The Effects of Increasing the Tenant Rent Contribution in the Housing Choice Voucher Program

Nina Castells
MDRC

This study examines the effects of a rent reform in the Santa Clara County Housing Authority (SCCHA) on Housing Choice Voucher (HCV) program residents’ employment rates, average earnings, and housing subsidies using a quasi-experimental design. In the face of federal budget cuts to the HCV program in 2013, SCCHA reduced subsidies for all households rather than cutting some households from the program. The primary component of its rent reform was to increase the tenant rent contribution rate from 30 percent of adjusted income (equivalent to about 27 percent of gross income) to 35 percent of gross income (eliminating all deductions and allowances) for all subsidy households. A risk was that if tenants reduced their earnings in response to the higher “tax” rate (since they keep a smaller portion of their earnings under the new policy), their subsidies would increase, counteracting the housing agency’s expected savings from increasing tenant rent contributions. A second rent reform component changed the voucher size policy, which resulted in a smaller voucher size (fewer bedrooms) for some households. The findings indicate that, on average, the SCCHA rent reform did not affect residents’ employment rates and average earnings throughout the 4 years following the implementation of the rent reform. Thus, the rent reform reduced households’ average housing subsidies as intended, and SCCHA was able to meet its projected savings. Since households did not increase their earnings to compensate for the reduction in their subsidies, these findings suggest that households absorbed their increased housing costs; however, whether they did so by reducing spending on necessary goods or by increasing debt and whether they experienced increased material hardship is unknown.