The voices of Urban Institute's researchers and staff
July 14, 2015

We knew housing vouchers worked-- we just didn't know how well

A major new HUD study has found that housing vouchers are overwhelmingly the most effective program for reducing homelessness. But that’s not news (see here, here, and here).

What we really learned from The Family Options Study is how well vouchers work—not only for stabilizing housing, but also for improving the lives of poor families in other crucial ways.

By helping families pay rent (the largest part of household budgets), they are less likely to experience economic stress and food insecurity. Further, families are stronger. Vouchers significantly reduced rates of domestic violence and drug and alcohol dependence. Families with vouchers were less likely to have their children removed, either informally in placements with friends or family or by the child welfare system for abuse or neglect. Finally, children are less likely to change schools often, which is important because frequent moves could lead to students falling behind academically. In other words, housing matters for much more than housing.

The Family Options Study, conducted by Abt Associates and Vanderbilt University, is the most comprehensive study of family homelessness programs ever undertaken. It examined the impact of four options for addressing family homelessness: housing subsidies (usually housing vouchers), project-based transitional housing, rapid re-housing, and usual care (a mix of emergency shelter plus whatever housing and services programs families accessed on their own). Researchers measured the programs’ effects on housing stability, income, food insecurity, and health outcomes for adults and children. The study is significant in its size (2,282 families enrolled across 12 communities), its rigor (the investigators used a randomized controlled trial, the gold standard for social policy research), and its importance for policymakers and practitioners.

Vouchers work and they work well. So why haven’t we ended homelessness?

The most recent count found that 67,000 families experience homelessness on a single night (about 156,000 over the course of the year). The voucher program serves more than 2 million households. A marginal increase either in the number of new vouchers or in the targeting of existing vouchers to homeless families would be sufficient to provide vouchers to all these families. Indeed, since 2008, Congress has authorized 78,000 special-purpose vouchers for homeless veterans, and the number of homeless veterans has fallen by a third.

Unfortunately, there is a nationwide shortage of vouchers. Only one of every four people who is eligible for vouchers receives them. And the number of available vouchers is shrinking, not growing. Why is Congress being so stingy with this evidence-based intervention? Let’s review the three main arguments policymakers usually present against vouchers. 

  1. Increasing vouchers specifically targeted to families in shelters could create perverse incentives. Policymakers are concerned that more poor families will go to shelters just to improve their chances of getting a coveted (and much needed) voucher. There is some evidence that these concerns are unfounded, but it likely depends on implementation. Empirical research shows that the slight increase in families entering shelter to receive a voucher is more than offset by the number of families able to permanently leave shelter with the help of a voucher.   
  2. Policymakers are also concerned that vouchers create work disincentives and welfare dependence. This concern should be taken seriously. The Family Options Study found that, compared with usual care, vouchers modestly reduced employment. By design, voucher holders pay more in rent as their income goes up, resulting in a “marginal tax rate” embedded in the program, reducing the value of each additional dollar earned. Some studies suggest that this effect fades over time. Public housing agencies are testing different rent structures aimed at eliminating work disincentives but, unfortunately, these activities are not being closely monitored or evaluated, so our ability to learn from them is a lost opportunity. We should also keep in mind that helping families get better-paying jobs is not just about getting rid of work disincentives; it’s also about giving them opportunities to build job skills, access education, and be paid living wages.
  3. Finally, policymakers are concerned about the cost of permanent vouchers. Vouchers provide an ongoing subsidy until the family doesn’t need it—that is, until their income grows big enough so that 30 percent of their monthly pay is equal to their rent. Therefore, as long as their income stays below that level, they can remain in the program. The Family Options Study found that, during the 18-month study period, vouchers were the least expensive compared with other interventions (except for rapid re-housing). But since vouchers have ongoing costs, it is unclear if the relative cost savings will hold up over time. How long do families remain on vouchers? One study suggests not as long as most people think. How do the ongoing costs of vouchers compare with not providing vouchers (i.e., families cycling in and out of shelter)? It is possible that the cost-effectiveness argument could hold up, especially since we know from the study that stays in shelter and transitional housing are expensive.  But we will have to wait and see.

Despite these concerns, the evidence that vouchers end homelessness is conclusive. Further, the stability they bring improves many other aspects of families’ lives. Homelessness among families is an unconscionable and persistent problem. If policymakers are really as committed to ending homelessness as they say they are, they should act immediately and increase the number of vouchers by 250,000.

However, what if Congress doesn’t increase funding for vouchers?  How can policymakers make the homeless system work better? The Family Options Study has answers, but you have to really dig into the study report. More coming soon!

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