The Importance of Housing Benefits to Welfare Success

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Introduction

Housing assistance can make a significant difference in the economic well being of low-income families. Like other families, housing costs are the single largest budget item in a lowincome family’s budget. However, the typical rent burden is much higher for poor than for nonpoor families. For example, the average fair-market rent in the US in 1999 was $579 per month, about half of a full-time worker’s gross pay if she earns $7 per hour (the median earned by families that left welfare in the 1997–1999 period). Those fortunate enough to have government housing assistance would typically pay 30 percent of their income for rent ($363), leaving them with an additional $216 per month for other family expenses.

Housing assistance may come in the form of a voucher that helps families to pay rent for a private sector unit, a subsidized housing unit for which building owners receive government payments to reduce tenants’ rents, or a public housing unit which is owned by the government. Unlike many other income support programs, housing assistance is not an entitlement. Benefits typically have been targeted towards families with the greatest needs. While housing assistance is sometimes coordinated with local welfare offices, it is largely administered by local housing authorities and independent of state and local welfare programs such as Temporary Assistance for Needy Families (TANF).

To date we know relatively little about the role of housing assistance in leaving welfare. Some state surveys of welfare leavers have reported the incidence of housing assistance. A synthesis of these results in nine states showed that the receipt of housing assistance six to twelve months after welfare exit ranged from lows of 14 and 17 percent in Illinois and Washington, respectively, to highs of 53 and 60 percent in Massachusetts and Georgia, respectively (Acs and Loprest 2001). Nagle (2001) also confirmed that about half of families that left welfare in Massachusetts received housing assistance, and another third were either receiving or on a waiting list for housing assistance when interviewed six to fifteen months after leaving welfare. Wide variation in the receipt of assistance by low-income families across the states has been documented in various studies (see, for example, Kingsley 1997). Historically, the federal government has allocated housing assistance on the basis of how aggressive local housing authorities and developers have been in seeking and using it as well as on the basis of estimated need. Since these allocations do not adjust over time, states vary widely in the degree to which the assistance they receive matches their current share of lowincome households. States also vary significantly in the mix of the three programmatic forms of assistance they receive.

This brief examines the incidence of housing assistance for a nationally representative sample of families in 1999, focusing on receipt by recent welfare status. The analysis compares housing assistance receipt among current and former welfare recipients, as well as families not on welfare in the previous two years, and examines the impact of housing assistance on employment, income, housing costs, and other outcomes of well-being.

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