Public housing advocates argue that the nation should expand the federal public housing program as part of an effort to increase the supply of affordable rental housing. This paper examines federal public housing construction in the largest US cities over the period 1937–1967, a period during which the public housing program was the primary program to provide low-income households with affordable rental housing. Public housing is found to depend upon the population level of the city, factors that characterize the housing stock as of 1950, the poverty level in the city, and the size of the nonwhite population in the city. The National Commission on Urban Problems (National commission on urban problems 1968, page 128) found that this supply response meant that “… the great need of the large central cities for housing for poor families was largely unmet.” Changes in racial segregation from 1940 to 1960 are found to be unrelated to public housing construction. While the current situation is different in many respects from circumstances of these earlier decades, a renewed effort to supply public housing might produce similar outcomes.
Passage of the Housing Act of 1937 was a political victory for the advocates of public housing in the US Numerous histories of public housing in the USA have been written; the recent book by Bradford Hunt [
Public housing advocates such as Bennett et al. [
Any conclusions that might be reached as to the relevance of this past history of public housing for current policy must be influenced by the fact that many factors are different from those that existed in the 1940s, 1950s, and 1960s. Current housing policy is a much more complex web of programs that includes federal demand-side housing vouchers, low-income housing tax credits that enable the private sector to supply subsidized rental housing to households with modest incomes, and an ongoing program to replace the current public housing stock with mixed-income housing developments that include public housing. These programs are discussed briefly. Furthermore, it can be argued that the racial discrimination that was often prevalent in the earlier decades has declined, in part as a result of the civil rights laws that were passed beginning in the 1960s. Racial discrimination in the housing market is against the law. What is more, the national has undergone massive suburbanization, a sizable increase in the percentage of households that own rather than rent, significant demographic changes (with a large increase in the Hispanic population), but little progress has been made in reducing the rate of poverty since the early 1970s. Finally, the housing market has experienced great turbulence in recent years. Consider first the current problem of housing “affordability.”
Today Americans at the lower end of the income distribution do not encounter housing problems as serious as those in the 1930s, but substantial problems remain. the poor rental household spent an average of 64% of income on housing in 2000, and 77% of the renter poor devoted more than 30% of their income to housing. Renter households in the lowest 20% of the income distribution spent an increasing proportion of their incomes on housing—47% in 1960, 53% in 1980, and 55% in 2000. Households in this group that spent more than 30% of income on housing increased from 62% in 1960 to 69% in 1980 to 79% in 2000.
the poor rental household spent an average of 64% of income on housing in 2000, and 77% of the renter poor devoted more than 30% of their income to housing.
Renter households in the lowest 20% of the income distribution spent an increasing proportion of their incomes on housing—47% in 1960, 53% in 1980, and 55% in 2000. Households in this group that spent more than 30% of income on housing increased from 62% in 1960 to 69% in 1980 to 79% in 2000.
Quigley and Raphael [
It is worth noting that any definition of housing “affordability” as a percentage of income is arbitrary. The demand for housing is more properly considered to be a function of income averaged over a period of years, not just current income. For another thing, some households may simply freely choose to spend a large percentage of income (in the longer run) on housing. So long as no laws are being broken and children are receiving adequate care, why should anyone else care? The real social problem arises if households with relatively low incomes must spend a large percentage of income just to obtain housing of some minimum standard—and therefore are unable to afford other basic necessities. The size of the problem depends, of course, on the minimum standard for housing that society chooses to define. A referee reminds us that both the standard for minimum housing quality and the definition of “affordable” varies widely around the world.
The American Housing Survey provides an update on the status of rental housing in the USA Table
Indicators of rental unit quality.
|Rental units (1000s)||34,007||35,378|
|Lacking full kitchen||3.98%||3.88%|
|Lacking full plumbing||2.88%||1.85%|
|(No exclusive use)||1.62%||1.58%|
|Year built (median)||1966||1971|
|Over 70 years old||16.58%||19.10%|
|Square feet in unit (median)||1293||1300|
|Square feet per person (median)||523||520|
|Persons per room|
|Up to 0.5||62.04%||63.30%|
|0.51 to 1.00||33.06%||32.46%|
|1.01 to 1.50||3.96%||3.39%|
|1.51 and over||0.94%||0.79%|
Source: American Housing Survey, 1999, 2009.
