The poor need mobility to prosper • Enough with all the tax havens
Imagine having no access to good education, health care, or job opportunities—imagine not even knowing anybody who does. Poor children do better when they move to places with less poverty, less crime, higher-performing schools, and more two-parent families. That’s just common sense, but if you’re skeptical, the research confirms it. One recent study found that living in a significantly better neighborhood from birth raises adult income on average by about 10 percent.
Yet it’s harder and harder for many poor families to improve their opportunities by moving. One reason: People in desirable neighborhoods aren’t eager to have them. Landlords set source-of-income requirements that disqualify people who receive federal housing subsidies. Zoning rules stipulate minimum lot sizes or maximum building heights to prevent the construction of affordable housing. Such restrictions can increase housing costs in thriving local economies by 50 percent or more.
Another obstacle is the design of many government programs. Medicaid, food stamps, and temporary assistance are all tied to the states where recipients reside. People who move have to reapply and manage without support in the meantime. Even federal housing subsidies, which are technically portable, are administered in such a way that moving is discouraged.
On zoning, a 2015 U.S. Supreme Court decision may point the way: It ruled that the Fair Housing Act prohibits policies that discriminate, even unintentionally, against minority groups, which typically find it hardest to move. This gives the federal government leverage to insist that states and municipalities improve mobility. In turn, this could help restore the market’s ability to provide housing in places where it’s most needed, which could boost the country’s output by almost 10 percent.
Housing subsidies need to be genuinely portable. A Baltimore experiment showed that modifications—administering subsidies regionally instead of locally, setting rent payments at local market levels, and helping families find homes in new areas—can make housing-voucher programs more effective.
Some of this will require money, so funding priorities must also change. As of 2014, U.S. households with an income of $200,000 or more received an average annual subsidy (largely through the tax deduction on mortgage interest) of more than $6,000. Households with an income below $20,000 received less than $1,500. And only a quarter of the households that qualify for housing vouchers actually receive them.
The U.S. needs to renew its commitment to mobility and opportunity. That will require greater tolerance of diversity— including economic diversity—in areas that are prospering. And it means smarter policies, too. In the past, mobility and dynamism have been the keys to wider prosperity in America. They can be again.