Social Safety Nets Lower Housing Cost Burden Among the Lowest-Income Renters

By Mackenzie Pish, NLIHC Research Analyst 

Research published in Housing Studies, “The role of government benefits in reducing housing cost burdens, 2009 – 2022,” found that accounting for in-kind government benefits from social safety net programs like the Supplemental Nutrition Assistance Program (SNAP) and tax credits reduces the prevalence of housing cost burden and severe housing cost burden among the lowest-income renters. These findings underscore the importance of anti-poverty policies in alleviating housing affordability challenges.  

The authors relied on data from the American Community Survey (ACS) and the ACS Supplemental Poverty Measure (SPM) Research Files for 2009–2022. They first estimated rates of housing cost burden using the traditional measure of housing costs as a percentage of pretax cash income, which includes wages and earnings as well as cash transfers from Social Security, Supplemental Security Income, and other general public assistance programs. Households are cost-burdened when they spend more than 30% of their income on rent and utilities and are severely cost-burdened when they spend more than 50%. The authors then recalculated housing cost burden by using a different measure of income, known as the Supplemental Poverty Measure (SPM), which accounts for in-kind government benefits a household receives, as well as certain necessary expenses the household pays. In this approach, a household’s income is adjusted by adding in-kind government benefits associated with the social safety net, such as housing assistance, school lunch subsidies, the Low-Income Home Energy Assistance Program (LIHEAP), SNAP, and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), and tax credits, such as the Child Tax Credit, Earned Income Tax Credit, and pandemic-era stimulus payments, and subtracting taxes paid and other basic expenses of childcare and child support, medical care, and transportation to work. This approach captures the positive impact that in-kind government benefits can have on a household’s resources to pay for housing, food, and other basic goods and costs that can significantly reduce those resources. 

Between 2009 and 2019, across all renters, the authors estimated greater rates of housing cost burden when using the alternative (SPM) measure of income likely due to the typical renter paying taxes and other costs higher than the social safety net benefits they receive. For the lowest-income renters, the alternative measure of income produced significantly lower rates of cost burden and severe cost burden. Cost burden rates were six percentage points lower, and severe cost burden rates were 9.5 percentage points lower when accounting for in-kind government benefits as part of household income. Additional consideration of taxes—both tax credits and liabilities—reduced cost burden and severe cost burden rates by an additional percentage point for the lowest-income renters due to tax credits, particularly the EITC.  

The authors also examined the differences in cost burden estimates between 2019 and 2021. During this time, pandemic-era policies such as new or expanded in-kind benefit programs like emergency rental assistance and tax credits were passed to stabilize households. They also examined cost burdens in 2022 when these pandemic-related benefits were expiring. Using the traditional housing cost as a percentage of cash income, the authors found that housing cost burden among all renters increased by about three percentage points between 2019 and 2021. However, the cost burden amongst all renters decreased three percentage points over the same period when using the alternative (SPM) measure of income. For the lowest-income renters, cost burden rates increased by two percentage points from 2019 to 2021 using the traditional cash income measure, but it decreased by five percentage points over the same period using the alternative (SPM) measure. Between 2021 and 2022, the prevalence of severe cost burdens increased by six percentage point for all renters and nine percentage points for the lowest-income renters, while remaining similar under the traditional cash income measurement, indicating the significant negative impact of the ending of pandemic-era assistance.  

The findings show the importance of government benefits associated with the social safety net, as well as progressive tax policy, in reducing the significant financial burdens of the lowest-income renters.  

Read the report.