While the quality of rental units barely changed from 1999 to 2009, rental housing costs as a percentage of household income increased sharply. Table
Monthly housing costs for rental households.
|Monthly housing cost (median)||$580||$755||$808|
|(corrected for inflation, $1999)||$580||$607||$627|
|Monthly housing cost as percent of household income (median)||28%||33%||34%|
|Monthly housing cost in excess of 30% of household income||42%||51%||53%|
|Monthly housing cost in excess of 40 % of household income||27%||35%||38%|
|Monthly housing cost in excess of 50% of household income||20%||26%||29%|
Source: American Housing Survey, 1999, 2007, 2009.
The American Housing Survey also reports the number of rental units that received some form of rent reduction. Table
Units in government rent reduction programs (1000s).
|Units under rent control||884||560||529|
|Public housing units||1,865||1,943||1,679|
|Federal rent subsidy (HUD and Department of Agriculture)||2,062||3,196||3,185|
|Other units with income verification||2,277||982||988|
Source: American Housing Survey, 1999, 2007, 2009.
Is it time to consider expanding public rent reduction programs for households with modest incomes? As Quigley and Raphael [
It is important that the argument for direct government intervention consists of three parts. First, a sizable fraction of the nation will continue to have low and moderate incomes. Second, the private market is unable to supply decent housing for the poor that is affordable. And third, the slum housing in which poor urban families live produces numerous negative externalities. The conclusion reached by Wood [
The paper examines the variation across major US cities in the number of public housing units that were constructed during the first 30 years of the program, 1937 to 1967. The study ends with 1967 for two reasons. First, the rules of the program remained essentially intact during these years. The Housing Act of 1968 initiated a major change in urban housing policy. Second, 1967 marked the beginning of the peak of urban rioting and, as McDonald [
The federal public housing program in the USA began with the National Industrial Recovery Act in 1933. Senator Robert F. Wagner of New York inserted a clause that permitted the Federal Emergency Administration of Public Works (PWA) that was created by the Act to build low-cost housing and carry out slum clearance projects. The PWA Housing Division constructed some 22,000 units of publicly owned housing from 1933 to 1938. This federal agency selected the sites, made the design choices, and managed the projects. Most of the units were built on vacant land because of a 1935 federal court ruling (in
These considerations were built into the Wagner-Steagall Housing Act of 1937. The Act created the Local Housing Authority, an entity to be chartered by state statute, to select sites, make the design choices, manage the projects, and apply for the federal subsidies that were created. In most states the board of the Local Housing Authority is chosen by the mayor of the municipality. The federal subsidies were designed to keep rents low. A construction loan was provided that covered 90% of the total project costs (with 10% borrowed by the Local Housing Authority). In addition, the federal program provided annual cash payments equal to the total debt service for the project. In effect, the federal program paid for the entire capital cost of the project. The program also required that local governments contribute 20% of the annual subsidy for each project, but permitted exemption from local property taxes to count for that contribution. In effect public housing was exempt from local property taxes. All of this meant that rents for public housing needed only to cover management and maintenance costs. Rents could be set so that low-income households could afford public housing. The Act included the provision that rent shall be no more than 20% of annual family income (16.7% for families of five or more). A final provision required “equivalent elimination,” the clearance of one slum unit for each new unit, although a loophole permitted deferring equivalent elimination in the event of a local housing shortage. As Bradford Hunt [
The next landmark in the program is the Housing Act of 1949. This Act stated the goal to “… provide a decent, safe, and sanitary living environment … for every American.” The Act authorized construction of 135,000 units of public housing per year for 6 years (810,000 units), so it was envisioned that almost 1 million units of public housing would exist by 1955. According to the National Commission on Urban Problems [
The National Commission on Urban Problems [
Municipalities with public housing: 1967.
