When you give people more money than they can earn by working, what are you incentivizing them to do?
That’s the rhetorical question raised by this California Lawyer article about section 8 housing, Lancaster, and disparate impact lawsuits. The reporter quotes Lancaster vice mayor Ronald D. Smith, arguing (incredibly) that Section 8 subsidies are too low in Los Angeles County:
But Smith also makes a case that the formula used to set Section 8 benefit levels ignores differences in the region’s housing markets. In Los Angeles County, subsidies are calculated by blending fair-market rents throughout the jurisdiction, which covers all but 18 cities and all unincorporated areas. Currently, a family of four that qualifies for a two-bedroom housing voucher can receive up to $1,319 a month. In Lancaster, however, that’s enough to rent a four-bedroom house.
“What do you do when you create a fair-market [rental] rate that is 35 percent lower than it really should be?” Smith asks. “You create a situation where they’re coming here in droves.”
Smith is making precisely the opposite point I want to make. He is saying that figure is too low, driving undesirable Section 8 tenants into the cheaper-to-rent Lancaster area of L.A. County.
I say that figure is far too high.
The average subsidy given to Section 8 participants is based on rental rates throughout L.A. County? Including rentals in Beverly Hills, Bel-Air, Brentwood, Malibu, and Rancho Palos Verdes??
And that leads to a subsidy that can give a family of four a four-bedroom house???
Look: I feel for people who find themselves out of work through no fault of their own. But I also feel for people who are working, heading a family of four, and housing that family of four in a one-bedroom apartment or a studio. And I guarantee you: that happens all over L.A. County.
If you tell people who aren’t working that you’ll give them enough money to pay for a house with a bedroom for each member of a four-person family, you are creating incentives not to find work.
Now, responsible people who are involuntarily out of work may not respond to that incentive. They may continue to look for work.
But many others may not.
By the logic of this policy, we should calculate unemployment benefits by taking an average of the salaries of people who do work — including multi-million dollar salaries for CEOs — and give that amount to people out of work. It’s crazy public policy.
If you want to live in Brentwood or Bel-Air, you should have to work to earn enough money to live there. Including ritzy areas in the calculation is insanity. Providing four-bedroom houses to families of four on the taxpayer dime, when working people are confined to much smaller quarters, is insanity.
And yet this is the type of thing that causes our taxes to be high. This is the type of thing that causes budgets to be squeezed. Where we are told the only answer is to close parks and libraries and schools, or raise taxes.
That is not the only answer. The answer is to incentivize people who are getting government assistance to stop.