The current system of low-income housing assistance can impose a range of unintended consequences on families and greater society. Its excessive reliance on unit-based housing assistance—which requires that recipients live in public housing projects or private subsidized projects—drives up the costs, denies families choice in the type of housing they receive, and results in a high concentration of poverty. Moreover, the current system is arbitrary, providing large subsidies for some families while excluding other families with similar needs and composition.
A proposed tenant-based housing system would allow families to receive a voucher that can be applied to any unit that meets federal standards. A complementary phase-out of public housing projects would offer tenants the choice between remaining in their current homes or moving to a new unit of their choice; private housing project tenants would be made a similar offer. This approach would increase economic integration, reduce the concentration of poverty, and lower the cost of public housing, allowing the U.S. government to serve an additional 1 million families on the same budget.
This paper argues that the two most serious structural shortcomings of the current system of low-income housing assistance are 1) its excessive reliance on unit-based assistance and 2) its failure to provide housing assistance to all of the poorest eligible families who ask for help. Evidence on the performance of housing programs indicates that unit-based assistance has a much greater cost than tenant-based assistance for providing equally good housing, and it needlessly restricts recipient choice. Unit-based assistance has no advantage over tenant-based assistance to offset these disadvantages. The nonentitlement nature of the current system is inconsistent with plausible assumptions about taxpayer preferences. The paper argues for a transition to an entitlement housing assistance program that relies exclusively on tenant-based assistance. It describes concrete actions that would achieve this result without spending additional money, and it shows that the major objections to these proposals are inconsistent with the evidence on program performance. The proposed transition would benefit most current recipients of housing assistance, and the reforms would give those taxpayers who want to help low-income families with their housing more for their money. After the transition is complete, millions of additional families would receive housing assistance that enables them to occupy better housing in nicer neighborhoods, and to consume more of other goods. Millions of other families that would have received unit-based assistance with the continuation of the current system would live in housing, neighborhoods, and locations that they prefer to their units in subsidized projects.