The Ladder

Over the past few years, Reid Cramer and Jeffrey Lubell, the Executive Director for the Center on Housing Policy, have worked on identifying ways to improve asset building opportunities among people receiving federal housing assistance. Their paper, “Taking Asset Building and Earning Incentives to Scale in HUD-Assisted Rental Housing,” details possible models that could improve the existing housing subsidy program. Families living in subsidized housing pay 30% of their adjusted income toward rent, which may provide a disincentive to increase earnings. Under the current program structure, 30 cents of every additional dollar a housing subsidy recipient earns automatically goes to rent, which blunts the incentive to work more hours or seek a higher paying job. If families are participating in other assistance programs, such as SNAP (food stamps), an increase in income could even disqualify them from receiving food assistance benefits. In this scenario, a family could potentially end up worse off by increasing their earnings (by paying more in rent and losing other necessary benefits) – what a backwards system! 

Reid and Jeff propose the idea of Rental Assistance Asset Accounts (RAAAs) as a creative tool to help families build wealth while still receiving the support of rental assistance with the ultimate goal of self-sufficiency. A small number (about 50,000) families receiving rental assistance already participate in a program that does just that: the Family Self Sufficiency program. Essentially, RAAAs allow the same principles to be scaled up to work for all households receiving rental assistance.

Here is a short conversation between Reid and Jeff, discussing the proposal and the benefits of bringing to scale a program that incents work, promotes asset development, enables independence and frees up funding for those families most in need.