Though crime-ridden high-rise projects are public housing policy's most abiding symbol, the majority of today's subsidized tenants don't live in them. Instead, 1.7 million households now get government vouchers that help pay their rent in the private market, at a cost of over $13 billion a year—a third of HUD's total budget. Liberals embrace these vouchers because they believe poor families can never afford decent market-rate housing; conservatives like the vouchers' ostensible free-market mechanism, which harnesses the private sector to serve a public goal. In Washington, the only question is how much to increase spending on the program. But out in the blue-collar and middle-class neighborhoods where voucher holders increasingly live, longtime residents hate the program. It undermines and destabilizes their communities by importing social problems into their midst, they say—vociferously enough to get the attention of local legislators. Though the program's supporters dismiss the critics (some of whom are black) as racists, they are nothing of the kind. And they are right.

In south suburban Chicago, with one of the highest concentrations of voucher holders in the country, middle-class African-American residents complain that they thought they'd left the ghetto behind—only to find that the federal government is subsidizing it to follow them. Vikkey Perez of Richton Park, Illinois, owner of Nubian Beauty Supply, fears that the small signs of disorder that have come with voucher tenants—the unmown lawns and shopping carts left in the street—could undermine the neighborhood. "Their life-style," she says, "doesn't blend with our suburban life-style." Kevin Moore, a hospital administrator and homeowner in nearby Hazelcrest, complains that children in voucher homes go unsupervised. Boom boxes play late at night. "I felt like I was back on the West Side," he says, referring to the Chicago ghetto where he grew up. "You have to remember how to act tough."

In South Philadelphia's Irish and Italian neighborhoods, which have seen an influx of voucher holders, elected officials report being inundated with constituent complaints—and watching white constituents move out of the neighborhood. The area's state representative, William Keller, describes how owners of row houses suddenly find that "the house next door is being rented to people whose kids are up all night, who are out in the street yelling 'M-F' this and 'M-F' that. It's like they're trying to find the worst people." The issue, he says, "isn't race; it's class."

In Maryland's Prince George's County, an area of the Washington, D.C., suburbs with a large concentration of middle-class black residents, hundreds of voucher tenants—many of whom come from Washington, since vouchers are portable from one jurisdiction to another—do not pay their utility bills or their required 30 percent share of the rent. "We're very concerned about the program," says Mary Lou McDonough of the Prince George's Housing Authority, which doles out the vouchers. The Authority is concerned about more than non-payment. Unlike most such agencies, it screens its voucher applicants, and it finds that some of the households have criminal records—including, recently, a murder conviction. Every year, the authority boots out 25 or 30 voucher holders for brand-new crimes, usually drug-related.

How could so politically popular a program become so fraught with trouble? The problem lies both in the program's underlying assumptions and its governing regulations. The idea began with Lyndon Johnson's Kaiser Commission on Urban Housing, which mistakenly believed that the private housing market couldn't provide the poor with decent homes they could afford, despite the fact that for much of the twentieth century it did so quite well. "The root of the problem in housing America's poor," the commissioners wrote, "is the gap between the price that private enterprise must receive and the price the poor can afford. The economic gap separating millions of deprived families from adequate housing can only be bridged by government subsidies. Such subsidies create an effective and real market demand to which private enterprise has proved it will respond."

Accepting this rationale, the Nixon administration, stung by scandals and cost overruns in federally subsidized housing construction, proposed the Housing and Community Development Act of 1974, whose Section 8 authorized federal rent subsidies for privately owned apartments. These so-called Section 8 vouchers appealed to Republicans because of their contrast with public housing built and operated at government expense. Not only did vouchers rely on the private market, but also they did not require public housing's ongoing maintenance costs.

As the program expanded, Republican officials continued to focus on the mechanics and efficiency of the program, without stopping to reconsider its fundamental assumption that, without subsidies, the private housing market couldn't serve the poor. For example, John Weicher, a Republican former HUD deputy assistant secretary now with the Hudson Institute, maintained that, through Section 8, "we can achieve the modest degree of improvement needed to bring many of our dwellings up to current quality standards and can provide significant financial relief for many hard-pressed poor families." The program, he thought, would allow the poor to move to "better neighborhoods," as if—another faulty assumption—a move to a middle-class environment would make them middle class.

