Chapter 2 -- Continued

• Increases in the numbers of single adults with very low incomes and in the incidence of worst case needs among them suggest that worst case needs rose markedly among persons with disabilities.

The 1996 worst case needs report, Rental Housing Assistance at a Crossroads, analyzed several sources to estimate the number of non-elderly adults with disabilities who receive housing assistance and the number who have worst case housing needs. That report concluded that in 1993 at least 17 percent of worst case households had adults with disabilities present. While there was a slight drop in the overall number of very-low-income households between 1993 and 1995, the number of non-elderly single persons living alone or with other singles in households with incomes less than 50 percent of the area median increased by almost 300,000. Moreover, worst case needs rose significantly among these households, from 44 to 48 percent. Therefore, the number of disabled adults living in households with worst case needs may well have grown to between 1.1 and 1.4 million by 1995.¹⁰

Housing assistance is an important part of this country's commitment to secure a dignified life for citizens with disabilities. Unless the number of households receiving housing assistance continues to expand, it may become an empty commitment for the hundreds of thousands of persons with disabilities who will have to pay more than one-half of their incomes for housing and/or live in physically deficient housing. In fact, the amount of public and assisted housing currently available to those with disabilities could shrink as a result of legislation that permits housing authorities and owners to bypass households with disabilities on waiting lists to create elderly-only "designated" housing projects (see exhibit 22).

• The number of elderly households with worst case needs problems remained above one million in 1995, while more than two million families with children had worst case problems.

Among households with very low incomes, both families with children and households with an elderly head but no children had almost a one-in-three chance of having worst case needs. This situation occurs despite the fact that housing assistance has been heavily directed toward these two groups -- 37 percent of very-low-income elderly and 29 percent of very-low-income families with children receive housing assistance.

Families with children represent the largest group of households with worst case needs -- more than 2.1 million households of a total 5.3 million worst case households. Just over 1 million elderly individuals or heads of households without children have worst case housing needs.

The total number of elderly with very low incomes dropped between 1993 and 1995 by about 300,000. This may reflect a growing portion of the elderly population protected from economic distress by Social Security and private pensions. Nonetheless, many elderly remain both poor and in need of housing assistance. These elderly poor are among those Americans for whom overall economic expansion will not alleviate worst case housing needs. Continuing or returning to work or gaining additional income through marriage are often unlikely.

As for all types of households, an overwhelming proportion (69 percent) of the elderly with priority housing problems are extremely low income, with incomes below 30 percent of area median (see exhibit 24). Similarly, unassisted, elderly-headed households whose incomes are below 30 percent of area median are far more likely to have acute needs (63 percent) than those with incomes between 31 and 50 percent (33 percent). Priority problems are rare among the elderly with incomes between 51 and 80 percent of median where only 72,000 (9 percent) have severe needs.

Inevitably, proposals designed to attract families with a broader range of incomes into public housing and project-based assisted housing would have the consequence of reducing the number of worst case households that have access to housing assistance. These proposals should be carefully crafted to apply only to those situations in which there is a compelling need to make this tradeoff. For example, the Administration proposes to permit ceiling rents for public housing that are as low as 75 percent of the operating costs of a public housing development but would not permit such ceiling rents for developments occupied predominantly by the elderly. There is no compelling need for income mixing in housing for the elderly -- no children for whom relatively better-off families can provide role models and no need to build work incentives into the rent structure.

• The results of welfare reform are not yet clear but are not likely to produce a substantial reduction in worst case needs.

