Should We Replace Housing Vouchers with Cash?

Image: Wikimedia Commons

This originally appeared on Fran Quigley’s blog, Housing Is A Human Right

The Biden administration recently launched a trial balloon floating a potentially huge change to the country’s largest source of deeply affordable housing. The Housing Choice Voucher program, often referred to as Section 8 vouchers, supports 2.3 million households by providing them with vouchers they use in the private rental market. The voucher-holding household pays a manageable 30% of their income on rent and the government makes up the difference to the level of fair market rent.

As described in a brief Department of Housing and Urban Development blog post and a more lengthy Vox article that relies on interviews with anonymous HUD officials, the possible change could mean the replacement of vouchers with cash the households would use to pay rent. The proposed first step is to conduct a study comparing outcomes for households that receive traditional vouchers with others who receive housing cash from philanthropic sources.

To me, at least, most housing policy questions are pretty straightforward. Public housing is good, especially when properly funded. Rent control is good, as are renter protections like good-cause eviction requirements and the right to counsel. Massive tax breaks for billionaire landlords and fast-cheap-easy eviction processes? Bad and bad.  Tenant movements are wonderful.

On this question, though, I am genuinely not sure.

Replacing Vouchers is a Bad Idea

On one hand, the danger of this plan is revealed by the tenor of the HUD justifications in the Vox article, which focused on appeasing for-profit-landlords. The current program is described as “traditional housing vouchers laden with red tape that landlords notoriously hate.” Vouchers are “so cumbersome that only around 60 percent of beneficiaries can find a landlord willing to rent to them.”

But we see in our law school eviction clinic that so-called red tape in the voucher program is often just basic protections for tenants, including inspections to ensure the rental home is in good condition and fair lease terms that block summary evictions and rent spikes.  For-profit landlords almost never provide tenants these protections without the government mandating them, and they don’t like doing so in order to receive federal rent funds.  In fact, the Vox article links to a 2018 HUD-sponsored study where housing inspections and “tenant conflict” are among the top complaints of landlords participating in the program. The HUD plans so far cater to those complaints by abandoning the government inspections and mandated lease terms.

The voucher program also limits the amount of rent the government will pay up to the established fair market level, instead of allowing the rent to be determined by profiteering landlords proven to dramatically raise rents on poor households in unregulated markets . Without mandated lease terms, those agreements will be drafted by for-profit landlords, many of whom have been shown to apply illegal terms. 

HUD officials are correct that for-profit landlords’ refusal to rent to voucher holders is a real problem. But that refusal is often motivated less by concerns about government bureaucracy than discrimination on the basis of race, income, and family composition. The most effective response to that bias is aggressive fair housing enforcement and laws prohibiting source of income discrimination. The latter is already in place in 17 states and 100-plus municipalities, and rightly proposed as a federal-level requirement.  

More broadly, this HUD proposal doubles down on the core flaw of our nation’s affordable housing programs: a misplaced reliance on the for-profit housing sector to address the needs of low-income households. The landlord discrimination that is rife in the Housing Choice Voucher program, along with the lack of deep affordability in the Low-Income Housing Tax Credit program, and the time-limited guarantees of affordability in the Project-Based Housing program all demonstrate how inefficient and unjust this approach has been. More recently, we spent $46.5 billion in Covid-response emergency rental assistance that enriched for-profit landlords while leaving behind no permanent affordability once the money ran out.

This is a peculiarly American dysfunction Other nations’ more successful and more efficient affordable housing programs focus on the public and non-profit sector. So it seems baffling why the Biden administration is not devoting its time and resources into developing the more and better public housing that has proven to be the long-term cost-effective answer to housing crises in the U.S. and beyond.

A foundational error underlying this cash-over-vouchers approach was unintentionally revealed by the HUD staffer quoted in Vox: “The idea — to the degree possible — is to make the [public housing agency] invisible,” explained the HUD official. “So a landlord knows they’re dealing directly with the tenant, and not the tenant and the PHA.”   Why does the Biden administration want to hide the existence of the very government agency sworn to protect tenants from exploitation and housing insecurity? Instead of making public housing agencies invisible, let’s make them better. 

Just Hand Over the Cash

Yet . . . there is an undeniable attraction to the idea of substituting housing vouchers for cash. Our clients are remarkably resourceful in managing their meager incomes to make ends meet, so we have not been surprised by the data showing that direct cash assistance was very effective in the context of child tax credits, guaranteed income programs, and Covid stimulus checks. Time and again, low-income people prove that they spend available resources effectively and wisely.

As the Center on Budget and Policy Priorities has written, specifically in the context of providing cash to low-income families with young children:

Parents make many small and large decisions and regularly evaluate tradeoffs about how to spend limited time and money. They are in the best position to know how to use additional resources to support their families. Some may buy a car to reduce long commuting times on public transit, while others may rent a more expensive apartment in order to be closer to grandparents who care for their children. In short, parents are in the best position to know how to support their children’s healthy development, and cash, by supporting parents’ competency and autonomy, enables them to do so.

If this autonomy is a valued component of the proposed voucher replacement, it seems critical that the HUD idea provides the tenants with maximum flexibility, instead of the current discussion of making the cash only available to pay for rent.

In response to my questioning why the Biden administration would not focus on building and improving public housing along the lines of proposals like Rep. Ilhan Omar’s Homes For All Act or Senator Bernie Sanders’ and Rep. Alexandria Ocasio-Cortz’s Green New Deal for Public Housing Act, pragmatic housing justice advocates would point to the makeup of the U.S. Congress at the moment. With a big boost in public housing not on the agenda of the Republicans who control the U.S. House of Representatives, maybe this is the time to try something creative.

Presumably, swapping out the supervised voucher program with straight cash will free up some funding for housing assistance that otherwise would be spent on administrative costs. And maybe it will provide a boost for the very politically popular notion of making housing vouchers universally available to all who qualify, instead of turning away three of every four households who are eligible to receive subsidized housing help now. And, with the voucher “bureaucracy” removed, so too should the justifications used by landlords for refusing to rent to subsidized tenants.

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If this does not seem like the most balanced recitation of the pros and cons of swapping vouchers for cash, that is a fair assessment. I lean toward not liking this idea. But I’ve been wrong before--probably a half-dozen times since breakfast, in fact. So please feel free to share your thoughts in the comments section below.