Today's housing bureaucrats continue to take as gospel the Kaiser Commission's core belief that housing—unless it's a shanty or a cold-water flat—will inevitably be too expensive for families of modest means. One example of many: a HUD press release this March bore the headline GOOD TIMES FOR MANY DON'T END HARD TIMES FOR LOW-INCOME RENTERS; DESPITE ECONOMIC BOOM, HUD FINDS HOUSING CRISIS DEEPENING.

But federal numbers don't support this assertion. Poor families can afford existing private housing without a subsidy—so long as the family has two earners. The federal government figures that it takes $27,000 for a family of four in Philadelphia to afford a house—that's where the voucher kicks in. But this is only barely above the $24,000 that two people earning the minimum wage would jointly earn. The additional support the Earned Income Tax Credit gives the working poor would close this "housing gap" even further, providing a $1,300 payment to a household with two children. In other words, the government officially presumes that a household in which two people earn only barely more than the minimum wage (and in this time of full employment, many unskilled workers make more) could afford private, unsubsidized housing. (Of course, a stay-at-home spouse who saved a family child-care expenses would have the same economic effect as a second job holder.) Our "housing problem," then, really is just another name for our single-parent family and illegitimacy problems, with female-headed households making up fully 84 percent of voucher holders (and a comparable percentage of public housing tenants, too).

Erroneous assumptions about housing affordability rest upon a failure to understand the importance of the means—marriage and thrift, above all—by which families improve their prospects so they can move to a good home in a good neighborhood. Better neighborhoods are not better because of something in the water but because people have built and sustained them by their efforts, their values, and their commitments. Voucher appropriations are based not only on the mistaken belief that it is necessary to award, at public expense, a better home to all who can demonstrate "need," but also that it is uplifting to do so, when in fact it is the effort to achieve the good home, rather than the good home in itself, that is the real engine of uplift.

Add to these misunderstandings the unanticipated effects of the Section 8 program's design, and you have a lethal mix. Although anyone earning less than 80 percent of the median income in theory qualifies for the program, vouchers are in limited supply, and priority goes to the poorest applicants. By law, fully 75 percent of vouchers must go to households earning only 30 percent or less of median family income. Local housing authorities can go even further in targeting the "neediest"; a quarter of Philadelphia's vouchers, for instance, go to those living in homeless shelters. These priorities are what torque the voucher program toward single-parent households, the country's lowest income group.

The priority given to such households, many of them on welfare or only recently off the rolls, forms part of a package of benefits—including food stamps, Medicaid, and the Earned Income Tax Credit—that have no time limits and that, taken together, constitute significant continuing public support for single-parent low-income households. So counter does this open-ended housing voucher run to welfare reform's five-year limit that Philadelphia's brochures that describe the program stress that, no, there really is no time limit.

What's more, the program has the effect of concentrating problem-ridden, very poor single-parent families in specific neighborhoods. Under normal circumstances, Section 8 tenants would be concentrated anyway. Most landlords would shun them, for fear they would damage their property. Only owners of hard-to-rent, run-down buildings would welcome them, and these properties would be concentrated in marginal neighborhoods struggling hard to maintain their respectability. Other things being equal, landlords would try hard to find respectable working-class tenants before renting to subsidized Section 8 families.

But other things are not equal. Voucher tenants come with significant advantages to outweigh their drawbacks. Landlords don't have to worry about non-payment, since the government deposits its share of the rent—the lion's share—directly into the property owner's bank account. Moreover, for properties in precariously respectable neighborhoods, the government-paid rent is more than the market rent. Reason: the Section 8 program allows voucher holders to pay up to the average rent in their entire metropolitan area, and landlords in working-class or lower-middle-class neighborhoods, where rents are below average, simply charge voucher holders exactly that average rent. Assured payment and a more-than-generous risk premium: no wonder some landlords in neighborhoods teetering on the brink of respectability gladly welcome voucher tenants over working-class families offering lower rents and so accelerate neighborhood decline. South Philadelphia state representative William Keller tells of local property owners who "couldn't rent their place for $500, but they can get $900 from Section 8."

