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Guaranteed Income, Direct Rental Assistance, and the Potential of Cash Transfers

May 22, 2024

Challenges in areas ranging from education to the environment, gender to governance, health to housing don’t exist in a vacuum. Each month, Abt experts from two disciplines explore ideas for tackling these challenges in our monthly podcast, The Intersect. Sign up for monthly e-mail notifications here. Catch up with previous episodes here.

Qualitative data indicate guaranteed income programs—which provide cash directly to beneficiaries—provide real stability to people in need. But, while we wait for the quantitative data to come in, the jury’s still out on how to maximize this approach. What do we still have to learn about cash transfers as a means of empowering people, and can making payments directly to households be a more effective way of providing rent subsidies? Dr. Jill Khadduri and Dr. Hannah Thomas discuss the outstanding questions in the latest episode of The Intersect.

Read the Transcript

Eric Tischler: Hi, and welcome to The Intersect. I'm Eric Tischler. Abt Global tackles complex challenges around the world, ranging from improving health and education to assessing the impact of environmental changes. For any given problem, we bring multiple perspectives to the table. We thought it would be enlightening—and maybe even fun—to pair up colleagues from different disciplines so they can share their ideas and perhaps spark new thinking about how we solve these challenges. Today I'm joined by two of those colleagues, Dr. Jill Kori and Dr. Hannah Thomas.

Jill came to Abt in 2000 after a storied career at the U.S. Department of Housing and Urban Development, where she was a career senior executive deeply involved in housing, research and policies. She conducts research on homelessness and homeless assistance programs and on housing programs and strategies, among them the Low-Income Housing Tax Credit, Housing Choice Vouchers and public housing, and HUD's Annual Homeless Assessment Report to Congress.

Hannah is a sociologist and geographer who brings over 20 years of experience in qualitative and mixed methods research addressing economic inequality. Her work has ranged across the fields of housing, guaranteed income, workforce development, the racial wealth gap, community development, and asset building for clients ranging from HUD to Health and Human Services to cities, states and nonprofits.


Jill Khadduri: Hi Eric.

Hannah Thomas: Hi Eric. How are you?

Eric: I’m well, thanks! Let's get into it. So initial reports on programs that offer universal basic incomes and guaranteed incomes to low-income families are favorable but not conclusive. As more and more people are looking at direct cash transfers as a means of supporting low income households, how else can these strategies be implemented and what do we still need to learn about these programs? Jill, let's start with you. I know that after decades in the field of rental housing subsidies, you think direct rental assistance might be a logical evolution in the housing choice voucher program, sometimes known as Section 8. What do you see as the potential benefits of DRA as an evolution of this program, and how should we be studying it?

Jill: Well, the potential benefit of direct rental assistance—which is a variant of housing assistance, it's not guaranteed income, it’s housing assistance—it helps people afford housing and solve the problem of unaffordable rents. It differs from the current Housing Choice Voucher program in that instead of the payment being made to the owner of the rental housing or the landlord, it would be made directly to the household. And this would make the program arguably a lot less bureaucratic, a lot less of a hassle for the households. And it would also make it less bureaucratic for the public housing authorities who administered the program, so that it might save administrative costs. And it might be more empowering for the families who participate in housing assistance. But we don't know a lot of things about direct rental assistance. We don't know whether landlords would actually like receiving their rent payments entirely from the household rather than partly from a government agency. So it's really important to do rigorous tests of direct rental assistance.

Eric: Thank you. And just to clarify, you're talking about administrative burden because one of the challenges of the housing choice voucher program is getting landlords to participate. So the idea here would be then that removing that burden makes them more likely to participate, making the program more successful, right?

Jill: Yes. Currently, only 60 percent of all of the households who come to the top of the waiting list— sometimes after having waited for years—are able to actually go out into the market and find a unit that qualifies for the program and a landlord that's willing to rent to them. So we're very concerned about the 40 percent of people who are not able to use a voucher subsidy. And that's why it's so important to try to figure out how we can improve the program. And one of the things that is really burdensome to landlords is that there is a very rigorous housing quality inspection. And it's not the rigor so much, this is basically health and safety stuff, it's the fact that the landlord often has to wait a long time. It can be two weeks, it can be a month. It could even be six weeks before the unit gets inspected. And meanwhile, he or she is losing income by having the unit stand empty. And so lightening up or even dispensing with the housing quality inspection is one of the features of direct rental assistance.

