In collaboration with the John D. and
Catherine T. MacArthur Foundation’s How
Housing Matters Initiative, Spotlight
on Poverty and Opportunity will be running a series of commentaries
for the next two months exploring the relationship between housing and three
topics: health, economic opportunity, and education. Please be sure to read
Michael Stegman’s “An Introductory Note” to learn more.
This commentary is the sixth installment in
the series, which is entitled “How Housing Matters to Families and Communities.”
rental housing assistance helps more than 4.5 million households access
decent-quality, affordable homes. The affordability and housing quality
provided through rental assistance offer a safe and stable environment in which
to raise healthy children and allow the elderly and disabled
to live independent lives.
the success of rental assistance as a housing program, some worry that it may
inadvertently depress work effort, a concern highlighted by Deven Carlson in
his recent commentary for Spotlight. While there is reason to be concerned about
short-term effects, most studies have found that rental assistance has no long-term
impact on earnings. Indeed, with some
modest enhancements, it’s quite possible that housing assistance could actually
boost economic opportunity.
research conducted by Carlson and his colleagues found that, among low-income
households in Wisconsin, the receipt of a Section 8 housing voucher led to an
initial decline in earnings of about ten percent. This earnings impact faded
over time and eventually became insignificant. In contrast to their findings on
earnings, the researchers found no statistically significant impact on
of an initial negative impact on earnings fading away to insignificance is also
evident in other research studies. For example, it shows up in a study using an experimental design
to look at the receipt of housing vouchers by families receiving welfare
assistance in six cities and a study of women receiving project-based
rental assistance - a
different form of federal rental assistance - using the Panel Study of Income
Dynamics. The one major outlier is a study of housing voucher recipients in Chicago, which found that declines
persisted over time.
In sum, the
weight of the evidence suggests that rental housing assistance may have
short-term effects on earnings, but these impacts generally do not persist.
results surprise both economists and practitioners, but for different reasons. Economists
generally assume that government programs that have the effect of boosting available
income lead to reductions in recipients’ incentives to work. Economists also
point to the requirement that residents of subsidized housing pay 30 percent of
their income for rent—a so-called “marginal tax” that should also reduce work
practitioners focus on the stability provided by rental assistance to argue
that, if anything, rental housing assistance ought to boost employment and
earnings. If one is worried about where to sleep at night, it must be difficult
to focus fully on getting and keeping a job. Moreover, housing vouchers have
the added benefit of helping families move closer to a new work site.
In sum, economists
predict a negative impact on work, while practitioners predict a positive
impact, but the results suggest no long-term impacts.
likely explanation is that there are attributes of housing assistance that both
promote and hinder work effort and, over the long-term, these basically offset
each other. The result is no persistent long-term impact.
explanation is correct, it raises the intriguing question of whether one might
be able to modify rental assistance to somehow neutralize the work-hindering
features, allowing the work-promoting aspects of housing assistance to
words, with some modest program enhancements, could housing assistance actually
become a platform for greater economic opportunity? While the evidence base is still
accumulating, there are a number of good reasons to think so.
example, a demonstration
known as Jobs Plus showed that an initiative combining financial incentives for
increased earnings with linkages to services and peer reinforcement could lead
to positive earnings gains among residents of public housing.
initiative called the Family Self-Sufficiency (FSS)
also reported positive results. Currently assisting about
55,000 households in the housing voucher and public housing programs, FSS offers
participants a work incentive and asset-building tool in the form of an escrow
account that grows as participants’ earnings increase and case management to
help them set goals and access services to overcome barriers to work.
are two important next steps to extend the evidence base. The first, which HUD has
already begun, is to launch a rigorous random assignment evaluation of FSS to
verify its effectiveness. If the evaluation confirms its positive impact, FSS
should be scaled up in its current form to help more households make progress
toward economic security.
second step is to study whether a low- or no-cost intervention could be
designed that would allow HUD to incorporate FSS-type features into the very
fabric of rental assistance and offer them to everyone in subsidized housing.
Reid Cramer and I have developed one approach for doing so and would urge
that it be tested rigorously against other alternatives to evaluate costs and
assistance is not an employment program. But that’s no reason to ignore
employment impacts. Let’s take our
knowledge base to the next step in this critical area.
To print a PDF version of this document, click here.
Jeffrey Lubell is executive director of the
Center for Housing Policy.