Absence of conflict of interest.
Citation
Highlights
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The study's objective was to examine the impact of the Rent Reform Demonstration on earnings and employment among families served by the Public Housing Authority (PHA) in Louisville, Kentucky. The authors also investigated similar research questions for each of the three other PHAs as separate contrasts and conducted a pooled analysis across all four sites, the profiles of which are available here:
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The study was a randomized controlled trial that used PHA administrative data and wage records to compare families receiving housing choice vouchers who were subject to the new Rent Reform Demonstration rules to a comparison group subject to the existing rent rules of their PHA.
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In Louisville, KY, the study found that families in the new rent policy group had significantly lower earnings in two quarters (7 and 11), were significantly more likely to remain in the HCV program, and received a housing subsidy significantly longer than those in the existing rent rules group. The study had mixed effects on quarterly employment.
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The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the Rent Reform Demonstration, and not to other factors.
Intervention Examined
Rent Reform Demonstration
Features of the Intervention
The federal Housing Choice Voucher program that provides rental subsidies to low-income families has been criticized for having a disincentive to work (due to policies that increase rent prices as family income rises) and for requiring substantial administrative costs and effort to implement. In 2015, the U.S. Department of Housing and Urban Development (HUD) launched the Rent Reform Demonstration to design and evaluate an alternative rent-subsidy policy for housing choice voucher recipients.
In Louisville, the new Rent Reform Demonstration policy updated three main areas of the subsidy program: (1) how total tenant payments and subsidies are calculated, (2) recertification time periods, and (3) safeguards for families. First, the policy simplified how the total tenant payment (TTP) is calculated by basing it on gross income over the past 12 months (rather than adjusted income), ignoring income earned from total family assets less than $25,000, and linking utility allowances to voucher amounts. Additionally, a $50 minimum total tenant payment designed to mirror a typical landlord-tenant relationship was also implemented for the first time as part of the new rent policy. Second, annual income recertifications were replaced with a triennial recertification to ensure that that earnings gains do not increase TTP for at least two years. Finally, the new policy included additional safeguards for families. For example, the revised policy included a 6-month grace period to allow families to temporarily reduce their TTP after the triennial recertification if their current or expected income was lower than their income over the prior 12 months and allowed for the family to apply annually for interim recertifications when their income dropped by more than 10 percent. Additionally, the new policy included a revised hardship policy that allowed TTP reductions under specific conditions (e.g., when facing eviction).
Features of the Study
The study was a randomized control trial designed to evaluate the effects of the Rent Reform Demonstration on earnings and employment for the Louisville Metropolitan Housing Authority in Louisville, KY. The authors used a statistical model to compare the outcomes of the treatment and control group members based on PHA administrative records and wage records obtained through the National Directory of New Hires.
The Louisville PHA study sample included 1,908 households who were not elderly or disabled (as defined by HUD), were currently receiving housing choice vouchers, and were scheduled for recertification. 947 households were randomly assigned to the treatment group and were subject to the new rent policy for the duration of the demonstration. 961 households were assigned to the control group and were subject to the existing rent policies in place at the Louisville PHA. Heads of households were predominately female (96 percent), Black/African-American (80 percent), and 39 years old on average.
Findings
Employment
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The study found that families in the new rent policy group were statistically significant more likely to be employed in all quarters than the comparison group (4.3 percentage points).
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The study found that families in the new rent policy group were statistically significant less likely to have been employed at any point in the last three months in quarter 11, and had lower average quarterly employment in quarter 11 than the comparison group. However, the study found that employment in Year 1 (Quarters 3-6), Year 2 (Quarters 7-10), Years 1 and 2 combined (Quarters 3-10), and quarters 2 through 8 were not significantly different across the groups.
Earnings and Wages
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The study found that the families in the new rent policy group had statistically significant lower total earnings in the seventh and eleventh quarters ($252 and $393 less, respectively) after random assignment. However, total earnings in Year 1 (Quarters 3-6), Year 2 (Quarters 7-10), Years 1 and 2 combined (Quarters 3-10), quarters 2 through 6, and quarter 8 were not significantly different across the groups.
Public Benefits Receipt
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The study found that families in the new rent policy group were statistically significant more likely to remain in the HCV program than the comparison group after Year 1 and 30 months (3.4 and 8.2 percentage points, respectively).
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The study found that the new rent policy group had a statistically significant longer time that they received a housing subsidy compared to the comparison group at Year 1 and 30 months (0.2 and 1.5 months longer, respectively).
Considerations for Interpreting the Findings
Although the study was a well-implemented randomized controlled trial, there are a few factors that should be considered when interpreting the findings.
The study authors estimated multiple related impacts on outcomes related to Employment, Earnings, and Public Benefits Receipt. Performing multiple statistical tests on related outcomes makes it more likely that some impacts will be found statistically significant purely by chance and not because they reflect program effectiveness. The authors did not perform statistical adjustments to account for the multiple tests, so the number of statistically significant findings in these domains is likely to be overstated.
Families in Louisville who were randomly assigned to the new rent policy were allowed to opt to continue to be subject to the existing rent rules. About 22 percent chose to continue to follow the existing rules, but are still in the new rent policy group for purposes of the evaluation. As such, the authors suggest that the estimated effects of the new rent policy in Louisville may be reduced.
For the purposes of this report, the authors defined the follow-up period as “the period that begins in the month after the month in which the family’s new TTP was expected to take effect” and not from random assignment. A family’s new TTP effective date typically occurred 4 to 6 months after random assignment (in Quarter 3). Thus, Year 1 is defined as Quarters 3-6 after random assignment, and Year 2 is defined as Quarters 7-10 after random assignment.
Causal Evidence Rating
The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the Rent Reform Demonstration, and not to other factors.