The result is a familiar government-subsidized racket: landlords who specialize in Section 8s—who advertise for them and know the bureaucratic rules about what it takes to get paid. In Philadelphia, state representatives and members of the City Council say that they get daily complaints about Section 8 tenants, and they keep a list of landlords and their Section 8 holdings. "There are guys with 100 Section 8 houses," says Philadelphia city councilman James Kenney. "They're clearing $40,000 a month just in Section 8 income." In south suburban Chicago, Section 8 tenants have taken over whole subdivisions of attached row houses. One subdivision in the Riverdale suburb is now a virtual Section 8 ghetto, with more than 200 voucher holders, and the whole of Riverdale has 336 voucher households out of a total population of just 13,000. Locals have nicknamed the bus that takes many of these minority voucher holders to the plentiful low-wage jobs of the western suburbs the "Apartheid Express."

As Democratic Senator Barbara Mikulski of Maryland points out, vouchers are replacing "vertical ghettos with horizontal ones." The southern suburbs of Chicago, where anger over Section 8 is reaching the boiling point, have absorbed almost 58 percent of all the Cook County Housing Authority's vouchers—more, in other words, than all the other parts of Chicago and its suburbs combined. All but a handful of the voucher-holders who moved from Washington, D.C., to its suburbs ended up in Maryland's Prince George's County. In Philadelphia, 45 percent of voucher holders inhabit just two of the city's five major sections—South Philadelphia and Northeast Philadelphia—blue-collar areas unaccustomed to subsidized housing.

The effects of a concentration of voucher holders on a small municipality are profound. "It has touched every aspect of the city government," says Riverdale mayor Joe Szabo. Like most of the municipalities south of Chicago, where the now-vanished steel mills and other heavy industry once clustered, this town of small ranch houses dwarfed by looming power-line stanchions has always been a solidly blue-collar place, with an active community life. Recently, though, Szabo has noticed things changing. There are more children than ever in town, but the once-popular youth football program has died. "We just can't get parent volunteers," he says. The mayor pushes park officials to mount more and more programs for lower-income children but finds that the kids' mothers just don't take the time to sign them up. "We'd have to go to individual households and convince them to send their kids, and even then they might not show up," he reports.

Demands have risen, though, for other sorts of public services. EMT crews respond to emergency calls to find callers, accustomed to city emergency rooms, simply saying they're "feeling ill." Riverdale's Potter elementary school, once boasting a top academic reputation, now has the state's highest student turnover. Student achievement has dropped—putting paid to the idea that shipping poor families to good schools in the suburbs will cause an education ethic to rub off. Instead, the concentration of disorganized families has undermined a once good school. School funds, says the mayor, must now be diverted to the legions of "special needs" students. Crime is up, too—"we have real legitimate gang issues now," the mayor says—and the city has had to increase its police force by 35 percent, from 26 to 35. That's pushing the tax rate up, which the mayor fears will discourage new home buyers, pushing the small city into a cycle of decline. A lack of local buying power—a function of the voucher program's preference for very low-income renters—has already left storefronts abandoned on Riverdale's main street.

Wayne Curry, the elected county executive of Maryland's Prince George's County (and the first African-American to hold the job), has similar worries about the impact of voucher holders on his jurisdiction. As the Washington Post observed in March: "Curry is trying to grow the economic base of Prince George's—which has one of the nation's largest black middle-class communities—by attracting higher-income residents that draw merchants and businesses. Taking in a larger share of the region's poor runs counter to that goal."

