The Joe Biden administration has made increasing affordable housing one of its main policy objectives. The best place to start is addressing the major shortcomings such as eligibility requirements for federal programs operated by the U.S. Department of Housing and Urban Development (HUD)—the federal program has impact on public housing authorities (PHAs) nationally.
For the focus of our discussion, we focus on New York City. Born amidst the affordable housing crisis of the 1970s, the New York City Department of Housing Preservation and Development (HPD) has been tasked with creating and maintaining the City’s affordable housing stock.
Today, HPD fulfills its charge through housing maintenance code enforcement, property-tax abatements, income-targeted housing lotteries, and the administration of the federal Housing Choice Voucher (HCV) program, commonly known as Section 8. While HPD tries its best to preserve affordable housing, municipal and federal housing policies maintain the status quo of economic disparity between lower-income New Yorkers and the more affluent. According to the U.S. Department of Housing and Urban Development (HUD), housing is considered affordable, if its cost does not exceed 30% of the household’s income. Housing expenses greater than 30% places a financial burden on the inhabitants and hinders their ability to purchase other necessities as well as goods and services. For households receiving HCVs, federal or municipal housing subsidies, their portion of the housing costs can never exceed 30% of income. Thus, the greater a household’s income, the higher its portion of the rent. While rental assistance tied to income appears fair, the problem arises with fixed-income households and an inability to keep pace with inflation.
Due to ever-increasing cost of living within New York’s five boroughs, some individuals in fixed-income households have taken on jobs—whether part-time, seasonal, or as part of the gig-economy, as a way of increasing their quality or standard of living. However, this extra income which may be used to purchase items beyond the essentials, or for establishing personal savings, is penalized. This is because the additional funds affects the eligibility level; it adversely affects the amount of housing assistance, and potentially the Supplemental Nutrition Assistance Program (SNAP) benefits the household receives. Once the additional income is discovered, the tenant’s portion of the rent increases, and their SNAP allotment is lowered.
The tenant is now placed in a precarious position and must decide from the following options: to maintain their employment and increased income and pay a higher share of the total rent; work additional hours to compensate for the increased portion of the rent and exacerbate the problem the following year; or, quit the job and avoid the housing cost increase altogether.
Most people faced with the challenges of taking on an increased share of the rent opt to quit their jobs.
Ironically, the incentive for low-income households to work and improve their quality of life is hindered by the same housing assistance programs designed to help alleviate financial burdens. The impact of these policies not only adversely impacts the head-of-household, but all members of the family. For example, a young adult, eager to start their first job, may be deterred by their parent because the increased family income would elevate their portion of the rent. The problem extends beyond increased revenue from employment; child support and assets are also factored in. Non-court mandated child support payments are often under-reported or un-reported as single parent households managing tight budgets try to conceal income that could increase their share of rent payment.
The lesson learned by HCV and other federal and municipal housing subsidy recipients is that to rise out of poverty or improve one’s living condition comes at a personal detriment. The HCV and other subsidized housing programs were designed to provide quality affordable housing as a first step toward reducing income and economic disparity. However, these subsidized housing programs now sustain a permanent underclass in New York City. Most housing assistance program recipients are ill-equipped to face the housing market if their subsidies are terminated. Transitioning to unsubsidized rental units or homeownership are near impossibilities for many households—the federal and municipal programs also penalize earned income, and personal savings, because of the revenue generated from interest.
To maximize the housing assistance received, subsidized housing assistance recipients try to maintain the status quo be intentionally remaining in a lower-income bracket, knowing that any increased revenue would work against them by adding their rent burden.
Even the cost-of-living adjustment (COLA) awarded to social security, disability, and pension recipients is received with mixed feelings. A benefit check could have more dollars, but the recipient’s rent would also be adjusted to account for higher income. Like Paula Abdul in 1989, the tenant takes “two steps forward and takes two steps back.”
Under the current farcical HPD policies will never solve the affordable housing crisis. If the Biden administration is really serious about tackling this crisis, it must engage in conversations with state and municipal leaders and start addressing the current dilemma—a system that punishes low-income earners when they work had to increase their household’s revenue.
The next article will explore some possible solutions.