October 10, 2018 Moving To Work Expansion Research Advisory Committee Background Material for Work Requirements Cohort Discussion

Background on Testing Work Requirements in the MTW Expansion

The concept of implementing a work requirement policy is rooted in two of the three statutory objectives of the MTW program: (1) to reduce cost and achieve greater cost effectiveness in federal expenditures, and (2) to give incentives to families with children where the head of household is working; is seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient. Nine of the current thirty-nine MTW agencies have implemented a work requirement policy at some point, and eight MTW agencies currently have a work requirement policy in place.

Testing work requirements was suggested by the MTW Research Advisory Committee and many respondents to HUD’s Federal Register notice soliciting input on which policies to test in the MTW expansion. Fourteen of the forty responses to the Federal Register notice referenced testing work requirements. (See Appendix A for extracts of the comments submitted pertaining to work requirements.) Most of the 14 comments submitted advocated for including work requirements among the policies to be tested in the MTW expansion, and all acknowledged that the impact of implementing work requirements are largely unknown, suggesting that a rigorous test of work requirements for households receiving housing assistance would fill an important knowledge gap. Most commenters indicated the importance of providing services to residents who are subject to work requirements, such as soft skills training, childcare, job search assistance, and education and training opportunities. Most commenters also emphasized the need to protect residents from a negative outcome, such as eviction. A handful of commenters also noted the importance of rigorous evaluation of this cohort to build the evidence-base and recommended randomized controlled trials and/or alternative designs that allow for a robust comparison group.

Why Test Work Requirements?

Understanding the impact of work requirements has increased importance now due to HUD’s recent legislative proposal, in which all PHAs would be able to implement work requirements mandating that all non-disabled, non-elderly tenants work or participate in “employment-related activities” for a specified number of hours to be established by the PHA. Currently, only MTW agencies have the authority to implement work requirements. In their recent article Work Requirements in Public Housing: Impacts on Tenant Employment and Evictions, Rohe et al identify four arguments typically offered in favor of work requirements tied to assisted housing:

(a) to counteract the negative work incentives inherent to the program;
(b) to increase the financial health of PHAs; (c) to serve more low-income families in need of subsidized housing; and (d) to increase economic diversity and establish an environment of work among residents in low-income housing.

Arguments against the institution of work requirements include the notion that all persons, regardless of means, should have a right to housing; concerns that those tenants that would likely be impacted most negatively by work requirements would be those who are least equipped to compete in the labor force, due to low educational attainment, poor work history, or other barriers to work, such as illness or a lack of decent and affordable childcare; and concerns that work requirements could lead to an increase in homelessness, as families who are unable to comply with the work requirements could be evicted or terminated from receiving assistance and be unable to pay market-rate rents.

What Do We Know About Work Requirements in Assisted Housing?

To gain a deeper understanding of the work requirement policies at the existing set of MTW agencies, HUD staff recently conducted hour-long structured telephone interviews with eight of the nine MTW PHAs that have implemented a work requirement policy. The purpose of these interviews was to understand the PHAs’ motivations for instituting a work requirement, the structure of the work requirement, and how PHAs monitor compliance, develop hardship policies, and have adjusted their work requirement policies over time. Currently, 8 MTW PHAs are implementing a work requirement. A ninth PHA had previously piloted a work requirement policy in a subset of their public housing portfolio which consisted of detached, single-family scattered site houses, but the PHA ultimately abandoned this policy due to continued low occupancy rates across these sites. From the conversations with PHAs that had implemented a work requirement policy, a few key points emerged.

PHAs have different end goals in implementing a work requirement policy, and these end goals influence the design of the policy. Through discussions with the PHAs, two primary motivations for implementing a work requirement surfaced. The first motivation is to promote a level of self-sufficiency that leads to an exit from housing assistance. PHAs in this group often pair their work requirement with a term limit policy. These PHAs tend to want to serve additional families on their wait list, and the twinning of work requirements and term limits is designed to move people through their programs. The other group of PHAs are motivated by wanting to support households in maximizing their engagement in paid employment, but without an expectation that families will exit housing assistance within any particular time frame. These PHAs are typically interested in increasing revenue to the PHA through increased tenant rent contributions, and in increasing the income of work-able households in support of a higher quality of life for the families. Many PHAs in this group note that in their communities, even working full-time at the minimum wage would not allow a household to afford market-rate rents without assistance. These PHAs often have less aggressive targets for families to meet in order to stay in compliance with the work requirement.