|City size||Number of cities||Percent with public housing|
The purpose of this section is to estimate a model of the determinants of the size of the public housing stock in a city as of 1967. The study includes the top 50 cities in the USA as determined by the 1960 census, excluding the three that did not participate in the public housing program (Long Beach, San Diego, and Tulsa) and Honolulu, Hawaii (which was not a state until 1959). The empirical results below suggest why Long Beach, San Diego, and Tulsa were not participants in the program in 1967. These were relatively small cities in 1950 (populations of 251,000, 334,000, and 182,000, resp.) with high rates of home ownership and small minority populations. The 46 cities that participated in the program had 113,603 units of public housing in service in 1949 (66.8% of the national total) and added 205,051 units between 1949 and 1967 (44.3% of the total units added in the nation during these years). As of 1967 these top 46 cities contained 50.3% of the public housing built under the federal public housing program.
The decision to request funds to construct public housing rested with the Local Housing Authority (and required approval by municipal officials in most cases), so what determined the magnitude of those requests? Approval of the proposals by the US Housing Authority was required, of course, but the initiative was with the local officials. As the National Commission on Urban Problems described, federal funding for the program varied from year to year and administration to administration, so this study examines the long run outcome—the total stock of public housing in service in 1967. The year 1967 is chosen because the Housing Act of 1968 marked a major change in federal housing policy. The focus is the result of the original public housing program as initiated in 1937 and extended in 1949.
What basic economic factors are likely to determine the size of the request made by the Local Housing Authority and the approval by the US Housing Authority? The most obvious variable is the population of the city. Holding other factors constant, a larger city has a greater need for public housing. Indeed, the simple correlation between the size of the public housing stock in 1967 and the population of the city in 1960 is 0.95. However, it is clear that there is much more to the story. Consider the five largest cities in 1960. New York City (with population 7.78 million) had 64,633 units of federally funded public housing (plus units funded by state and local funds), Chicago (population 3.55 million) had 32,960 federally funded units, and Philadelphia (population 2.00 million) had 15,719 units. But Los Angeles (population 2.48 million) had only 9,287 units and Detroit (population 1.67 million) had 8,180 units.
As noted above, the basic hypothesis in this study is that the demand for public housing in a city depends upon the characteristics of the private housing stock and the local population. Characteristics of the private housing stock that may be important include the following. The age of the housing stock, measured as the percentage of the housing stock in 1950 that was constructed after 1940. Very little construction took place in the 1930s, so this variable in effect measures the percentage of housing that was built before 1930. The percentage of the occupied housing stock that is owner occupied. Since public housing is rental housing, a larger rate of ownership means a smaller demand for rental housing. The percentage of units with hot running water, private toilet and bath, and not dilapidated. This is the basic measure of “standard” quality used by the census. The vacancy rate. This is an ambiguous indicator in that a high vacancy rate can mean an ample supply of rental housing, or it can mean that the supply is of low quality. Population density in the city, to measure the extent to which the city is crowded—possibly with unhealthy tenement structures.
The age of the housing stock, measured as the percentage of the housing stock in 1950 that was constructed after 1940. Very little construction took place in the 1930s, so this variable in effect measures the percentage of housing that was built before 1930.
The percentage of the occupied housing stock that is owner occupied. Since public housing is rental housing, a larger rate of ownership means a smaller demand for rental housing.
The percentage of units with hot running water, private toilet and bath, and not dilapidated. This is the basic measure of “standard” quality used by the census.
The vacancy rate. This is an ambiguous indicator in that a high vacancy rate can mean an ample supply of rental housing, or it can mean that the supply is of low quality.
Population density in the city, to measure the extent to which the city is crowded—possibly with unhealthy tenement structures.
These variables are taken from the 1950 Census of Population and Housing on the grounds that this census reflected the situation after the first wave of public housing construction from 1937 to 1949 and the state of the housing stock to which local officials responded in formulating their requests for additional public housing in the 1950s.
