Taking Asset Building and Earnings Incentives to Scale in HUD-Assisted Rental Housing

In the United States, housing assistance is not an entitlement. Despite annual federal expenditures in excess of $30 billion for housing subsidies distributed to roughly 4.8 million households, millions of eligible families with low incomes and high housing costs do not receive any support. Some families have applied for assistance from their local housing authorities but must wait for their names to come to the top of the list; others have not applied but may pay large shares of their income for rent, reducing available funds for basic necessities, such as food and health care. To ensure that our limited federal housing resources are available to assist as many families as possible, we should be actively searching for innovative ways to encourage existing subsidy recipients to build assets and make progress toward economic security. By helping families take advantage of the stability that federally-subsidized housing provides as a foundation for income and asset growth, we can free up existing housing subsidies for other families in need.

In this pursuit, we believe that the existing rent formula for subsidized housing, which requires families to pay 30 percent of their adjusted income for rent, is a critical asset that can be leveraged to promote both asset building and economic security. Currently, HUD’s Family Self Sufficiency (FSS) Program—a small initiative serving about 50,000 families in the housing voucher and public housing programs—illustrates this potential well. When program participants increase their earnings, the resulting increase in rent is placed into an escrow account which they can receive after successfully completing the program. With support from case managers who provide service referrals, participants identify a series of goals to define success, which may include any number of personal goals as well as the required goals of becoming employed and independent of TANF assistance. Through the combination of case management support and the work incentive provided by the presence of an escrow account, FSS participants have been able to increase both their earnings and assets, making progress toward economic security.

Given the strong program design, existing authorization, and a twenty-year track record of success, it makes sense to capitalize on opportunities to strengthen and expand the FSS program on its own terms. This could help tens of thousands of additional families in the short term.

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