Vouchers can lead to the deterioration of individual properties as well as of whole neighborhoods. Most landlords are unwilling to rent to voucher tenants: 40 percent of the voucher funds in Cook County, and $1 billion nationally, went unused because voucher holders couldn't find landlords willing to accept their scrip. Throughout California, where landlords can find solid working-class tenants who can pay more than the vouchers pay, voucher tenants are not welcome. So voucher holders, once they succeed in finding housing, tend not to rock the boat, contrary to the expectation that they would exert leverage on landlords to keep up their properties. Moreover, observes assistant manager Patrick Finn of the village of Flossmoor in south suburban Chicago, "If you are only paying $200, and you're getting a $700 or $800 apartment, your expectations are low. It's not your money. Section 8 supports the weakest section of the real-estate market—the house that can't sell, the absentee owner who doesn't perform well in the private marketplace. It subsidizes the marginal sector."

Though in theory the voucher program was supposed to promote racial integration as inner-city minority households used their vouchers to move to previously all-white suburban neighborhoods, the effect in practice appears to be just the opposite. Vouchers are creating new, all-black communities. Joe Martin, director of an organization that has been trying for more than 20 years to attract middle-class African-American newcomers to south suburban Chicago while retaining long-term white residents, notes that the spread of voucher holders makes his already difficult task harder. "Voucher holders," he says, "have the effect of confirming the worst stereotypes." Racial integration is hard enough when whites and blacks are at relatively similar incomes. Mixing poverty-level blacks—by design of the Section 8 program—with middle-class whites is a recipe for racial instability.

But voucher-related racial problems are not confined to suburbs. The majority of voucher placements are, in fact, in lower-income urban neighborhoods, many of which are oases of hardworking families trying to maintain their properties. These are people who must be allowed to distinguish themselves from the disorderly poor. When the shabby-genteel neighborhood is white and the disorderly poor who arrive are black, the mixture is explosive—as in Philadelphia, where the Housing Authority has consistently placed the "worst stereotypes," minority former shelter residents and long-term public housing tenants, in historically white ethnic blue-collar neighborhoods.

In South Philly, the neighborhood office of state representative William Keller bustles with irate residents whose entire net worth is tied up in their homes and who fear that the presence of voucher holders will undermine the value of their property. At a City Council hearing last year, Lynne Rototli of the Mayfair Civic Association in Northeast Philly blamed vouchers for the fact that property values in her neighborhood were declining while taxes were going up. Residents of absentee-owned rental properties did not participate in community life, she said, and subsidized tenants kept late hours, making it hard for those getting up to go to work in the morning to sleep. "We are afraid," she told the Council hearing, " that the Section embodies everything that we, the middle-class people, fear."

One tragedy in the voucher saga is that some black elected officials—Pennsylvania congressman Chaka Fattah, for instance—dismiss such heartfelt concerns as racist. Such attacks leave bitterness in their wake. "You know what bothers me?" one South Philadelphia resident confided in Representative Keller's office. "I've got two kids. You know why I don't have three? Because I can't afford it. And I see people with three or four kids and no father getting a subsidy to live in my neighborhood—which means I'm paying to help them. And complaining about it makes me a racist." Being black doesn't shield you from being labeled with the R-word when you attack Section 8. African-American local officials in predominantly black Matteson, Illinois, report that they've been accused of racism over the city's decision to advise landlords that it may be better to leave a unit temporarily vacant than to rent to a voucher holder.

Harvard sociologist William Julius Wilson famously argued that class, not race, is the most powerful divide that separates Americans today. Frank Arceneaux, an African-American state trooper who owns a home in Matteson and rental property in nearby Richton Park, illustrates Wilson's point as well as anyone—and he puts the lie to the idea that opposition to vouchers is inherently racist. He's become afraid to send his wife to collect rents in the apartment building he owns because of the presence of Section 8 tenants at a building nearby. "Section 8 brings a life-style from the city that I tried to escape from," he says. "It's a value difference. It's all single mothers. They let their kids stay out until midnight. I admit I'm prejudiced against blacks—blacks who don't honor my values. I can understand white flight. I'd like to fly, too, but I can't. I've maxed out my income. I'm not gonna get rich all of a sudden. I've got to stay and fight."