The intent of the public housing program was to provide decent housing for poor families, so the percentage of low-income families should be relevant. The official federal poverty definition did not exist in 1950, but the 1950 Census of Population and Housing provides data on the percentage of families with incomes below $2,000 per year in 1949. A second population characteristic is also tested—the percentage of the population that was nonwhite. This is the measure of the minority population that was provided by the censuses of 1950 and 1960. The motivation for testing this variable has two parts. First, it may be that, among families with incomes below $2,000, the incomes of nonwhites were less than the incomes of whites. If the public housing program is responding to the number of families in extreme poverty, then inclusion of the nonwhite percentage may add to the explanatory power of the model. However, it has been alleged (and in the case of Chicago, demonstrated in federal court) that site selections for public housing sometimes were used to maintain racial segregation. If local jurisdictions were motivated to confine the nonwhite population to certain areas within the city, then the Local Housing Authority might apply for more public housing—especially the high-density variety that was constructed in the 1950s and early 1960s. Hirsch [
The variable definitions, means and standard deviations, and data sources for the 46 major cities, are shown in Table
Variable definitions and descriptive statistics: 46 major US cities.
|Variable||Mean||Std. Dev.||Minimum||Maximum||Data source|
|Public housing units per 1000 population||8.96||4.35||0.80||26.89||National Commission on Urban Problems|
|Percentage of housing stock built after 1940||15.85||9.80||3.1||36.3||1950 Census|
|Percentage housing owner occupied||45.92||10.60||19.1||64.0||1950 Census|
|Percentage housing standard quality*||76.76||10.26||56.0||91.0||1950 Census|
|Vacancy rate (%)||1.64||1.23||0.50||6.70||1950 Census|
|Percentage families, income <$2,000||21.57||6.43||13.1||39.4||1950 Census|
|Percentage Nonwhite population, 1950||14.11||9.92||1.6||39.9||1950 Census|
|Percentage Nonwhite population, 1960||19.59||11.87||2.7||54.8||1960 Census|
|Segregation index, 1950||88.29||4.35||76.9||97.8||K. Taeuber and A. Taeuber [|
|Population density per square mile||9,496||5,294||2,861||25,046||1950 Census|
*Units with hot running water, private toilet and bath, and not dilapidated.
Multiple regression models were estimated, and the results of four of the models are shown in Table
Regression analysis of public housing units per 1,000 population* (
|Percentage of housing||—||−0.126||−0.134||−0.143|
|Stock built after 1940||(1.83)||(2.04)||(2.22)|
The estimated equation in column (2) of Table
A final test, shown in column (4) of Table
The model was estimated using the actual number of public housing units (PHU) as the dependent variable and population of the city in 1960 as an additional independent variable. The estimated equation is POP60 = population of the city in 1960 in 1000s, OWNOCC = percentage of occupied units owner occupied in 1950, POVERTY = percentage of families with income below $2,000 in 1949, BLTAFT40 = percentage of housing units in 1950 built after 1940, NONWHITE60 = percentage of population nonwhite in 1960.
POP60 = population of the city in 1960 in 1000s,
OWNOCC = percentage of occupied units owner occupied in 1950,
POVERTY = percentage of families with income below $2,000 in 1949,
BLTAFT40 = percentage of housing units in 1950 built after 1940,
NONWHITE60 = percentage of population nonwhite in 1960.
Note that, except for percentage of nonwhite population, the coefficients of all of the variables attain high levels of statistical significance. The coefficient of the percentage of nonwhite population is positive as expected with statistical significance at the 93% level for a one-tail test (86% level for a two-tail test). In this case, the addition of the segregation index for 1950 (not shown) did not add to the explanatory power of the model.
