This is one in a series of 15 two-page, evidence-based framing memos on pressing education and social issues prepared by MDRC for the incoming Obama Administration and the new Congress.

Bottom Line

There is increasing interest among policymakers in exploring ways for rental subsidy programs to encourage tenants to work and strive for self-sufficiency. Most experts agree that, to achieve these goals, reform efforts should focus on new rent policies or other financial incentives to encourage work and asset-building. Some advocate for better employment services tailored to the needs of assisted tenants, and some call for work requirements as a condition of getting and keeping housing assistance. These goals have inspired a variety of policies and programs over the years, but convincing evidence of “what works” is scant, making it difficult to decide on the best options.

What Do We Know?

Federal housing assistance reaches many low-income families. At any given time, Housing and Urban Development (HUD) housing assistance (public housing, housing choice rent vouchers, and project-based rent subsidies) reaches over 1.9 million households headed by working-age, nondisabled persons. Of these households, 1.6 million are raising children — nearly as many as the number of families supported by the federal welfare (TANF) program. Over a third of these households have no workers, and most workers earn very little. More than one-quarter (27 percent) receive TANF.

Access to housing subsidies alone does not improve work outcomes. Housing assistance increases access to decent affordable housing (its main purpose) and is an important economic benefit to families receiving it. Some supporters believe it can also improve low-income families’ participation in the workforce. For example, they argue that it can improve housing stability and security so that families can concentrate better on work. Those with portable rent vouchers can also search for housing closer to employment opportunities. However, rent rules that cause rent to increase when earnings and income grow may discourage work effort. The best available evidence from a variety of studies suggests that, on average, housing assistance — by itself — does not promote work; some studies suggest that it may actually reduce employment and earnings, while others find no noteworthy effect either way.

For welfare recipients who are in the welfare-to-work system while also receiving rent subsidies, combining employment services with mandates to participate in them can improve work outcomes. A number of random assignment experiments show that mandatory welfare-to-work programs can increase earnings for welfare recipients who are receiving rent subsidies, suggesting that mandatory employment interventions can be effective with this important segment of the assisted housing population. Less is known about mandatory employment services operating within the housing system and for tenants not on welfare.

The effectiveness of HUD’s main employment intervention, the Family Self-Sufficiency (FSS) program, is uncertain. FSS is primarily used by Section 8 voucher holders. It offers employment counseling and referrals to social services. It also matches any increases in rent (due to increases in earnings) with deposits into special escrow savings accounts. Although a number of studies suggest that the program holds promise, the findings remain inconclusive because of data and research design limitations.

One HUD-supported employment program (Jobs-Plus) stands out as an example of success for public housing residents, based on rigorous evidence. To date, the strongest evidence of an effective employment initiative for HUD-assisted tenants comes from the Jobs-Plus Community Revitalization Initiative for Public Housing Families. Tested in low-work, high-welfare public housing developments in six cities, the program supported and rewarded work by: keeping rent lower that it otherwise would have been if residents worked; providing on-site employment services; and offering neighbor-to-neighbor support for work. Where properly implemented, Jobs-Plus raised tenant earnings by an average of 14 percent per year (relative to a control group), and by 20 percent during the fourth follow-up year of the study. Strong effects were observed across very diverse population groups and cities with very different housing and labor markets, suggesting the program’s broad applicability.

Key Choices and Recommendations

1. Jobs-Plus, already shown to work, may be worth replicating in a limited number (20-25) of high-need public housing developments across the nation.
   
   
2. Better evidence on the effectiveness of the Family Self-Sufficiency (FSS) program and of innovations that build upon its services and asset-building approaches would help policymakers know whether these types of interventions are worthwhile national investments. (A small random assignment test of FSS is currently underway in New York City, as part of a Bloomberg Administration initiative called "Opportunity NYC — Work Rewards.")
   
   
3. Most experts agree that better evidence is urgently needed on whether changing HUD rent rules (e.g., by introducing flat rents with income-based rents as a back-up) would improve work outcomes for tenants, reduce administrative burdens on housing authorities, and improve (or at least not harm) housing authorities’ rent revenues.
   
   
4. The continuing debate over work requirements as a condition of housing assistance (taking a lead from welfare reform) should be informed by carefully built evidence.
   
   
5. Because expertise and resources focused on work outcomes are more the province of the nation’s workforce development (Workforce Investment Act) and welfare-to-work systems, better strategies for cross-agency collaboration — including legislative provisions — to improve such outcomes for assisted tenants should be considered.
   
   
6. As recommended by the recent report of the National Research Council, efforts to incorporate a stronger evidence-building agenda into future reform efforts should follow the path adopted, for example, by the Administration for Children and Families (Department of Health and Human Services) and the Department of Education, which rely more heavily on randomized trials. Studies should also include careful cost-benefit assessments, which are virtually nonexistent in studies of housing-based employment initiatives.

Key References

Bloom, Howard S., James A. Riccio, and Nandita Verma. 2005. Promoting Work in Public Housing: The Effectiveness of Jobs-Plus. New York: MDRC.

Mills, Gregory, and others. 2006. Effects of Housing Vouchers on Welfare Families. Report prepared by Abt Associates for the U.S. Department of Housing and Urban Development Office of Policy Development and Research.

Riccio, James A. 2008. “Subsidized Housing and Employment: Building Evidence of What Works.” In Nicolas P. Retsinas and Eric S. Belsky (eds.), Revisiting Rental Housing; Policies, Programs, and Priorities. Washington, DC, and Cambridge, MA: Brookings Institution Press and the Joint Center for Housing Studies.

Shroder, Mark. 2000. "Does Housing Assistance Perversely Affect Self-Sufficiency? A Review Essay." Journal of Housing Economics 11, no. 4: 381-417.