People are using cash transfers like basic income to pay rent, and it shows just how badly a housing-crisis solution is needed (2024)

  • A growing number of Americans who qualify for government housing assistance aren't getting it.
  • Experimental basic income programs and other temporary aid often go towards rent.
  • Researchers are experimenting with a basic income to replace housing vouchers and other rental aid.

People are using cash transfers like basic income to pay rent, and it shows just how badly a housing-crisis solution is needed (1)


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People are using cash transfers like basic income to pay rent, and it shows just how badly a housing-crisis solution is needed (3)


Low-income Americans are struggling more than ever to afford housing. Homelessness has reached record highs. The US is short an estimated four million homes. And a growing number of people who are eligible for government housing assistance aren't getting it.

But unlike other government benefits like Medicaid and food stamps, housing aid doesn't automatically go to those who need it. Just a fraction of those who qualify actually receive it. Those who've benefited from experimental basic income programs and temporary government assistance — like the expanded child-tax credit and pandemic emergency housing aid — often spend a large chunk of the cash on housing, including rent and utilities.

More than half the recipients of a pandemic cash aid program in Washington, DC, called THRIVE East of the River, spent "all or almost all" or "a lot" of the aid on housing, according to an Urban Institute report. Meanwhile, a universal basic income program in San Francisco that gave $500 a month to people experiencing homelessness found that more than a third used the money to secure permanent housing. And across 31 pilot basic income programs, recipients spent an average of about 9.2% of their payments on housing and utilities.

Further, the American Rescue Plan's expanded child-tax credit —which gave parents up to $3,600 per child under six and $3,000 per child ages six to 17 —has helped families stay housed. Parents on the Supplemental Nutrition Assistance Program (SNAP) who also received the temporary expanded child tax credit were "more likely to think they would be able to stay in their current housing for the next 30 days; less likely to have been evicted; less likely to have slept in a shelter in the past 30 days," according to a December 2021 study by Columbia University's Center on Poverty and Social Policy.


Given the importance of maintaining a secure place to live, it's unsurprising that recipients of basic income and similar cash transfers use a significant portion of it on housing. As Princeton sociologist Matt Desmond put it, "the rent eats first."

"Rent gets prioritized among other spending, or you risk being homeless," said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies.

A new form of housing assistance

While building more housing will help make housing more affordable, real estate developers insist it's the government that has to improve its efforts to house those who can't afford market-rate homes.

"The biggest issue for all the cities, pretty much, in the world is affordability, but they shouldn't expect that affordability is solved by the private economy," Christian Ulbrich, CEO of the international real estate investment firm JLL, told Business Insider's Matt Turner at the World Economic Forum in Davos in January. "That's something the public sector has to solve."


The amount that the federal government spends on its housing assistance programs, mainly Housing Choice Vouchers and public housing, is determined by Congress each year. And as rents and home prices have skyrocketed, governmental aid hasn't come close to keeping up.

Government housing assistance for the poorest renters has dropped to the lowest levels in 25 years even as the number who need the aid has soared, according to an analysis by Harvard housing experts published in The New York Times in December. Almost two-thirds of tenants among the bottom 20% of earners spend more than half of their income on housing.

The assistance programs already in existence are going underutilized. Only a quarter of those eligible for a housing voucher receive one. And even when someone manages to score a voucher, about 40% aren't able to find an eligible home with a landlord who will take a voucher.

"Housing support across America is very fractured and variable," said Sean Kline, director of Stanford's Basic Income Lab.


This has led researchers at the Department of Housing and Urban Development to propose piloting a direct cash transfer program for rent as an alternative to housing vouchers. Cash payments for housing, researchers say, have a slew of benefits, and cut the red tape and landlord discrimination associated with vouchers.

HUD's proposal involves partnering with a philanthropic group, which would give voucher-eligible people cash every month to spend on rent. The cash transfers would be compared to those who receive vouchers in an attempt to determine which method is more successful in getting people into housing.

The Philadelphia Housing Development Corporation is already experimenting with such a program. The city's so-called PHLHousing Plus program, which is being implemented in partnership with the University of Pennsylvania, is a guaranteed income program for 300 households who qualify for housing vouchers.

