Shared Housing as a Poverty Solution

Shared Housing as a Poverty Solution

We often think there are only two ways to fight poverty — the government and private philanthropy. But living arrangements can be just as important. Moving in with relatives or friends can save on housing costs and make things like child care and food preparation easier. It also allows people to pool their resources, protecting them against job loss or other bouts of bad luck.

According to the latest Census data, 75 million American adults share housing with other adults (excluding married and cohabiting couples, as well as households where parents live with adult children who are enrolled in school). Including the children in these families, more than a quarter of Americans live in shared housing.

Sharing is not only extremely common; it’s also highly effective at alleviating poverty. By my calculations (based on data from a 2012 Census report), 32 percent of adults in shared households would be poor if they lived alone. But they reduce their poverty rate to 10 percent by living together and sharing resources.

Unfortunately, little attention is paid to how shared housing can improve well-being. Instead, the term “doubling up” is often associated with negative outcomes, and the U.S. Department of Education defines children as homeless if their family lives in others’ housing because of economic hardship. And most importantly, as I demonstrate in a paper recently published in Tax Notes, major government safety-net programs penalize shared housing.

To be sure, there can be negative aspects to shared housing: If families couch-surf from one relative’s home to the next, children's education may suffer, and if housing is crowded, there can be negative health consequences. It also isn't a solution for everyone: Weak social connections may make sharing less accessible to some families, and even when poor households move in together, they still may not have enough to get by when pooling their resources.

But at the very least, policymakers should ensure that safety-net programs do not excessively penalize sharing housing, inadvertently robbing poor Americans of the flexibility to use their limited resources on other needs.

In my paper, I found that housing-assistance programs were the worst offenders in this regard. For example, if two recipients of Section 8 housing vouchers were to move in together, every dollar they saved on rent would go back to the government. This removes any incentive for families to live in shared housing.

That is a big problem. Recent research shows that moving from high-poverty areas to ones with better opportunities is beneficial for children’s lifetime chances of success; sharing would allow more families to do so. Also, program costs are driven up when people live in small, separate households in expensive cities. Currently, the majority of Americans eligible for housing assistance don’t receive it because waiting lists go back several years or are closed outright. It makes little sense for the government to support a lucky few families so that they can live in separate households in expensive areas, while others live in shared housing without any assistance.

Housing assistance should be reformed to make it more flexible and efficient. One solution would be to prioritize the applications of people willing to share housing. The savings could then be used to serve more people. A bolder solution would be to convert housing assistance into flexible but smaller cash grants available to all eligible Americans. Verification that people are actually housed somewhere (as opposed to sleeping in cars or in homeless shelters) could be required. Work requirements could also be used for those expected to work.

Food stamps and cash-welfare programs often penalize people for sharing housing as well. The goal should not be to fully eliminate these penalties. After all, people who save money by living with others don’t need as much public assistance to cover their needs. But poor Americans willing to live more frugally should capture at least some of the savings from doing so.

Poverty is a vexing challenge. While our large public and philanthropic investments do a lot of good, they are not enough on their own. Sharing housing is an important tool used by millions of Americans to overcome poverty. We should do a better job in ensuring that our safety-net programs don’t stand in the way.

Kevin Corinth is a research fellow in economic policy studies at the American Enterprise Institute.

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