In 1995, when the current AHS was conducted, welfare reform had not yet been enacted. In the 1995 AHS, one fourth of those with worst case needs reported receiving welfare payments from either Aid to Families with Dependent Children (AFDC) or Supplemental Security Income (SSI). Among the 2.1 million families with children who had worst case problems, 930,000 (44 percent) reported AFDC or SSI payments. When worst case needs are measured on the basis of the 1997 AHS, most effects of welfare reform will still be unobservable because the data will describe conditions just one year after the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

The effect of welfare reform on the incomes of extremely-low-income families with children is still uncertain. States have great flexibility to design their own income support systems under Temporary Assistance for Needy Families (TANF), the successor to Aid to Families with Dependent Children, and some families will receive increased support for a limited time period because of generous disregard of earned income for determining benefit levels. In all States, however, some families will lose benefits because they do not cooperate with the new rules requiring work or training, while others may reach the time limits for TANF without finding jobs. Even families that do find jobs will lose the income associated with their former benefits.

In the year following passage of the Act, welfare caseloads fell throughout the Nation, with the number of recipient families in the typical State falling by more than one-sixth. Favorable job markets, the specific policies implemented by the States, and the general message of the reform all played some part in this change.

It is not possible at this stage to determine whether increases in earned income will exceed losses of welfare benefits for the affected families, but rigorous evaluations of State reforms started before the new Federal law provide some clues about the size of the effect that can be expected.

• In Delaware, the evaluators found that after 12 months of implementation, the new welfare program raised employment by 24 percent over the old welfare program, but the average annualized gain in earnings for the caseload as a whole was just $668 per family per year.¹¹

• After 21 months of experience with the new program in Minnesota, researchers found that the rate of employment among families who had ever received welfare rose from 38 percent under the older program to 52 percent under the new one. Earnings had risen at an annualized rate of $694 per family per year.¹²

• After 15 months of experience in Florida, analysts reported an increase in employment from 34 percent under the old program to 37 percent under the new one, with earnings over the past year higher by $157 per family per year under the new program.¹³

Based on this earlier experience, the incomes of families under national welfare reform may be higher, but not radically higher than they were under the old regime. Many affected families will have low wages and will likely have worst case needs despite working. Moreover, policies that effectively compel them to obtain access to a job may also lead some to rent more expensive housing than they did when on welfare, because housing that is convenient to jobs will be more costly than equivalent units that have less easy access. On balance, there is no reason to believe that welfare reform will lead to a significant decline in worst case needs over the next few years.

10. In 1995 the (AHS) found 656,000 renter households with no children or elderly persons but at least one person receiving SSI. Of these, 559,000 had very low incomes; 227,000 (41 percent) of these very-low-income households had worst case housing needs. The equivalent figures from the 1996 report, using the 1993 AHS, were 422,000 very-low-income non-elderly renters receiving SSI income, of whom 144,000 (34 percent) had worst case needs. However, HUD has always known that this AHS proxy for persons with disabilities is incomplete. The 1996 report compared the 1993 AHS with data from the Social Security Administration for Supplemental Security Income (SSI) recipients in 1994. An extrapolation from SSI figures estimated that 2,148,000 renters were non-elderly adults with disabilities, of whom 881,000 (41 percent) had worst case needs (see table 2 of the 1996 report). An equivalent updated comparison file from the Social Security Administration is not available at this writing. The range cited in the text (1.1 to 1.4 million) is an extrapolation that assumes constant relationships between the number of persons reporting SSI in the AHS and the number likely to be found in SSI data when they become available.

11. David Fein and Jennifer Karweit, The ABC Evaluation: The Early Economic Impacts of Delaware's A Better Chance Welfare Reform Program, Abt Associates, December 1997.

12. Cynthia Miller, Virginia Knox, Patricia Auspos, Jo Ann Hunter-Manns, and Alan Orenstein, Making Welfare Work and Work Pay: Implementation and 18-Month Impacts of the Minnesota Family Investment Program. Manpower Demonstration Research Corporation, October 1997. The research finding is a difference in earnings of $1,041 over 18 months, which we converted to an annualized rate in the text.

13. James Kemple and Joshua Haimson, Florida's Project Independence: Program Implementation, Participation Patterns, and First-Year Impacts. Manpower Demonstration Research Corporation, January 1994.