found that in Seattle, Los Angeles, Washington and New York, the relationship was particularly strong.

That’s led mayors and other public officials to call for more funding for affordable housing and homeless services. While Seattle erupted in protest over the “head” tax, the money it would have raised is just a fraction of what the city needs to address its crisis. A report by McKinsey & Co. concluded that the region needs to double its funding to roughly $400 million a year in order to provide the services and number of affordable units needed.

Seattle City Councilwoman Kshama Sawant, an advocate for the tax, criticized Bezos’s charitable pledge as an effort to “mitigate his image” after “threatening” to pull people and resources from Seattle over the tax.

Still, the contribution for homeless families is “needle-moving” and may show people, even on a small scale, that the issue can be addressed, said Mary Cunningham, vice president for metropolitan housing and community policy at The Urban Institute. A coordinated effort among government, philanthropists and social service agencies helped cut the homeless veteran population in half from 2010 to 2016, she said.

“A lot of people think of homelessness as an unsolvable problem and that people choose to live on the streets,” Cunningham said. “The positive effect of an investment like this is you can start to see results and get some momentum. We know a lot about what works, but lack resources and political will.”

©2018 Bloomberg L.P.