NCPA - National Center for Policy Analysis

Subsidized Housing Undercuts The Working Poor

July 1, 1996

Federal housing policy punishes the hard-working poor by denying them a way to socially distance themselves from those on welfare, according to Harvard University professor Howard Husock.

  • Building government housing in higher income neighborhoods or giving housing vouchers to poor families on welfare provides them with better housing than the working poor.
  • Such policies threaten to introduce the social problems of welfare families into other neighborhoods, while giving those families no incentives to solve them.
  • Providing quality housing with many amenities for the nonworking poor rewards need, not achievement.

The $8 billion spent annually on federal housing programs actually helps reduce the supply of cheaper, unsubsidized and privately owned housing for the working poor by encouraging demolition of older housing, stringent building codes and the rehabilitation of low-cost housing for rent-subsidized tenants.

  • Housing rehabilitation in programs using federal tax breaks or guaranteed rental income for owners costs about $100,000 per unit.
  • In contrast, City Homes, Inc., in Baltimore, using "minimal rehabilitation" that includes fewer amenities, renovated 243 row houses for an average of $12,000 each between 1987 and 1994.
  • By altering and relaxing housing regulations, San Diego has encouraged construction of new single room occupancy hotels over the past 10 years, with 2,400 new units and 370 substantially renovated units.

Only 29 percent of families eligible for housing subsidies actually receive them. The efforts of these lower-income working families to move up to better housing and protect the value of their housing investment helps maintain the social fabric of poorer neighborhoods.

Source: Howard Husock, "Repairing the Ladder: Toward a New Housing Policy Paradigm," Policy Study No. 207, July 1996, Reason Foundation, 3415 S. Sepulveda Blvd., Suite 400, Los Angeles, CA 90034, (310) 391-2245.


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