Federal housing choice voucher program must be modernized
The United States federal government spends roughly $45 billion per year on affordable housing programs, including $20 billion on the Housing Choice Voucher (HCV) program, which provides rental assistance to low-income families.
Though the voucher program theoretically allows families to rent units in any neighborhood in their housing authority’s jurisdiction, most of the 2.2 million families with vouchers currently live in relatively high-poverty, low-opportunity neighborhoods.
My colleagues and I found this puzzling. Research shows that every year spent in a higher opportunity neighborhood during childhood raises adult earnings, increases the likelihood of college attendance and decreases the likelihood of incarceration and teen births. Are families participating in the HCV program predominantly locating in low-opportunity neighborhoods because they actively choose to do so? Or would many families prefer to move to a higher opportunity area but face sizable barriers in the search, leasing and moving processes?
Our recent research shows that offering families assistance with moving to high-opportunity areas can make a tremendous difference for families. Beginning in April 2018, we ran a randomized controlled trial to test the Creating Moves to Opportunity Project (CMTO), a new program designed to reduce the barriers that families face in moving to higher opportunity neighborhoods in the Seattle area. The program provided customized housing search assistance, connections to landlords and financial support to housing voucher recipients.
We found our results striking. Only 14 percent of families receiving standard services from local public housing Authorities chose to move to opportunity neighborhoods—close to the historical average in the Seattle metropolitan area. But 54 percent of families receiving additional basic services as part of CMTO chose to move to opportunity neighborhoods. In other words, the CMTO program has so far increased the share of families who lease units in high-opportunity neighborhoods by 40 percentage points.
CMTO is predicted to increase the lifetime incomes of children who move from low- to high-opportunity neighborhoods at birth by $210,000 and significantly increase college attendance rates, reduce teen birth rates and reduce incarceration rates. Importantly, the program appears to have been similarly valuable for a wide variety of participating families, including families from all racial, ethnic, income, linguistic and education subgroups that participated.Families who moved to higher opportunity areas through the program also report much higher levels of neighborhood satisfaction.
We conclude that many low-income families are concentrated in lower-opportunity areas not because of a strong preference for such neighborhoods but rather because of addressable barriers that currently prevent them from moving to higher-opportunity areas.
We are buoyed by recent policy momentum this direction. Earlier this year, Congress funded the Housing Choice Voucher Mobility Demonstration with $28 million for mobility services, new vouchers and evaluations. This demonstration will help public housing authorities across the country pilot similar programs expanding access to opportunity areas for low-income families. The House added an additional $25 million in funding in June, and Senate appropriators will now consider whether to do the same when they meet this fall.
For those of us anxious to find ways to reduce the intergenerational persistence of poverty, this feels like a very important moment.
Christopher Palmer is an assistant professor of finance at the MIT Sloan School of Management, where he teaches corporate finance.