Work

Work Requirements for Housing Assistance Are a Disaster

But this largely unknown HUD program can actually make a difference.

Gardite Fougy is pictured at center with her sister Stephanie Fougy (far left) and friend Aisha Baker (far right), and Fougy's three children: Myien, 14, Myiella, 9, and Gabriel, 6.
Gardite Fougy is pictured at center with her cousin Stephanie Fougy (far left) and friend Aisha Baker (far right), and Fougy’s three children: Myien, 14; Myiella, 9; and Gabriel, 6.*
Heratch Photography

In the 1970s, conservatives, led by President Ronald Reagan, helped popularize the idea of the “Welfare Queen,” to highlight the supposedly swank, lackadaisical lifestyles of people receiving government assistance.* Since that image of the welfare queen took hold, every administration since, Republican and Democrat, has whittled away at public assistance as we knew it. And now, the narrative of the welfare queen is making a comeback with the Trump administration’s executive order requiring people who receive public assistance to work.

But is requiring people who receive public assistance to work really that unreasonable?

Actually, it is. Evidence analyzed by the Urban Institute shows that work requirements for people receiving public assistance are ineffective and “do more harm than good,” because they tend to push people into very low paying jobs that can’t pay them enough to relieve their need for assistance. In other words, work requirements keep people in a cycle of poverty, rather than ending that cycle.

And sometimes they really can’t work. This is particularly true when it comes to work requirements for housing assistance, where nearly half of all of those who receive public housing are elderly or disabled. And the loss of a stable home is catastrophic for any family, especially the most vulnerable. It leads to more problems on all fronts, especially job and income instability, the very problem work requirements are meant to correct. And, since not all families who qualify for housing assistance are getting it, taking away assistance from one family does not produce a dime of taxpayer savings—cutting one family off from public housing just frees a spot for another family from the waiting list.

If the Trump administration is serious about creating more self-sufficient recipients of public assistance, as its executive order claims to want to do, then the best way to do so may not be work requirements, but the Family Self-Sufficiency program, which the nonpartisan Center on Budget and Policy Priorities has called Housing and Urban Development’s “best kept secret” for promoting employment and asset building.

Gardite Fougy knows the success of FSS firsthand. For Fougy, a mother of three who was in an abusive relationship and working part-time as a cashier at TJ Maxx, money management was impossible. She had never been taught about budgeting or managing costs. She’d blow through whatever money she had, then assess how she’d make it through each week. She was receiving housing assistance for her two bedroom apartment in Cambridge, Massachusetts, with a portion of her monthly income of $500 going toward rent and the rest covered by a housing agency.

Then she got a postcard from the nonprofit Compass Working Capital, encouraging her to enroll in the Family Self-Sufficiency program. She signed up. She met with two caseworkers who came up with a plan for her to go back to school, work more, and save more. As part of the FSS program, the housing authority locked in a rent subsidy for Fougy; as her income increased, so did her share of the rent, but the excess money she was paying in rent was captured into a savings account, managed by the housing authority, which she’d receive in full when the program was completed.

In the five years it took to complete the FSS program, Fougy left the abusive relationship, went back to school, landed a better full-time job as a “family partner,” a coach and mentor for parents of children with serious emotional disturbances, and she now makes more than double her previous salary, taking home $2,000 each month. Her credit score has gone up more than 200 points, she’s paid off some major debts, including furniture she’d bought on credit, and she’s collected more than $8,000 in savings and is now looking to purchase her own home. She “just got preapproved this week,” she told Slate.

“The more your credit score is, the less interest you have to pay,” she explained. “The debt-to-income ratio goes down. I didn’t even know words like that before,” she said.

Fougy is one of the more than 1,000 people who have graduated or are currently taking part in a Family Self-Sufficiency program managed by Compass Working Capital, which recently partnered with Abt Associates to evaluate their programs in Cambridge and Lynn, Massachusetts. For the first time, rigorous and robust research and evaluation data exists to show that a local FSS program works, and such private-public innovative partnerships can make it happen.

FSS has been around for 25 years and Congress provides funding each year for FSS coordinators at housing agencies across the country. But there is a limit to how many people a single coordinator can reach, and many housing agencies do not have the option of a partnership like the one Compass provides. Before Abt’s recent evaluation and data, there was limited evidence on the success of the program.

Here’s what they found: Participants who spend an average of 40 months in the program reported an increase of more than $6,000 in household earnings and a nearly $500 decrease in household welfare income on average.* Participants also were able to build good credit, with a 23 point average improvement in credit score and a nearly $800 reduction, on average, of derogatory debt (i.e., the debt that comes from late payments).

“FSS combines three things we think are important for low-income families to make progress to economic security: stable affordable housing, case management, and financial incentives for families to increase their earnings,” said Jeffrey Lubell, director of Housing and Community Initiatives at Abt Associates and the principal investigator of the evaluation of the FSS programs in Lynn and Cambridge.

Participation in FSS is optional, both for housing authorities and housing aid recipients. Those who opt into the program work closely with a caseworker to create financial and career goals and a way to meet them.

In traditional housing assistance, any increase in earnings translates to an increase in the participant’s share of the rent. “It’s one of the unintended consequences,” said Sherry Riva, the founder and executive director of Compass Working Capital. “As earnings go up, you can lose more benefits tied to income. If you make too much money, you can lose your housing assistance altogether.”

But in FSS an increase in earnings translates to more funds in an escrow account, so families are instead building significant savings, with many doing so for the first time in their lives. Unlike work requirements that eventually hurt families’ subsidies, FSS actually incentivizes work and better earnings. Besides the initial gains from several years’ worth of a savings account, the improved credit scores and reductions in debt lower the costs of borrowing and help low-income families access mainstream financial products, says Lubell, such as buying a car with a low-interest or no-interest loan.

Building assets under FSS is what distinguishes it from other programs designed to combat poverty. “We have historically approached poverty as an income problem, and as a result, our solutions are income-based,” said Riva. But for a family to graduate from housing assistance, they don’t just need income; they need time to save and plan.

The executive order from the president on mandatory work requirements gave HUD 90 days in which to review its regulations and policies, and an agency response is expected in July. In late April, HUD released a detailed legislative proposal which would allow housing agencies and private subsidized housing owners to impose work requirements. But HUD cannot implement such changes without the approval from Congress. Congress recently expanded and made permanent the number of families on public housing assistance who can participate in FSS, as part of the new Dodd-Frank legislation, and housing experts hope that the stated goal of the executive order—self sufficiency—could be achieved through evidenced-based programs like FSS, rather than work requirements.

“You don’t need to be threatening people with evictions to help them raise their earnings and find jobs,” said Will Fischer, a senior policy analyst focused on federal low-income housing programs at the Center on Budget and Policy Priorities.

And simply having income is no substitute for actually building assets: “There is a big difference between helping people get from $0 to $9,000 a year and helping them attain $20,000 to $30,000 in annual income. Work requirements don’t do much with the latter,” Lubell insists. FSS, on the other hand, gives people the opportunity to build capital, get training, and come up with a plan to leave public assistance altogether. “The potential here is really to help people make larger strides.”

Support for this article was provided by Rise Local, a project of the New America National Network.

Corrections, June 21, 2018: This piece previously misstated that Republicans and Reagan coined the term “welfare queen” in the 1980s. They did not coin the term but helped popularize it in the 1970s. The post also previously stated that the assessment of FSS found that participants spent an average of 40 months in the program. In fact, those surveyed spent an average of 40 months in the program. Also, the caption mistakenly identified Stephanie Fougy as Gardite Fougy’s sister. She is her cousin.