Living in an Economically Cooperative House
Several years ago, we made a choice to begin paying for our rent and household expenses based upon our income. I will share how we arrived at this decision, how the process and the math work, and what challenges we've experienced.
First, I'll talk about our thought processes around our decision to create an "economically cooperative" house. Please feel free to skip this section if it is boring to you, and go right to "How We Set Up Our Economically Cooperative Household."
We formed our house on a loose cooperative basis four years ago, sharing food and chores and meals, with rules governing the household and a conflict resolution process. At the time, this seemed like about as far as we wanted to go with the whole "cooperation" aspect of our household.
Some time later (two years?) my close friend and housemate M. (who is a professional/paid activist and worker rights advocate) and I were discussing a recent news item about a project where young people with wealth/inheritance got together and talked about how they could share this wealth.
I (as a poor person from a poor/working class background) was initially really excited to hear about this project. M., who's from a middle class background, was also excited about it. It sounded like a way for people to actually begin to talk about income openly, something I'd been taught was impolite and inappropriate. I also thought the 'wealth sharing' that the young wealthier folks would be doing might be more direct and accountable than we usually see happening.
Around the same time, M. and I had also been having a lot of conversations about why we've been taught not to talk about wealth and income and poverty in real numbers, with each other. Why are our incomes considered so personal? Why does it feel shameful to make a lot of money, or to make very little money? What, exactly is wrong with talking about income?
As I learned more about it, it turned out the cool project I had heard about, with young people talking about wealth, was not so cool after all. It wasn't a conversation between poor and rich, it was just rich kids talking to each other. It wasn't about resource sharing, it was about choosing which charities to support. It was the same old, non-profit industrial complex, feel-good game. It was rich folks deciding what movements get money and which don't.
This got me thinking: What if we shared our incomes more directly with each other, within small accountable units-- like a household, for example? Could we help to alleviate the burdens of capitalism for each other? Families share resources-- could near-strangers do it too?
Through conversations with M., the highest earner in our household and a worker's rights advocate, we decided that a good way to become economically cooperative would be to pay into the bills and rent according to our income, rather than dividing it equally.
Once we had thought of it, it seemed absurd to not do it. We were both on the anarchist-socialist side. We believed in progressive taxation, welfare, economic responsibility to each other. So why weren't we practicing these values yet in the one place where we could-- at home? We decided to bring the issue to our other roommates for discussion.
How We Set Up Our Economically Cooperative Household
We discussed a couple of methods before settling on one that works for us. We decided that whatever method we chose, it would need to be simple enough to do, and not present any major logistical challenges. We tend to make our household rules with a real respect for human laziness and a reality-based approach to "what's really going to work" (Not just what we wish would work.)
We briefly considered having everyone pay into an account every month, which would then be used to pay all the bills. Each person would pay according to their income. We decided against this idea for two reasons: It would require a new bank account, and since bills change, the account could end up broke, or over-paid.
Ultimately, we settled on what I'll call "percentage-based expense paying," or PEP. With PEP, we total up all of our income and determine what percentage of the total income each person makes, and that becomes the percentage portion of each bill that that person pays.
If you make 15% of the total household income, you pay 15% of the rent, 15% of the utilities, and 15% of any special expenses that come up.
To calculate this, sum up the yearly (or monthly, your choice) income of everyone in the household. For example:
400 + 1400 + 650 + 750 + 2500 = 5700
Then, for each resident, divide their income by the total household income.
400/5700 = 0.07 or 7%
1400/5700 = 0.25 or 25%
650/5700 = 0.11 or 11%
and so forth.
Make sure all the percentages total to 100. If not, adjust your rounding until they do.
If you get numbers larger than 1 on the calculator, you are dividing the total income by the individual income. Switch 'em around.
Let's say the rent for this five-person household is $1200. Person A, who makes $400 and pays 7% of the rent, would calculate her rent this way:
1200 x 0.07 = $84
and other bills can be calculated in the same exact way!
Issues and AdjustmentsIn our household, we have one person who makes significantly more than everyone else. We chose to make a rule that if any person has a percentage over 50%, they would have their percentage adjusted down to 50% and the remaining "percentage points" would be distributed evenly among the rest of the household. So if the top earner has 56% of the income, those extra six points would be redistributed to the other three household members evenly. This makes our system a little more regressive, but it's meant to keep us from scaring away any higher-earning future roomies who might feel paying over 50% of the bills and rent was unfair. This adjustment works for our house, for now, but we can always change it later. A larger househole (6+ people) would likely never have this problem at all.
When we advertise for new potential roommates, we have to explain the system to them. A few get scared away, some actually express that they think the system sucks, or is unfair. But the vast majority of potential roommates are on board with it. Once they understand how it benefits them and the rest of the household, and they understand the system, they support it.
Benefits of PEP/Economically Cooperative Households
Paying bills with the PEP system is a way for us to live our values, care for each other, and fight the stigma associated with income inequality.
Our particular system also works well to make sure that each of us has at least a little bit of disposable income every month. Higher earners still have more disposable income, and lower earners have less, but no one is totally broke anymore. As our incomes change, our rents change. We recalculate yearly or when a big income change happens for one of us.
PEP alleviates some of the pressure on the poorest members of cooperative households. It should be a flexible system, with households able to adapt it to their needs.
Check out my article for the Commonwealth Project.