All of the PHA staff interviewed noted the critical importance of the availability of services to address barriers to work among residents who would be subject to a work requirement, but PHAs adopted different approaches to providing services. Some PHAs mandate participation in case management or other work-related services, and other PHAs offer case management and other services on a voluntary basis. Many PHAs administer case management in-house with PHA staff, whereas others partner with community-based service providers to offer a range of services to residents. Only one respondent acknowledged that the service package available to residents subject to the work requirement was modest, and that the PHA was not able to offer case management due to a lack of available funding to support that component of the program. The respondent offered the opinion that more extensive services would improve the current implementation of their work requirement policy.

PHAs take various approaches to monitoring compliance with the work requirement policy, but most of the PHAs described compliance monitoring as burdensome. Smaller PHAs did not report the same level of difficulty in monitoring compliance as did large PHAs, and PHAs that reported monitoring only once a year at the annual recertification also identified less burden due to the infrequency of the monitoring. Other PHAs engaged property managers and case managers in monitoring compliance, and several noted that they have streamlined their work requirement policy over time to make it simpler for the PHA to manage. Charlotte Housing Authority, for example, modified their initial work requirement policy to streamline compliance monitoring. CHA had initially designed a phased work requirement policy. In phase 1, the work requirement policy required non-disabled, non-elderly heads of household to work 15 hours per week, and any additional household member had to be employed 5 hours per week. In phase 2 of the work requirement, the requirement would be doubled, requiring non-disabled, non-elderly heads of household to work 30 hours per week, and any additional household members to be employed 10 hours per week. CHA never reached the implementation stage for phase two, however, because they changed the policy in 2016 to mandate 20 hours of employment per week, per household. Anyone in the household could contribute towards meeting the requirement and keep the family in compliance. This modification was made to ease the burden of monitoring compliance with the work requirement policy.

All PHAs report needing significant lead time to prepare residents for the implementation of the work requirement policy. The PHAs stressed the importance of clear and regular communication about the pending work requirement far in advance of the policy start date, and the value of assessing the set of households who would be subject to the work requirement to evaluate their potential service needs in order to meet the work requirement. All of the work requirement policies currently in place apply only to nonelderly, nondisabled households, but many PHAs acknowledge that there are often families or residents that are initially identified as work-able, but who have disabling conditions or family circumstances that greatly impede employment. PHAs often have safe harbors or hardship policies for such households as they seek to establish disability status. For example, the Chicago Housing Authority has a safe harbor provision for households who are waiting for a disability claim to be processed. Until such time as the household has received a response from their claim, they are not subject to the work requirement.

Many PHAs implemented the service component of the work requirement far in advance of the work requirement taking effect and offered services to help households prepare to meet the work requirement once it was implemented. Charlotte Housing Authority, as described below, began offering case management two full years before the work requirement went into effect. Several PHAs also described the importance of understanding the community context in which the work requirement would be rolling out—such as the unemployment rate, the types of positions that were in demand in the local job market, and the kinds of employment services offered by local community-based organizations—in order to best position their households for success once the work requirement was implemented.

The majority of PHAs have evolved their policy over time as they have identified elements of their policy which were more burdensome than anticipated and/or to reflect the changing circumstances in the community. For example, the Housing Authority of Champaign County initially established a policy that required only the head of household to be working, but subsequently expanded their policy to apply to all work-able residents once the work requirement had been in place for five years. Lawrence-Douglas County Housing Authority initially established a policy requiring all able-bodied adults age 18 and older to work a minimum of 20 hours per week, but this requirement was scaled back to 15 hours per week due to a downturn in the employment market a few years ago.