Eric: Thank you. Okay, so looping back to what you were saying about understanding whether the landlords would be receptive to receiving cash directly from tenants, Hannah, you've been looking at guaranteed income, which is another “cash directly to recipients” approach. And I know there are a lot of questions there. What are you seeing in some of the challenges of understanding how effective these kinds of benefits are?

Hannah: Right, thanks Eric. So, I think a core tenant of the guaranteed income pilots and what they're trying to test is really what happens when you trust households to have cash and then use it, and trust them to know the best ways that they need to use that money. And to speak to what Jill was talking about in terms of empowering families, I think there's a question: Can we make that application to the Housing Choice Voucher program in terms of that principle of trusting the household to know best how to use the money.

In terms of the research on guaranteed income, we're really kind of at the beginning of seeing a number of studies being released looking at that impact and how it's playing out. And I think what we are seeing is that, for some of those initial pilots that are releasing studies, we're seeing some temporary benefits to households in the program while the program's in effect, particularly around covering expenses and financial wellbeing. And in the case of Denver where they're running a program that's focused on unhoused populations, they are really seeing that that is helping to increase housing security at the kind of initial stages of looking into the program. We're also seeing mental health improvements during the pilot, and I think this has in some way to do with the capacity of households to potentially use the money in ways that make sense to them. So that's encouraging.

All of that said, there are some questions about what the right amount is, how long that money should be provided to households, what's the right amount that's really going to put families into a more stable position for the long-term after the end of that assistance that they're receiving.

Jill: One of the distinctions between guaranteed income as it's being tested now and direct rental assistance is that direct rental assistance is intended to be a long-term subsidy. That is to say, a subsidy that doesn't just last a year or two years, but a subsidy that the household can keep as long as they need the subsidy. So I mean, I think what Hannah's referring to is the concern about what happens when the guaranteed income ends. Do the benefits that are being seen persist after people no longer have that extra cash?

Hannah: And to speak to that, Jill, just to give context for people listening in, most of the pilots that we're seeing where they have this monthly cash payment is usually a period of 12 months or 24 months. So we are talking, as you say, kind of a short-term program as opposed to the direct rental assistance, which, as you articulated, is for a potentially much longer period of time.

Jill: And in terms of what you were saying about trust in the household, let me amplify, what if there is no quality inspection, if there's a self inspection or maybe no quality requirement at all, are households able to make sure that the unit that they rent doesn't have health and safety hazards? Can we think that low income families can act just like any other family in deciding to rent a unit that's good for them, and if the unit has health and safety violations and then they work with the landlord in order to overcome that? So these are some of the unanswered questions about how direct rental assistance would work as compared to the current Housing Choice Voucher program.

Eric: So let's talk about that for a minute because, Jill, you're talking about autonomy and whether autonomy in the Housing Choice Voucher program is okay or not. And I know that one of the upsides we've seen from the guaranteed income programs so far is that they allow for autonomy and that autonomy seems be paying off, at least from what we can tell from qualitative data. So you want to explain that a little bit?

Jill: One of the arguments in favor of the current rather bureaucratic program is that you interpose the housing authority between the landlord and the tenant, and the housing authority can threaten the landlord with withdrawing the assistance, but of course that hurts the household as well as hurting the landlord. And another dimension of this is can people actually negotiate the rent for themselves? Will they be able to figure out whether they're being charged a fair rent, will they be able to shop around? The current program doesn't have such a shopping incentive, and there is an argument that the current housing voucher program can lead to rent inflation, although there's no strong evidence that it actually does. So, again, it's sort of who makes the decisions, really: is it a government agency like a housing authority that makes key decisions about consumption or is it the family that makes the key decisions about the consumption?

Eric: And that's interesting because we're talking about sort of a very specific use case here. And Jill, you're raising a lot of questions. Hannah, with guaranteed income, though, you're saying “Here is some cash, go forth” and anecdotally, at least, you're seeing good results. So it's interesting, there's this sort of compare and contrast, but again, I guess with guaranteed income, we don't know yet. We want more data. So how might we go about distinguishing between a program that seems to be promising with virtually no guidelines and another program that we're interested in but, to your point, Jill, might want a lot of additional guardrails attached to it. Because, superficially they might seem like very similar concepts but right there we're identifying a couple of different parameters for each.

