Stegman et al. argue that federal housing policy must pay more attention to the growing affordability crisis among the middle class. Using data primarily from recent American Housing Surveys, the authors show that of the 13.7 million families (14 percent) in the United States with "critical housing needs" (families that spend 50 percent or more of their income on housing or live in a substandard unit), more than 3 million of them are working families. And from 1995 to 1997, the number of working families with such needs increased by 17 percent.

The report acknowledges the ongoing, severe housing affordability crisis for low-income Americans, but the authors note that "an exclusive focus on very low-income families fails to appreciate the full extent of the country's affordable housing problems."

Stegman and his colleagues paint a comprehensive picture of the nation's working families who have critical housing needs:

• More than one-half are homeowners.

• More live in suburbs than in central cities.

• Moderate-income families with only one wage earner are 1.6 times more likely to have critical needs.

• Minimum-wage workers and workers with old-economy jobs are the most likely to have critical needs.

• Workers with key but low-paid jobs, such as teachers and police, are especially vulnerable.

• Some urban regions have more than twice the national rate of families with critical needs.

• In some regions, the lack of affordable housing for working families is hindering economic growth because workers cannot find housing and companies cannot attract workers.

The connection between economic growth and housing costs brings up crucial policy questions. For example, would families suffering the effects of the crisis have a more difficult time if the job market were to shrink and companies were unable to expand or even driven away? Such questions require more research: Stegman and his colleagues find only anecdotal accounts for these perceived trends. But available data do measure effects on vulnerable groups: "The incidence of teachers and public safety officers spending more than half their income on housing doubled between 1993 and 1996, from 6.8 percent to 14.6 percent."

Along with the increasing but unmet demand for affordable housing, the report identifies the other main factor in the crisis: an insufficient supply of affordable housing units (to buy or to rent). A limited number of houses are under construction, and most are being sold at high prices, forcing more working families to abandon their dream of owning a home. In the rental market, the authors note that in 1997 the consumer price index rose 1.6 percent while rents rose 3.1 percent; in 1998, the index rose 1.7 percent while rents rose 3.4 percent. Rents now exceed inflation everywhere across the country.

Given these troubling trends, Stegman and his colleagues recommend that federal, state, and local governments pay more attention to the housing crisis faced by working Americans. Because the scope of the crisis varies from region to region, however, they suggest that the federal government "provide a menu of flexible housing resources supported by tax code incentives." This menu could, for example, expand voucher access to middle-income people. The authors also note that the government must give more attention to increasing the housing supply; this will depend on "meaningful coalitions between business, organized labor, and governments."