Outcomes of Work Requirement Policies

There is little evidence regarding the outcomes of work requirements policies. There has been one rigorous study of work requirements conducted at the Charlotte Housing Authority (CHA), where a work requirement policy, requiring work-able residents to work 15 hours per week, was implemented across 5 of 15 public housing developments. To support residents in complying with the work requirement, CHA offers case management and allows residents to count work-related activities (e.g. education & training) towards meeting the work requirement. In addition, CHA began offering case management two years in advance of the implementation of the work requirement, and violations of the work requirement were addressed in a phased manner with increasing severity over time. The research team carried out a quasi-experimental study in which residents of 5 developments were subject to the work requirement and residents of 10 developments were not. The research compared the employment and eviction rates among residents subject to the work requirement to the employment and eviction rates among residents not subject to the work requirement. The analysis found that employment increased significantly in the treatment group (those subject to the work requirements) following the implementation of the work requirement, but among those already working when the requirement was implemented, the average number of hours worked did not increase. The number of CHA residents subject to work requirements who were sanctioned was low, and overall, the implementation of work requirements did not increase negative move-outs or evictions. CHA is currently expanding their work requirement policy to apply to all of their work-able households in both the public housing and HCV program.

The researchers conclude their research by cautioning against a wholesale adoption of work requirements across PHAs, due to the challenges of scaling up work requirement implementation in the way that was done by CHA. Specifically, the researchers note the intensive amount of supportive services, and the decision of the PHA to offer those services for two years in advance of introducing the work requirement, the willingness of the PHA to delay the implementation of work requirements for a year due to local economic conditions, and the decision of the PHA to delay enforcement of the work requirement among households identified as potentially having disabilities.

Design Questions for Consideration by the MTW Research Advisory Committee

The conversations with the PHAs who have implemented work requirements has helped to frame some of the key design questions to consider in structuring an evaluation of work requirements through the third cohort of the MTW expansion. Key design questions include:

Goals of the Work Requirement Policy to Be Tested

• What should the goals be of the work requirement policy or policies to be tested? Goals can be defined in terms of residents’ work status, number of work hours, exiting housing assistance, and self-development and goals can be defined from the PHA’s point of view, e.g., in terms of budgets or movement of families into and out of assistance.
• Should HUD define a work requirement policy (or a set of potential policies for PHAs to choose from), or should HUD allow PHAs to craft their own work requirement policy? Should we allow work requirements to be paired with time limits? Should other MTW flexibilities be restricted for this cohort, such as rent reforms?
• If PHAs have the option to design their own work requirement policy, rather than being required to implement a work requirement policy specified by HUD, should PHA be restricted from modifying their work requirement policy during the evaluation period?
• How should we be thinking about the potential overlap of work requirements implemented by an MTW PHA, and any other work requirements that an assisted household might already be subject to based on their participation in another human services benefit program, such as SNAP, TANF, or Medicaid?
• Households that are defined as “work-able” are often defined in this way simply because they have not previously been identified as either elderly or disabled (as per HUD’s definition), but even among the households that are defined as work-able, some families may have significant barriers to employment. Should HUD require PHAs seeking to implement a work requirement policy to first assess their work-able households to understand the relevant barriers to work among the population being served?

Research Questions

• What are the most important research questions to answer with the work requirements cohort?
• Beyond work status, hours worked, and income, what are the most critical outcomes for households that HUD should seek to measure?
• What are the most important PHA-level outcomes HUD should measure?

Research Design, Data Collection and Analysis

• How many PHAs would be reasonable to include in the third cohort testing work requirements?
• Assuming the research design will use random assignment to create treatment and control groups, at what level should randomization occur? At the PHA level? At the household level? Is there some other option, such as random assignment of Assessment Management Projects (AMPs) among public housing residents and neighborhoods among housing choice voucher holders?
• How can HUD ensure, or should HUD ensure, that work requirements can be implemented in both the public housing and the Housing Choice Voucher program?
• Is there another research approach that would produce valid estimates of the impact of work requirements on households and PHAs?
• If HUD allows PHAs to craft their own work requirement, how can outcomes be compared across multiple PHAs?
• How can the research design account for the inevitable variation across communities, such as the employment rate, job growth, types of jobs available, and so on?
• How can the evaluation timing be aligned to account for the potentially long duration of the roll out period leading up to the implementation of the policy?