Critics of the voucher program propose three fixes, all of dubious efficacy. The first is the idea of "deconcentrating" voucher holders. South suburban Chicago congressman Jerry Weller (who represents Riverdale) went so far as to propose a 20 percent cap on voucher holders in a given census tract. Congressman Jesse Jackson Jr., who holds a key seat on the House Housing Committee, endorsed a version of the idea of a cap, or moratorium, in a letter to the Chicago Sun-Times last December. In a bid to placate his significant constituency in the southern suburbs, Jackson proposed that the moratorium apply to any "South Side neighborhood or southern suburb that is experiencing zero or negative economic growth"—a tough standard to meet in these prosperous times. But to spread out Section 8 tenants into other, wealthier neighborhoods would require HUD to pay even higher reimbursements to landlords—a tough sell to many legislators—and even so, landlords with other prospective tenants to choose from would resist voucher holders. It is so difficult to place voucher tenants in so-called non-traditional areas that a south suburban Chicago nonprofit dedicated to that purpose—Housing Choice Partners—has been able to place only 225 of 9,200 voucher holders outside the Section 8 corridors, despite personal counseling of voucher holders and assurance to landlords that the prospective tenants were not disruptive.

A second proposed improvement, also aimed at deconcentrating voucher tenants, is to align the value of vouchers more closely with actual private rents in a given neighborhood, to make the program less of a windfall for the owners of marginal housing. But for landlords willing to amass large blocks of such properties to rent to Section 8 tenants, the guarantee of even average rents in poor neighborhoods, deposited directly in their bank accounts each month by the government, will remain a temptation. It's an easy, risk-free way to make money.

The last proposed fix is to screen tenants. In fact, housing authorities already have legislative license to screen out those who haven't paid their rent in the past or who have criminal convictions, but they are reluctant to do so. Observes a senior HUD official closely familiar with the Section 8 program: "If a family's been evicted for disturbance—drinking, making noise—typically the authority won't screen those families out. Authorities tend not to like to do heavy screening, because it puts them in a position of having to justify their actions legally. They're worried about some Legal Aid lawyer who's going to rake over their files and make their lives miserable." And if screening is difficult, revoking vouchers after a renter has moved in requires a major effort on the part of housing authorities. While housing authorities should certainly try to improve screening and should deal firmly with rowdy tenants, such screening cannot easily replace the screening that the housing market, left alone, would do to protect and sustain neighborhoods.

But maybe we would do better to rethink this issue completely. We could house the same population we now house with vouchers—primarily single mothers—in existing public housing projects. But we could transform those projects into something very different from what they are now—into institutional homes where unwed mothers could stay only for a fixed period of time (perhaps two years), during which time they might get instruction in parenting, along with encouragement to marry the fathers of their children. Such a system envisions personal and cultural change, not just redistribution of income. In this respect, even no system at all would be better than Section 8 vouchers. Were the public to withdraw the support that enables single-parent families to get their own apartments, the women might be forced to consider marriage or to live with their own extended families, which might provide more supervision for the children. As matters stand now, a young woman who has children as a teenager can qualify, at age 18, for her own voucher-paid house, and she can keep it in perpetuity. If her income is low because she has no work experience, she would get top priority.

Even if we were to accept the dubious Johnson administration view that the poor need more income in order to afford better housing, that doesn't mean that rent vouchers would be the right way to provide it. Through the Earned Income Tax Credit, poor working families today can qualify for tax "refunds" larger than the amount actually withheld from their paychecks. If we're convinced that we must provide financial support to the working poor, far better to do it this way—or to reduce the regressive Social Security tax—than to provide housing vouchers. Even with such an income supplement, a household would still have to strive and save to find a home in a better neighborhood. Its relationship with a landlord would not be distorted. It would have to adopt the habits of thrift and discipline that would win favor with middle-class neighbors.

What our experience with Section 8 vouchers teaches us is simply this: replacing an old failure with a new one should not be confused with success.


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