Over 2 million households receive federal housing subsidies that allow them to rent in the private rental market. The Housing Choice Voucher program, funded by the U.S. Department of Housing and Urban Development (HUD), requires households to pay 30 percent of their incomes toward rent; HUD subsidizes the remaining amount of the households’ rent up to a certain threshold based on area housing costs. This rent policy aims to protect assisted households from excessive rent burdens, but critics of the policy argue that pegging tenant contributions to income creates a disincentive to work. A reform that reduces housing subsidies and increases households’ contributions might therefore have effects on employment. The MDRC Moving To Work study – part of a broader retrospective evaluation of MTW led by the Urban Institute – examines the effects of one such reform on subsidy recipients’ employment rates, average earnings, and housing subsidies.

Agenda, Scope, and Goals

HUD’s Moving to Work Demonstration, launched in 1996, grants 39 selected Public Housing Authorities (PHAs) the flexibility to implement strategies to increase cost-effectiveness, promote household self-sufficiency, and increase housing choice for assisted households. These PHAs have special statutory authority to change many Housing Choice Voucher program rules, including rent rules.

This project evaluates the impact of a reform made by one PHA, the Santa Clara County Housing Authority (SCCHA), using its Moving To Work flexibility. In 2013, federal budget cuts significantly reduced the budget for PHAs operating voucher programs. To avoid having to terminate households from the program, SCCHA chose to increase tenants’ rent contribution from 30 percent of their adjusted incomes to 35 percent of their unadjusted incomes (later adjusted to 32 percent of their unadjusted incomes). It also changed the policy governing what size housing units tenants could rent, which resulted in some households getting vouchers to cover units with fewer bedrooms.

This study examines two primary research questions:

  • How does an increase in tenant rent share affect tenants’ work behavior?

  • How does it affect households’ housing outcomes?

Design, Sites, and Data Sources

The study sample includes the nonelderly, nondisabled adults and households who were receiving Housing Choice Voucher subsidies from SCCHA (in Santa Clara County, California) or one of the three selected comparison PHAs at the time the SCCHA rent reform was implemented in July 2013. These comparison PHAs are the Housing Authority of the County of Alameda (California), the Housing Authority of the County of San Mateo (California), and the San Francisco Housing Authority. The effects of the rent reform are examined for this sample for up to four years after the rent reform. The analysis uses state unemployment insurance wage data to measure employment rates and average earnings and HUD’s Inventory Management System/PIH Information Center data to measure households’ housing subsidies and housing characteristics. The study also uses a combination of analytic methods to assess the effects of SCCHA’s rent reform.