Bruce Katz

Introduction

I want to have a frank conversation today about "where affordable housing is on the national agenda" and take (perhaps) a different tack on ways of elevating its importance.

I have long believed that affordable housing - to paraphrase Rodney Dangerfield - "does not get any respect" at the national level. In real terms, federal funding for affordable housing programs has plummeted over the past several decades. Few members of Congress develop an expertise in housing policies. HUD is a backwater in the federal government and has almost disappeared from the radar screen during the current Administration.

For the most part, housing advocates have tried to change the current situation by making the case for affordable housing on its own merits. We need more affordable housing because we have an affordable housing crisis.

This presentation will take a somewhat different cut. It will argue that housing advocates need to play on a larger field and describe the essential role that affordable housing plays in advancing other priorities that are arguably higher up on the national agenda.

• Affordable housing, for example, is essential to making work pay for working families - a key component of post welfare policies.
• The location of affordable housing is a central part of smart growth policies.
• And, perhaps most importantly, housing policy is school policy. In the end, educational reform probably won't succeed unless housing is part of the mix.

I would contend that connecting affordable housing explicitly to these broader issues is an important part of improving affordable housing's visibility nationally and contributing to the kind of national attention, investment and policy reform that is ultimately needed.

This expansion in focus does not come without its challenges however—substantive and otherwise—and I will try to draw out some of these challenges to spark the discussion on this afternoon's panel.

Making Work Pay and Rewarding Work

Let me focus first on the role of housing in making work pay for working families.

Over the past two decades, the federal government has placed increased emphasis on rewarding families who enter and stay in the workforce. According to David Ellwood of Harvard, the federal government spent about $6 billion a year on working families in 1984. In 2000, annual expenditures had risen to about $52 billion a year.

What happened?

In short, the federal government has substantially increased funding for a range of supports targeted to the working poor.

Funding for the earned income tax credit, for example, doubled during the 1990s. In 1999, over 19 million families earned $32 billion in EITC refunds. The EITC is now the largest federal aid program targeted to the working poor and. Incredibly the EITC is as large as the HUD budget and most scholars assume that 1/3 of the tax credit or more is used by working families to address housing needs.

The federal government also increased funding for health care and child care.

And welfare reform shifted funding that was once reserved for cash assistance to welfare mothers to work supports for recipients entering the workforce.

What has emerged over the past two decades, in short, is a federal working families agenda. It is a revolution in social policy that has shifted the emphasis of federal investments from dependency to responsibility, from the hand out to the hand up.

What is remarkable about this agenda is how little housing is mentioned or considered.

This is significant for several reasons.

First, and foremost, housing remains the biggest household expenditure for many low, moderate and even middle-income families. Nearly three-fifths of working poor renters with children who do not have housing assistance pay more than 50 percent of their income for housing or live in seriously substandard housing, or both.

For these families, affordable housing is as important as health care or child care; in many respects, affordable housing provides the foundation for addressing many of the other challenges faced by struggling families.

Second, researchers and policy makers are starting to realize that the lack of affordable housing is a barrier to getting and keeping a job for welfare recipients and other low-income families. These findings suggest both that welfare interventions are more effective when combined with housing assistance partly because housing subsidies help to stabilize the lives of low-income families and partly because housing subsidies can free up funds within the budgets of low-income families for work-related expenses, such as childcare, work clothes or transportation.

Finally, housing is likely to become more important to working families over time. That is because the affordable housing crisis is likely to get worse before it gets better for all the reasons that everyone in this room knows by heart:

• The decline in the number of rental units affordable and available to very low income families.
• The rapid increase in rents relative to inflation over the past number of years.
• Changes in the labor market that are likely to keep earnings low.

The bottom line is that housing is central to making work pay for low wage workers and ultimately helping these families build wealth and assets. Without a strong housing policy, it is impossible to imagine how the federal government can make work pay for low income workers.

Smart growth

I would like to now shift the conversation to the central role housing could play in the burgeoning smart growth movement.

In the past few years, widespread frustration with sprawling development patterns has precipitated an explosion in metropolitan thinking and action across the United States. A new policy language - "smart growth", "livable communities," "metropolitanism," "sustainable development"—has emerged to describe efforts to curb sprawl, promote urban reinvestment and balance growth. Such language and rhetoric has now become common not only among political, civic and corporate leaders but also among developers and other participants in the real estate industry.

The involvement of Governors and state legislatures has been particularly noteworthy. Since 1997, states have made considerable progress on several fronts, including metropolitan governance, growth management, land use acquisition, and infrastructure policy.

Like the working families agenda, housing policy reforms are rarely discussed as part of the smart growth solutions. This is a fatal oversight.

The spatial distribution of affordable housing plays a central role in shaping metropolitan growth patterns.

• Most metropolitan areas in the United States are sharply divided along geographic lines - wealth, prosperity and opportunity tend to be located on one side of the line, with failing schools, distressed communities and poverty concentration on the other side (Atlanta, Chicago, Washington, DC).
• The location of affordable housing helps contributes to these regional disparities.
• In most metro areas, subsidized housing tends to be disproportionately located in distressed inner city and older suburban neighborhoods for various reasons, relegating lower income households to these areas.

When the supply of affordable housing is limited in scale and limited in place, several things happen.

