Panel:
Assessing the Effects of Alternative Rent Policies for Housing Subsidy Recipients on Work and Other Outcomes
(Housing, Community Development, and Urban Policy)
*Names in bold indicate Presenter
This panel will discuss three studies sponsored by the US Department of Housing and Urban Development (HUD) designed to test alternatives to HUD’s typical rent policies for low-income families receiving housing subsidies through the Section 8 Housing Choice Voucher (HCV) program or public housing. Like other important income transfer programs, these housing benefits are means-tested, and higher subsidies are paid to families with lower incomes. Tenants contribute about 30 percent of their adjusted income (after some deductions) toward their rent (and utilities). Using HUD funds, local public housing agencies (PHAs) cover the remaining costs, up to certain limits based on local area rents, or subsidize the cost of providing units to public housing residents. This percent-of-income structure serves an important safety net function, ensuring that families in greater need receive greater support. But it also means that tenants who increase their earnings pay more in rent, limiting how much they gain in disposable income. Does this discourage tenants from working? Widespread concern that it does has made “rent reform” an important and contentious public policy issue for decades. Yet no strong evidence exists on whether alternatives to HUD’s traditional rent policy for this multi-billion-per-year subsidy system would change how much tenants work and earn, or affect their overall economic security, material hardship, and well-being.
The three papers on this panel will discuss alternative models that are the focus of careful evaluations. The first model attempts to “make work pay more” by allowing voucher holders to not report any income increases to the housing agency for up to 3 years, dropping the implicit marginal “tax” on increased earnings from 30 percent to zero during that time. A randomized trial is testing the effects of variations of that approach in four cities. A second policy, tested in one housing authority and evaluated with a comparative interrupted time series design, takes an opposite approach: it increased the tenant contribution rate (and, hence, the marginal tax on increased earnings) to 35 percent. A third set of policies, which is at a planning stage, will be tested with coordinated randomized trials in 10 cities. The new policies include “tiered rents,” which allow tenants to increase earnings within set income bands with no rent increases until they cross into a higher band, and “stepped rents,” which progressively increase over time, regardless of income (and tenants’ ability to pay). In certain respects, stepped rents mirror time-limited welfare reform policies. The first two papers will discuss available impact findings available to date on employment, earnings, housing subsidies, and other outcomes. The third paper will present the rent reform policy designs, the policy rationale, and evaluation plan. The discussants will examine the tradeoffs associated with each model, drawing comparisons to HUD’s traditional rent policy as well. They will also comment on the quality of the evidence these studies have produced so far, the policy implications of that evidence, and what directions future research should take.
