Urban Research Monitor
Housing-Welfare Reform Linkages: How Much Do We Know?

The Home Front is a collection of studies about different aspects of the interrelationship between housing and welfare policy. Sparked by a 1997 Johns Hopkins symposium on this issue, editor Newman describes the book as "a first effort to critically analyze what we know about this issue and what we need to know to fashion a coherent social policy." The essays by housing and welfare scholars present new research on the projected impacts of welfare reform on housing, distill lessons from past research and demonstration programs concerning self-sufficiency initiatives, and examine the particular challenges that welfare reform presents to public housing authorities.

In the lead article, Newman and Johns Hopkins colleague Joseph Harkness describe the results of a simulation they developed to project the effects that national welfare reform might have on several housing-related issues: the employment and income of AFDC households receiving public assistance, the HUD budget for housing subsidies, and the housing cost burdens of unassisted households. The researchers based their simulation on a "set of programs that have actually defined welfare reform for at least the last 15 years, namely, state AFDC waiver programs." These waiver programs later served as working models for welfare reform policies of other states. To ensure a breadth of approaches, the authors used two state programs they considered conservative—the Family Transition Program (Florida) and the Virginia Independence Program—and two state models considered moderate to liberal-To Strengthen Michigan Families and Vermont's Welfare Restructuring programs.

Before the programs, 8 percent of the family heads on welfare in these four states were working in unsubsidized jobs. In the simulation, the proportion of working families increased after 5 years from a low of 10 percent under the Michigan plan to a high of 14 percent in Florida. Monthly income in the simulation rose by 2 percent in Michigan and 4 percent in Vermont but fell by 8 percent in Florida and 21 percent in Virginia. The Michigan and Vermont programs increase the out-of-pocket rent expenses of these families. Projected nationally, this change would produce budget savings for HUD of between $39 and $69 million per year. The tenant rent burden would decrease under the Florida and Virginia programs, producing an estimated budget increase for HUD of $172 to $424 million per year. Projecting an intermediate scenario—that half the states would opt for the more conservative programs and half for the more liberal program models—the simulation forecasts a net cost increase to HUD of 0.5 to 1.5 percent of total budget.

The simulation found that welfare reform would bring only small changes in the already high rent burdens of unassisted households. The researchers point out that these households were already averaging one-half of their income for rent, about two-thirds more than the 30- percent-of-income rule of thumb for affordable housing under HUD programs.

Previous                 Contents                 Next