Journal Issue: Children and Poverty Volume 7 Number 2 Summer/Fall 1997
For more than half a century, the federal government has provided housing assistance to low-income households with the overarching goal of providing "a decent home and suitable living environment for every American family." The majority of federal housing assistance for low-income renters is through either project-based or household-based subsidies. Project-based subsidies include low-rent public housing and Section 8 construction or rehabilitation, through which the federal government subsidizes the rents of apartments or housing units built by private developers. Household-based subsidies provide rent subsidies to families to use in existing privately owned apartments as long as the rent is below the fair market rent, which is set at approximately the 45th percentile of the local rents for units that have been on the market during the previous two years. Both types of subsidies are designed to improve the quality of housing and to reduce housing costs to 30% of net family income. About 70% of housing assistance goes to recipients of project-based subsidies. Recently, however, the vast majority of new authorizations for rental assistance have been for Section 8 household-based subsidies because it is considerably cheaper to subsidize a family in an existing unit under a voucher program than to subsidize new construction or substantial rehabilitation.
Like the Food Stamp Program (FSP), housing assistance programs target one of the most fundamental of all human needs—a place to live. Unlike the FSP, however, housing assistance is not an entitlement: when the funds allocated to housing assistance are used up, eligible households are placed on a waiting list. In general, the system assigns highest priority to households with the following characteristics: (1) very low income, defined as income that does not exceed 50% of the median income in the local area; (2) housing costs that are more than half of family income; and (3) substandard housing.
To the extent that the goal of housing assistance is to provide decent and suitable housing for all, evaluating program outcomes depends on how criteria are defined and on whether families, especially those with children, live in housing that meets these criteria. Standards have been established for housing programs, but the relationship of these standards to child well-being has not been studied. Yet, housing assistance, perhaps more than any other program considered in this article, has a broad range of potential positive and negative outcomes.Program Coverage
One of the most important factors inhibiting the effectiveness of housing assistance is the lack of funds to serve all eligible families. Estimates from the 1993 American Housing Survey indicate that rental housing assistance serves only about 26% of eligible very-low-income households (household income not greater than 50% of the local median income) and 6% of low-income rental households (household income between 50% and 80% of an area's median income).66 In 1995, only 31% of AFDC households received any housing assistance.67 A more recent Conference of Mayors report based on 29 cities found that applicants for public housing waited for 19 months on average from the time they applied to the time they received assistance, and for Section 8 housing certificates, the average wait was 31 months.68 Households with children comprise 41% of unsubsidized very-low-income households with priority.69 In short, there is a huge unmet demand for housing assistance, especially among low-income households with children.Achievement of Program Goals
Among recipients, housing assistance reduces the prevalence and magnitude of housing problems, but does not resolve them completely. In 1989, approximately half of recipient households experienced one or more housing problems—defined as either substandard housing quality, over-crowded housing, or excessively high housing costs—compared with almost 80% of eligible households not receiving assistance.69
Affordability of housing is the major housing problem experienced by low-income households. Consistent with the program's goals and design, housing subsidies reduce the cost of housing of recipient households compared with eligible households not receiving assistance.69 Nonetheless, 45% of subsidized households reported out-of-pocket housing costs in 1989 that exceeded 30% of their income. This finding likely reflects the choices of households to spend more than 30% of their income on housing or, perhaps, some underreporting of household income. In contrast, all eligible and unserved households with priority (by definition) and more than 60% of other eligible very-low-income renters had housing costs that exceeded 30% of household income.
Housing assistance also leads to a lower prevalence of substandard or overcrowded housing conditions. Only 13% of subsidized households live in substandard or overcrowded housing as compared with 26% of very-low-income households not receiving assistance.69 Physically substandard or overcrowded housing is more prevalent, however, among large families regardless of program status.Indirect Program Outcomes
Housing status is directly related to families' living standards, health, safety, education, and economic prospects. The cost of housing determines how much is left from a limited income for expenditures on food, clothing, and other items, and housing may also affect health, family formation, and stability.70
A common criticism of project-based housing is the concentration of poor and minority families in economically depressed, violent, and physically deteriorating inner-city neighborhoods. This concentration of poor families can produce joblessness and general isolation from the economic mainstream, segregation, substance abuse, poor school performance, teen parenthood, and crime.71 Current housing assistance policy options recognize these negative effects of project-based housing and focus on the provision of household-based assistance in the form of rental certificates and vouchers. Presumably, the use of certificates and vouchers would enable poor families to move out of areas with high concentrations of poverty. However, empirical evidence on the success of certificates and vouchers is mixed. Although families receiving certificates and vouchers generally find housing in areas that are less poor and less segregated than public housing neighborhoods, many of these families continue to find housing in racially segregated and poor neighborhoods. Several factors are responsible for these location choices, including racial discrimination in the rental housing market, limited housing search experience and resources among families receiving assistance, and a limited supply of units.71
Recent housing initiatives that have promoted residential mobility by combining vouchers with additional services such as outreach to landlords, participant screening, and housing search counseling seem more successful. Findings from these initiatives suggest improved opportunities for recipients: less segregated housing, higher employment rates, better success in school for children, higher graduation rates and college admission rates, and a higher level of satisfaction with life.71-73
One unanswered question about housing voucher programs is the extent to which they cause rents in the private market to rise in response to the increased demand for housing. Available evidence suggests that vouchers had relatively small effects on market rents, but this conclusion may not apply in all housing markets or for large-scale programs.74
Like food stamps, housing assistance acts as both an income supplement and an inducement to consume more of the subsidized goods. Without housing assistance, housing costs can have detrimental effects on children by squeezing household budgets and reducing expenditures on other necessities. Overall, it is estimated that housing assistance can effectively double family cash income for AFDC households, and this may result in improved outcomes for children.74 Moreover, studies of both public housing and Section 8 programs indicate that recipients consume more housing and fewer other goods than they would with a cash equivalent.75,76
One issue to address in assessing federal housing assistance is the extent to which the program creates incentives for households to work less. Rent subsidies decrease as household income increases, until 30% of income equals the fair market rent and the housing subsidy disappears altogether. Families living in public housing can never be evicted, but as their income goes up, rents also increase, until some project-specific, maximum level is reached. Although almost no evidence is available on the specific work disincentives of housing assistance, because most families that receive housing assistance also receive other support programs, it is likely that the combined effects of benefit reductions across a number of programs would present an important work disincentive.76