National Housing Law Project Housing Law Bulletin

Funding for rental housing assistance has traditionally flowed directly from the Department of Housing and Urban Development to the 3,400 public housing authorities (PHAs) throughout the country. States and local governments have played only a minor role in the provision of federally funded housing assistance to poor families.

A proposal in the President's budget to provide 50,000 new housing vouchers to families making the transition from welfare to work would begin to change this. The program would establish new partnerships between housing agencies and state and local agencies working to promote and implement the new state welfare laws and help states meet the goal of moving families from welfare to work. In conjunction with state and local welfare agencies and local entities administering the new federal welfare-to-work funds, PHAs would compete for the vouchers. PHAs, welfare agencies, and administrators of welfare-to-work grants would collaborate to design a program that would meet their particular needs. For the first time, federally funded housing resources would be provided specifically to complement and further the goals of new state welfare laws.

Only families that currently are eligible for or have received Temporary Assistance to Needy Families (TANF) in the last year and that have housing needs related to their ability to obtain or retain employment would be eligible for a voucher. Families would use these vouchers to rent housing on the private market; public housing is not involved. (A family with a voucher typically pays 30 percent of its income for rent. The housing authority pays the difference between the family's rent payment and a "reasonable rent standard" for housing.) Beyond this, the combination of state and local welfare agencies, employment agencies, and public housing agencies competing for these vouchers would have flexibility to design programs that meet local needs and support local welfare reform strategies to help families achieve economic self-sufficiency. These vouchers could be awarded for such purposes as providing incentives for families to move from welfare to work or to retain employment, enabling families to move to where job opportunities and transportation networks to job opportunities are located, and enhancing coordinated economic development initiatives.

The Need

Studies indicate a substantial proportion of families that moves from welfare to work has difficulty retaining employment. Researchers who have tracked families over time have found, depending on the study, that between 20 percent and 60 percent of families that moved off of AFDC returned to AFDC within two years.² A recently completed study by the University of Maryland Department of Social Work found that one-fifth of families who left Maryland's cash assistance program between October 1996 and March 1997 returned to the program within six months after leaving.³ Two of the factors that contribute to this job instability are difficult commuting regimes and high housing costs.

Job access problems. Current and former welfare recipients tend to be concentrated in high-poverty areas where, in many cases, job opportunities are limited. High housing costs often make it difficult for these families to move to areas that have lower rates of unemployment that are closer to where jobs are located. If parents have to travel long distances and take several buses to get to their job, they may face significant difficulties in finding and retaining employment. Such access problems can be particularly difficult for poor families living in rural areas. Families without cars or those living several hours from areas with good employment opportunities may be unable to find a job. Moreover, those with a job may have difficulty getting to work if their car breaks down. As the length of the workday increases due to time-consuming commutes, child care costs rise, and children may be left unsupervised for longer periods of time.

Housing cost burdens. Housing costs generally consume more of a low-income family's budget than any other item. More than 40 percent of working poor households with children pay at least 50 percent of their income in rent.⁴ Such high housing costs can leave families with little disposable income to meet employment-related expenses such as transportation, unsubsidized child care costs, and additional clothing that may be required for work. For example, in the nation's 20 largest metropolitan areas, a single mother with two children who works full time throughout the year at $6 an hour would, on average, pay over two-thirds of her income in rent for a two-bedroom apartment at the "fair market rent."

Due to these high housing costs, a large proportion of low-wage working families are unable to afford housing of their own. If these families are forced to move from one relative or friend to another or, even worse, if they end up homeless, they may face major hurdles in securing and retaining employment. By helping families afford their own housing, the provision of vouchers could protect them from having to move and potentially disrupt their employment.

The Administration's proposal would enable welfare agencies and housing providers to reach out to families whose employment prospects are clouded by problems of job access and lack of affordable housing.

Rewarding and Encouraging Partnerships and Innovation

Under this proposal, state and local welfare agencies, entities administering welfare-to-work funds provided in last year's Balanced Budget Amendment, and housing authorities would have a great deal of discretion over the program's design. Housing vouchers could be used in a number of ways, as selected by state and local welfare agencies and PHAs, to provide incentives and supports for families making the transition from welfare to work.

Providing incentives to work. Housing vouchers could be used as a reward for families that have successfully obtained a job, thus providing additional incentives for families to move into the workforce or to remain employed.

Solving job access problems. It is often difficult for a family that receives a voucher from one PHA to use it in a location closer to available jobs or transportation networks in an area administered by a different PHA. Under this proposal, PHAs in high-poverty areas could link with PHAs in areas with good job opportunities and transportation networks.
A mother from a high-poverty neighborhood could work with a job training and employment services agency in a high-growth area in her search for a job. If successful in her job search, the mother could be given a voucher to help her move closer to her new place of employment.