• First, many working poor get concentrated in particular parts of a metropolis, usually far from educational and employment opportunities.
• Second, the housing/jobs imbalance worsens the areas traffic congestion by forcing families to travel long distances to their place of employment.
• Third, the housing/jobs imbalance places enormous stresses on the region's employers by limiting the pool of workers who can live within a reasonable commuting distance.
• Fourth, affordable housing concentration forces leapfrog development and sprawl. Sprawl, in a sense is just the flip side of concentrated poverty.

So, here's the punch line. For smart growth to succeed - for metropolitan areas to have less sprawl and more balanced growth - affordable housing policy has to be a central, conscious, concerted part of the mix.

Housing and Education

Let me now shift the conversation to education policies.

I think everyone in this room understands the role housing plays in educational achievement. For those of us with children, housing decisions and neighborhood decisions are essentially school decisions. We move to neighborhoods with good schools; we leave neighborhoods at even the hint of subpar performance. We don't, in short, play roulette with our children's education. Housing policy IS school policy.

Arguably, the school/housing nexus is even stronger for low-income families. Research has clearly shown that children who live in poor urban neighborhoods are at greater risk for school failure—poor standardized test results, grade retention and high drop out rates. To the extent that affordable housing policies exacerbate concentrated poverty, school performance and school reform is put at risk.

Research has also shown that when low income families are given the chance to move to better neighborhoods, school performance improves.

The Gautreaux and Moving To Opportunity demonstration program showed that children saw substantial gains in academic achievement when they moved from high- to low-poverty neighborhoods; and those who moved to the suburbs did better than those that moved to another part of the city.

These results are the closest thing to a homerun in the social science community. Housing mobility works. Housing vouchers work. And, an important point, housing vouchers - unlike school vouchers - are a tried and true program.

The bottom line is that the housing community has something to say - profound to say - about school reform that is grounded in 20 years of rigorous programmatic and social analysis. It is a voice that needs to be heard.

The Challenges Going Forward

Now the hard question. How do we use this evidence of housing's clear and essential role in advancing national priorities? How do we convince other constituencies of the critical role played by housing in advancing their agendas? And what implications does this conversation have for housing policy itself? Does housing policy need to change to align itself better with other national priorities?

OK. Challenge Number One is simple to say, tough to execute.

Housing advocates need to be vocal about the importance of housing for other national priorities.

• When welfare reform is being debated, housers need to talk about the affirmative roles that housing assistance plays in moving families from welfare to work.
• When large tax bills are debated, housers need to talk about the critical role of the tax code in making work pay through the earned income tax credit and the refundable child care credit.
• When transportation reform is debated, housers need to talk about the need to link transportation, housing and land use planning - so we ultimately build communities that work for people, not just for cars.
• And when school reform is debated, housers need to talk about the nexus between housing and school policy.

In short, housing policy, the housing discussion does not start and stop at HUD's door. The housing community needs to take the big picture on worker incomes, housing location and housing prices - wherever those discussions may be taking place.

In the near term, this kind of dialogue and discourse could have real effects. In the welfare reform bill this year, for example, Senator Kerry and others lobbied to exempt housing assistance from being counted against federal time limits.

But it's the long term that really matters. Housers need to convince other players in the domestic agenda that housing matters - that it needs to be treated with the same level of respect and discipline and attention accorded to other higher profile issues.

That leads to Challenge Number Two. Housing advocates need to find ways of communicating with a wide array of constituencies.

To do that successfully, housers are going to need to demystify affordable housing. Affordable housing is complicated. For the average corporate or political or civic leader, housing programs seem inaccessible and incomprehensible, often described in ways—"Section 8" or "Section 221(d) (3)"—that make sense only to people and organizations who specialize in HUD programs and policies. Housers need to deal with the complexity of housing programs, particularly for constituencies who did not get a housing degree from HUD!

There is a bigger discussion going on out there - but it will continue to go on without mention of housing if we cant communicate what housing policy is.

That leads to Challenge Number Three. The housing community needs to deal with some harsh facts about housing programs as currently constructed and implemented.

All the evidence suggests that to the extent affordable housing policy reinforces concentrated poverty, then housing may be part of the problem, not the solution.

• Concentrated poverty prevents the creation of wealth
• Concentrated poverty exacerbates sprawling developing patterns
• Concentrated poverty undermines educational achievement.

So, its not enough to say that affordable housing matters to working families or smart growth or school reform. To have any sustainable impact, housing policy needs to be crafted in a way that supports these other priorities.

What does that mean? At a minimum, it means that affordable housing must be economically integrated. It must be regionally focused. And it must support choice in the private marketplace.

That could mean some big changes in how current housing policies operate.

Just take one example. More balanced growth patterns will only come when new affordable housing is built in fast growing areas where jobs are increasingly concentrated. That could mean a potential change in the allocation of federal resources like the Low Income Housing Tax Credits so that more units are built—by for profits and non profits—in the areas where population and job growth is occurring.

Conclusion:

So here's my proposition. Affordable Housing matters Big Time to other national priorities.

• It will ultimately affect whether we as a nation can make work pay.
• It will ultimately influence whether metropolitan growth patterns can be reshaped.
• And it will ultimately affect whether educational achievement is a reality for millions of our children.

Affordable housing, in short, is not just about affordable housing. Recognizing that may help lift this issue to the place it deserves in the American domestic agenda.

© Copyright 2002 Bruce Katz

Note: The views expressed in this piece are those of the author and should not be attributed to the staff, officers or trustees of The Brookings Institution