off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Trump Rent Plan Would Squeeze Low-Wage Workers, Others Struggling to Afford Housing
February 9, 2018 at 6:00 AM
Update, February 13: We’ve updated this post to reflect information in the President’s budget, released February 12.
A proposal from President Trump would raise rents by more than $2 billion per year on nearly 1.8 million low-income families with nearly 3 million children receiving rental assistance, with almost two-thirds of the increase falling on low-wage workers. The proposal, which would force families to divert money from other basic needs and put some at risk of losing their homes, would reduce federal costs by squeezing more rent from low-income people. That’s particularly inequitable given the new, Republican-driven tax law that will mainly benefit the wealthy and corporations and that’s expected to add $1.5 trillion to budget deficits over ten years.
The President’s 2019 budget request for the Department of Housing and Urban Development (HUD) largely confirmed the plan detailed in draft legislation that was leaked February 1. It would raise rents on people with rental assistance — other than households headed by a person who’s 62 or older or disabled — in three main ways. See the table below for the state-by-state impact data. (Our estimates exclude another $1 billion in rent increases that the plan, as described in the leaked draft, would have imposed on the elderly and people with disabilities but which the budget said HUD would avoid.)
The plan would:
- Raise from 30 to 35 percent the share of income that households must pay in rent. The bulk of such rent increases would fall on low-wage workers, whose rent payments would rise by close to $120 a month, on average. Such families typically have little or no room in their budgets to cover added costs after paying for other basic needs and work expenses like child care and transportation.
- Eliminate income deductions that reduce rents for certain households that likely have high out-of-pocket expenses. For example, the plan would end a deduction for child care costs that helps many working parents with rental assistance make ends meet.
- Raise the “minimum rents” charged to households with little or no income by as much as $150 a month. Virtually all of the affected families have incomes below half of the poverty line, so they would have little ability to cope with higher rents. This proposal would be especially harmful for children in these families, who are already among the nation’s most vulnerable. (The affected families could be eligible for hardship exemptions, but those exemptions protect few families, experience has shown, and HUD has not complied with a 2016 congressional directive to certify that existing protections are being enforced.)
In addition, the plan would give HUD unlimited power to impose additional rent increases, letting it drastically cut rent subsidies for low-income Americans without seeking Congress’ approval. It would also sweep aside most of the careful rent reforms that Congress enacted unanimously and President Obama signed into law in 2016 but that HUD has not yet implemented. And it would put the cart before the horse by making fundamental rent changes just as HUD is overseeing a rigorous evaluation of alternative rent policies, with findings due in 2020.
The President’s plan doesn’t seem to advance any coherent policy goal. For example, HUD claims that it’s intended to increase local control and choice, but the minimum rent proposal would eliminate local agencies’ flexibility to determine rents for the poorest families. And HUD says it aims to encourage work among rental assistance recipients, but key aspects of the plan would, if anything, discourage work, such as raising households’ rent to 35 percent of their income — which would increase rents more sharply as earnings rise — and eliminating the child care deduction. (The plan also included a proposal to let agencies and certain subsidized housing owners condition rental assistance on work requirements. As we’ve explained, that would hurt families — including working families — while doing little to support work.)
Instead, the proposals seem designed mainly to generate added rent payments to offset the Trump budget’s deep cuts in rental assistance. In practice, they likely wouldn’t generate enough payments in calendar year 2019 to offset more than a fraction of the proposed cuts, even if Congress adopts them before the end of the year, since implementing the new rent rules would take time. Nevertheless, HUD’s proposals offer a deeply problematic approach that would undercut rental assistance programs and hurt the low-income families they assist. Policymakers should adequately fund rental assistance and avoid rent increases that would make it harder for the nation’s poorest families to keep a roof over their heads.
|Impact of Rent Changes in Administration Proposal|
|State||Households Affected||% Increase in Rent for Affected Households||Average Annual Rent Increase Per Household||Total Annual Rent Increase|
|District of Columbia||5,000||35%||$1,400||$7,038,000|