Jill: So, the guardrails have actually, excuse me, Hannah, the guardrails for the housing voucher program have grown over the years. I mean, the program was simpler at the beginning, but as people have been concerned about various things like “Does the unit have lead paint? Do we have to require that the lead paint be removed or encapsulated in order to be able to rent the unit?” It's that kind of very well-intentioned things. There's also a lot of complicated bureaucracy about how the tenant share of the rent is actually calculated deductions from income, how do assets count? And these things have grown over the years and they've made the program really burdensome for families—and many people think demeaning for families—that they have to jump through all of these hoops in showing that they're paying the appropriate amount. And so another thing that direct rental assistance might do is simplify all of those income calculations, although still requiring an income test for whether you receive the subsidy.

Hannah: And I think, to build on what Jill is saying as well, some of the ways that families might prioritize. So for example, we often see families looking to move to neighborhoods where their kids may feel safer, neighborhoods with school systems that they want to enroll their children in. And there may be a trade off for that family and thinking about how they're applying that housing cash if it's in the form of the direct rental assistance to the type of unit that they are renting. So that family may be willing to make a trade-off in the short term quality of their housing to access that neighborhood and be able to participate in a different environment. So I think these are the kinds of questions that we want to be able to answer and understand better. And again, going back to giving households and families, the agency and empowerment to be able to make those decisions for themselves.

Eric: Hannah, do you want to talk a bit more about what you've seen so far in terms of anecdotally and there's promise there, right? Do you want to talk about that a bit more?

Hannah: Sure. Yeah. So there are some studies that have come out that look particularly at, we can measure how well a program is doing in a couple of different ways. We can do survey data and then test that through a randomized control trial where we are testing how families in a program are living and what their experiences are like, what their wellbeing is like as compared with a set of families who are not receiving the cash in this case. And when we look at that data for studies that have been released, we are seeing some promising results there, particularly around mental health and wellbeing. We're seeing some promising results around financial wellbeing, improved financial health and reduced stress around finances. We can also understand how a program is doing by talking with the people in the program. And so where we've been able to talk to participants in some of the pilots, there are some really promising conversations there.

Some of these concepts are harder to measure in surveys, but there’s some really promising data. Talking to how guaranteed income is allowing families to make decisions. For example, making trade-offs around whether they're working three jobs or whether they choose to work a little bit less and spend more time with their families and engage with their children more. So, particularly on the parenting side, we have seen in some of our research that has been released that trade-off being made: families really investing in their children and those relationships, which we think has got long-term value for society where parents are able to spend that extra time, a little bit extra time, improves the wellbeing of their children. That's an investment in the longer term. So as we're looking to this direct rental assistance model, again, going back to the trade-offs that families make, there may be some interesting trade-offs that could be good for that bigger longer-term societal goal.

Jill: And Hannah, you mentioned one of the trade-offs, which is that families may be willing to live in a better neighborhood even though the housing unit is not quite up to standards. And conversely, they may be willing to buy less expensive housing and spend more on their children's education or more on other things that are important to the family's wellbeing. But because a lot of these are questions that we need answers to for direct rental assistance, just like guaranteed income, we would also like to do mixed method studies that combine randomization of people to either get a housing choice voucher— the current program—or to get direct rental assistance and then measure the impacts as well as spending a lot of time talking to families. We think this is particularly promising and important to test for families with children and talking to the families and finding out how they react to having full responsibility for paying the rent. And also talking to landlords to find out how landlords view this program, in which the trade-off is they don't get part of their rent from a government agency, but in return there is a lot less trouble dealing with the government agency that might cause them delays and might cause them to lose rental income.

Hannah: Yeah. So I think the other piece, just thinking about questions and to the future, I think a big place where are—we have a lot of questions remaining around the guaranteed income pilots and programs—is thinking about program design. What is the right amount of time that families receive cash for? And I think we have to understand then how and whether additional supports are available to those families. So, for example, does it make sense for families to be offered access to some of the financial coaching services that are available in their community or to mental health services or potentially housing services? Access to those bridging organizations that help families to navigate their communities and figure out how to potentially gain some economic mobility could be really important. But we don't know yet because we haven't put those services together. We haven't offered those as part of the intervention with the cash. So we're asking similar questions in thinking about direct rental assistance, what does the program design start to look like? What are the details of how that money is delivered and additional supports or services that might be helpful to families that they can choose what to engage with? We wouldn't be requiring things, but what could that program design ultimately look like and then test those models?

Eric: Well, it's exciting that there's enough promise to further this conversation at least. So hopefully we keep the tires on some of these ideas that the two of you're putting forth. So I'm just going to conclude it by thanking you both for joining me.

Jill:Thank you very much, Eric, for organizing this conversation.

Hannah: Likewise, Eric. Thank you.

Eric: And thank you for joining us at the Intersect.

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