Meeting families housing needs. Welfare agencies, job training providers, and employers often are able to identify situations in which long commute time or housing instability undermine a families ability to make the transition from welfare to work or to retain employment. But if the agency or employer directs the family to the local public housing authority, it takes an average of 26 months between the time of application and receipt of a housing voucher or certificate.⁵ In many areas, the waiting lists are so long that they are closed to new applicants. Under the proposed initiative, welfare agencies, current and would-be employers and training providers could directly refer to public housing authorities families whose unstable housing situations or long commute times are affecting their ability to find or retain jobs.

Connecting with potential employers. In certain areas, employers face a shortage of low-skilled labor. An employer facing a labor shortage could make a commitment to hire a certain number of parents moving from welfare to work, and the local housing authority could commit to providing these new hires housing vouchers so that they could move closer to their new jobs.

Establishing links to housing producers. In certain areas, even if a mother has been offered a job and a voucher, she may be unable to move near her prospective place of employment due to an insufficient supply of housing at a reasonable cost. Vouchers could be administered by a state housing agency that also administers the low-income housing tax credit. The welfare-to-work vouchers could be tied to new units financed through federally or state-funded production programs, such as the low-income housing tax credit and HOME block-grant program, and located in areas with employer need and a high demand for low-skilled labor. Links with housing producers and employers could also contribute to economic development efforts in such areas.

Leveraging state resources. The competition could give priority to PHAs in states that agreed to match the assistance provided by the federal government, thereby leveraging additional resources for housing and related social services. A state could match the federal dollars provided on a one-for-one-basis, thus increasing the number of families served. State-funded supportive services, such as mobility and employment counseling, could be combined with the federally funded housing assistance. Two states, New Jersey and Connecticut, as well as San Mateo County, California, have recently established housing allowance programs for certain families making the transition from welfare to work. Federal welfare-to-work vouchers could help these states and localities expand such programs and encourage others to launch their own state-supported housing assistance efforts targeted at families making the transition.

Building on successes. Prior experience indicates that coordinated efforts among housing, welfare, and other service providers yield positive results. Under the Family Unification program, for example, housing and child welfare agencies have successfully coordinated efforts to provide housing assistance to families whose children are determined by the child welfare agency to be at imminent risk of being placed in foster care because of housing problems. The Family Unification program has already served to reunite or keep together close to 10,000 families.⁶ Other PHAs that have established Family Self-Sufficiency programs or launched a Moving-to-Work demonstration have established linkages with providers of supportive services. PHAs that have been successful in offering families the needed supports and resources necessary to transition into the workforce, however, have been unable to expand these programs due to funding constraints. The provision of the welfare-to-work vouchers could provide such PHAs the opportunity to reach out to new families with employment-related housing needs, while building on successful programs.

Conclusion

More TANF recipients are served by HUD-financed voucher and certificate programs than any other federally funded housing program, including public housing. By encouraging welfare agencies, housing authorities, local developers, and employers to expand or build new partnerships, this proposal could provide important new lessons concerning how best to coordinate these housing resources with state efforts to move families from welfare to work. Important lessons also could be learned about how to link state and local efforts to the provision of rental housing assistance, production of new low-cost housing, and economic development initiatives. Successful programs could serve as models for state welfare agencies and housing authorities as they continue the push to move more people from welfare to work, and to help families that have already moved into the workforce to stay employed and attain economic self-sufficiency.
 

¹  This article was prepared by Jennifer Daskal and Barbara Sard of the Center on Budget and Policy Priorities, 820 First Street, N.E., Suite 510, Washington, DC 20002, Tel. (202) 408-1080.
²  See, e.g., Daniel R. Meyer and Maria Cancian, Life After Welfare: The Economic Well-Being of Women and Children Following an Exit from AFDC, Discussion Paper 1101-96 (Institute for Research on Poverty, Univ. of Wisconsin, Aug. 1996), at 3. The data are mostly based on families who left AFDC during the late 1970s or 1980s.
³  Maryland Department of Human Resources and University of Maryland School of Social Work, Life After Welfare: An Interim Report (Sept. 1997), at 35.
⁴  Center on Budget and Policy Priority (Washington, D.C.), Tabulations of the American Housing Survey, 1995. Any household with earned income greater than or equal to half-time earnings throughout the year at the minimum wage is defined here as "working."
⁵  Data based on the national average wait for receipt of assistance through the Section 8 voucher and certificate programs. United States Department of Housing and Urban Development, Office of Policy Development and Research, A Picture of Subsidized Households, Vol. 11 (Dec. 1996), at 72.
⁶  Debra J. Rog, Ariana M. Gilbert-Mongelli, and Ezell Lundy, The Family Unification Program: Final Evaluation Report (CWLA Press, Washington, D.C., 1998), at 3. For Fiscal Year 1997, numbers are based on the Notice of Funding Availability for FY 1997.