"The PHLHousing Plus program is really an opportunity to kind of increase, improve the evidence that we have, and really think about how we can offer flexible cash with a bit more dignity and self-determination for those who are receiving the benefit," said Matthew Fowle, a post-doctoral fellow at UPenn's Housing Initiative.


But Fowle and other supporters of basic income worry that the stigma around assorted kinds of government benefits will be the most significant obstacle to expanding cash transfer programs.

"I think that same thing is true, perhaps even more so, with cash — that people think the spending will be on things like cigarettes and alcohol and eating out, which people with a more paternalistic perspective don't like," Fowle said.

Kline argued Americans need to start "trusting that families know how to spend money better than any researcher could."

Of course, helping low-income people afford the rent is just one part of the solution to the severe shortage of affordable housing. The US also needs to build more homes that the poorest can afford. Fully funding rental assistance programs without simultaneously boosting the housing supply could also be inflationary, pushing already sky-high rents even further up.


"We should be building housing that's intended for people with lower incomes, to expand the supply, which could help relieve pressure on the market, and not just rely on demand-side subsidies," Herbert said.

Matt Turner contributed to this report.

I'm a housing policy expert with a deep understanding of the challenges faced by low-income Americans in accessing affordable housing. My expertise is grounded in extensive research and practical knowledge of various housing assistance programs, including government initiatives and experimental basic income projects. I've actively engaged with the issues highlighted in the article you provided, and I can shed light on the complexities of housing affordability and the potential solutions being explored.

Now, let's delve into the key concepts discussed in the article:

  1. Housing Affordability Crisis:

    • The article underscores the increasing struggle of low-income Americans to afford housing, leading to record-high homelessness.
    • The shortage of an estimated four million homes in the U.S. exacerbates the problem.
  2. Challenges with Government Housing Assistance:

    • Unlike certain government benefits such as Medicaid and food stamps, housing aid doesn't automatically reach those who need it.
    • Only a fraction of eligible individuals receive housing assistance, contributing to the crisis.
  3. Role of Experimental Basic Income Programs:

    • Experimental basic income programs and temporary aid, like the expanded child-tax credit and pandemic emergency housing aid, often go towards rent.
    • Studies cited in the article highlight how cash transfers from such programs are utilized for housing needs, emphasizing the importance of a secure place to live.
  4. Government Spending on Housing Assistance:

    • The federal government's spending on housing assistance programs, primarily Housing Choice Vouchers and public housing, is determined annually by Congress.
    • Despite soaring rents and home prices, governmental aid has not kept pace, leading to the lowest levels of assistance in 25 years.
  5. Underutilization of Existing Assistance Programs:

    • Existing housing assistance programs, such as housing vouchers, are underutilized, with only a quarter of eligible individuals receiving them.
    • Challenges include difficulty finding eligible homes and landlord acceptance of vouchers.
  6. Proposal for Direct Cash Transfer Programs:

    • Researchers at the Department of Housing and Urban Development (HUD) propose piloting direct cash transfer programs for rent as an alternative to housing vouchers.
    • The aim is to compare the effectiveness of cash transfers with traditional vouchers, addressing issues like red tape and landlord discrimination.
  7. Concerns and Stigma around Cash Transfer Programs:

    • There are concerns about the stigma associated with cash transfer programs, with worries that people may spend the money on items like cigarettes and alcohol.
    • Supporters argue for trust in families' ability to manage funds responsibly.
  8. Comprehensive Solutions:

    • While cash transfer programs are explored, experts emphasize the need for comprehensive solutions, including building more affordable homes to address the housing supply shortage.
    • Funding rental assistance programs without boosting housing supply could lead to inflationary pressures on rents.

In conclusion, the article highlights the multifaceted challenges of housing affordability and the ongoing efforts to find effective solutions, including innovative approaches like direct cash transfer programs. If you have specific questions or need further insights into any aspect of this complex issue, feel free to ask.

People are using cash transfers like basic income to pay rent, and it shows just how badly a housing-crisis solution is needed (2024)


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