In summary, the empirical results in Table
The estimated models can be used to compute expected values of public housing units, which can be compared to actual values. The above model for the actual number of public housing units is employed, and the results of the computations for the top 20 cities are shown in Table
Expected and actual public housing units.
|City||Expected units||Actual units||Population 1960 (1000s)||Percent||Poverty||Percent ||Built after 1940|
Those political factors are the subject of detailed studies of Los Angeles by Don Parson [
The influences of the variables included in the model can be seen in Table
A second feature of the public housing program was equivalent elimination—the requirement for the elimination of unsafe and unsanitary dwellings in the same numbers as the newly built public housing units. However, there was a major loophole in the law. Equivalent elimination could be deferred if there was a shortage of decent units that was so severe that elimination of units would cause dangerous overcrowding. Furthermore, elimination of any units by a public body in the jurisdiction counted towards the equivalent elimination requirement. The National Commission on Urban Problems [
An alternative specification relates equivalent eliminations per 1,000 population (EE/1,000) to public housing units per 1,000 population (PHU/1,000). The estimated equation is
Racial segregation of the African-American population was and is a prominent feature of all major cities in the USA The landmark study of racial segregation by K. Taeuber and A. Taeuber [
|Year||Mean of segregation indices||Range|
|1940||86.45||77.0 to 98.0|
|1950||88.29||76.9 to 97.9|
|1960||86.79||69.3 to 97.9|
Some indices of segregation changed from decade to decade. The means and ranges for the changes in the indices for the 44 cities are as in Table
|Years||Mean of change in index||Range of change|
|1940–60||0.35||−13.6 to 14.4|
|1950–60||−1.49||−10.5 to 6.2|
The change in a segregation index is a complex result of several factors. Cities change. Some cities expanded their boundaries and others did not. Some cities experienced population growth, while others experienced population decline. Some cities were major destinations for the “great migration” of African Americans from the South during these decades, but others were not. The percentage of African-American population was high in some cities and low in others. And some cities built more public housing than did others.
The purpose of this section is to estimate a model of the change in the index of segregation that includes the number of public housing units per 1,000 population. Is public housing associated with an increase or a decrease in segregation? Or does the evidence indicate that changes in segregation were unrelated to public housing? The “second ghetto” hypothesis is not clear as to whether public housing increased segregation or tended to maintain a given level of segregation. Hirsch [
What factors are associated with changes in segregation during the 1940s and 1950s? K. Taeuber and A. Taeuber [
Estimates of multiple regression models of the change in the segregation index are shown in Table
Regression analysis of change in segregation index* (44 cities).
|Independent variable||Change in segregation index: 1940 to 1960||Change in segregation index: 1950 to 1960|
|Units per 1,000||(0.31)||(0.02)|
|Percentage change in||0.050||0.041|
|population of city||(2.32)||(1.77)|
|Change in percentage||−0.203||−0.132|
|Population in 1950||(2.21)||(3.02)|
The estimated coefficient of the public housing variable is not statistically significantly different from zero for either time period. This evidence suggests that the change in the segregation index was not related to the units of public housing per 1,000 population. According to one version of the “second ghetto” hypothesis, the public housing program was operated to maintain an existing level of segregation. The evidence in Table
This study shows that the quantity of public housing that was constructed in 46 major cities in the first 30 years of the program largely can be explained by a small number of variables: the population of the city, the nature of the housing stock, the incidence of poverty, and the percentage of nonwhite population. Equivalent eliminations of slum housing units (a requirement in the law) were driven by the construction of public housing units, but equivalent elimination systematically fell far short of public housing construction. An examination of the possible effect of public housing on racial segregation finds that changes in racial segregation in the major cities were not related to the volume of public housing constructed. The first public housing program, for good reasons, relied on local officials to initiate proposals for public housing construction. It is reasonable to presume that any new public housing initiative similarly would rely on local officials, and that their responses might be similar to those of their earlier counterparts. Larger cities and cities with lower rates of home ownership, an older rental housing stock, and more poor people will request more public housing construction. Cities with a greater proportion of minority population will request more public housing, but the program will have no impact on the level of racial segregation. Other local and policy factors will influence requests as well. For example, the demand for public housing may be influenced by the number of Housing Choice Vouchers supplied by the federal government and by the amount of low-income housing tax credits allocated to the state (and allocated to the city by the state). The massive suburbanization of the population has left minority populations with greater political influence in many of the major central cities. This factor may result in greater demands for public housing, other factors equal, than was revealed in the first three decades of the federal program. And the massive wave of mortgage defaults that has taken place since starting in 2007 has turned large numbers of households from home owners to renters. The rate of home ownership has declined from a high of 69% to 65% and shows signs of further declines. As the estimated models suggest, a reduction in the rate of home ownership increases the demand for public housing.
The National Commission on Urban Problems [ delays in planning, approval, and construction of projects, failure to take advantage of construction cost reductions, construction of too many high-rise projects [ disregard of the needs of large families by building apartments with two bedrooms or fewer, rents required to pay expenses meant that units tended to be occupied by families with incomes at or just below the income limits so the very poorest families were not being served, neglect of services for tenants, attractive design for the projects, and training for public housing personnel.
delays in planning, approval, and construction of projects,
failure to take advantage of construction cost reductions,
construction of too many high-rise projects [
disregard of the needs of large families by building apartments with two bedrooms or fewer,
rents required to pay expenses meant that units tended to be occupied by families with incomes at or just below the income limits so the very poorest families were not being served,
neglect of services for tenants, attractive design for the projects, and training for public housing personnel.
The Commission [
The Commission did not foresee, and perhaps could not have foreseen, the disaster that public housing became in the coming decades in several large cities (with New York City as a major exception). At least two of the criticisms of the program listed above proved to be prescient. Many of the high-rise projects became centers of poverty, crime, and social disorder. And the neglect of services for tenants, of attractive design, and of good management practices contributed to the coming disasters. See Bradford Hunt [
Bennett et al. [
Another book by Wood [
The Housing Opportunities for People Everywhere (HOPE VI) program began in 1993 as an effort to enable local public housing agencies raze or rehabilitate deteriorated public housing units and to transform the “projects” into low-density public housing communities. The largest HOPE VI effort has been active in Chicago since 1999. See Bennett et al. [
Most of the units are part of the Section 8 program (since renamed Housing Choice vouchers) created by the 1974 Housing and Community Development Act.
These programs include FHA low-interest loans and mortgage insurance for the construction of rental housing for households with low and moderate incomes. This program began as Section 221(d)(3) and related sections of the National Housing Act of 1954. The rental housing developments can participate in the program for a maximum of 40 years. Other units were constructed under Section 236 of the Housing and Urban Development Act of 1968, and the program continued until 1983 under the 1974 Housing and Community Development Act. Included in this category as well are rental units built using federal Low Income Housing Tax Credits, a program that began in 1986. Units remain affordable at least for the life of the tax credit, which is 15 years. Also included are units constructed under the HOME program (begun in 1990), which provided housing development resources for nonprofit groups and public agencies. Both the LIHTC and HOME programs have been criticized for not being targeted at very poor households.
In addition, 1967 is the year of the filing of the lawsuit against the Chicago Housing Authority and the Department of Housing and Urban Development on the grounds that site selection for public housing in Chicago had been used to promote racial segregation. The ruling in favor of the plaintiffs came in 1969. See Bradford Hunt [
An early study of public housing units in towns and cities by Aiken and Alford [
Other regression results not shown in the text include the following. Public housing units as of 1967 divided by the 1950 city population are a function of owner occupancy and poverty as
K. Taeuber and A. Taeuber [
The HOPE VI program replaces demolished high-rise public housing projects with low-rise, mixed-income developments. Some public housing residents move back into the new developments, while others receive Housing Choice vouchers and move to other neighborhoods. Current research is focused on the viability of the mixed-income developments and on the outcomes for the public housing residents. See Popkin [
|White population||Nonwhite population|
|Zone||White Pop.||Cumulative White Pop.||Cumulative percentage||Nonwhite Pop.||Cumulative nonwhite population||Cumulative percentage nonwhite|
|White population||Nonwhite population|
|Zone||White Pop.||Cumulative white Pop.||Cumulative percentage||Nonwhite Pop.||Cumulative nonwhite population||Cumulative percentage nonwhite|