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"Making a Nationwide Gautreaux Program More "Neighborhood Friendly","

by George Galster January/February 2005 issue of Poverty & Race

Alex Polikoff, in his famously lucid, engaging and persuasive manner, presents a compelling proposal for a national, Gautreaux-like voucher program as a solution for black ghetto poverty. In principle, I am a supporter of this proposal. However, despite its many prospective advantages, such a plan has the potential of being implemented in ways that might be economically, socially and politically counterproductive. These dire consequences would transpire if new voucher recipients were to move out of the ghetto but overwhelmingly concentrate in a few “almost ghetto” neighborhoods: those with moderate poverty rates with vulnerable housing markets. The consequences would transpire through two related mechanisms and would manifest themselves as an upsurge in a variety of socially problematic behaviors and falling property values in the destination neighborhoods where voucher recipients might cluster in this worst-case scenario. In this comment, I outline this danger and raise the challenges to policymakers in order to ensure that inappropriate clustering of new voucher recipients would not occur.

Distribution of the Poor and Overall Level of Social Problems in an Urban Area

The first potential problem from clustering arises due to the threshold nature of the relationship between the percentage of poor residents in a neighborhood and a variety of socially problematic behaviors that will be generated there, such as crime, out-of-wedlock teen parenting, dropping out of secondary school or not participating in the labor force. The research literature consistently suggests the existence of thresholds: critical values of neighborhood poverty after which significantly different impacts on residents’ behaviors occur with the addition of one more poor household. The literature identifies two thresholds. One appears at the intuitive demarcation between low- and moderate-poverty neighborhoods (approximately 15 to 20 percent) and denotes a point after which socially problematic outcomes begin to rise rapidly with increasing concentrations of the poor. The second appears at the demarcation between moderate- and high-poverty neighborhoods (approximately 30 to 40 percent) and denotes a point after which further concentrations of the poor produce no noticeable additional negative consequences. How rapidly the incidence of problems rises after the first threshold is exceeded appears to depend on the outcome indicator in question. Of course, the evidence consistently supports the conventional wisdom that the highest level of negative social impacts of all sorts occurs in the highest-poverty neighborhoods.

But, it is the relative differences in marginal impacts of one more poor households when they move between low-, moderate-, and high-poverty neighborhoods that is the central consideration here. If social problems in the destination neighborhood to which the voucher holders move rise in aggregate more than they decline in origin neighborhoods from whence they moved, society overall will be worse off. This circumstance is most likely if voucher holders move from high- to moderate-poverty neighborhoods or, by concentrating in erstwhile low-poverty destinations, convert them into moderate- or high-poverty ones.

Threshold Effects for Negative Property Value Impacts in Destination Neighborhoods

The second mechanism, closely related to the first, is that, in sufficient concentrations, poor households with housing vouchers can have a deleterious effect on property values in the nearby neighborhood. In the recently published Why NOT In My Back Yard (Rutgers Univ. Ctr. for Urban Policy Research, 2003), my colleagues and I report that stereotypical NIMBY concerns may be valid in certain (but not all) circumstances. The magnitude of impacts from the in-migration of voucher holders was clearly contingent on neighborhood context and spatial concentration. There was a widespread pattern of threshold effects, whereby home price impacts became negative when more than a critical mass of voucher holders was located in the vicinity. This danger of “re-concentration” was most acute in lower-value neighborhoods already possessing a modicum of poor households, especially where homeowners perceived a vulnerability to their quality of life and neighborhood’s competitiveness. Indeed, in some especially vulnerable circumstances we observed that any additional voucher recipients would have harmful impacts on property values. But even in the most favorable neighborhood contexts observed, we estimated that a tiny number of such assisted households concentrated within 2,000 feet could lead to ensuing negative impacts.

Implications for the Implementation of a National Gautreaux Plan

Both potential concerns above lead to an implication about where recipients of a new voucher program should move in order to maximize the overall well-being of society. Clearly, they should move to low- (not moderate-) poverty neighborhoods, and even then at very low concentrations (not in large “Section 8 apartment complexes”). Polikoff suggests some recognition of this in his discussion of the “relatively few numbers of new voucher recipients compared to the hundreds of potential destination communities.” But the programmatic challenge is greater than cursory consideration of “destination communities” alone. We must worry about the neighborhood level distribution of voucher holders, for it is at this small scale where critically important consequences for social problems and property values emerge.

This raises several key operational questions. Will any conceivable mobility counseling program guarantee that all or even most new voucher holders will move into (and remain in) low-poverty neighborhoods? Or, might it be more effective to tag these new vouchers with the proviso that they only may be used in census tracts with less than 10% poverty rates (including any voucher holders already living there) and in locations at least minimally separated from other poor families? Will there be sufficient vacant units below HUD Fair Market Rents in such neighborhoods, or will most voucher holders be frustrated and ultimately be forced to turn in their voucher unused? If there are insufficient FMR housing units in these low-poverty areas, what would need to be done to increase the supply? Might all landlords be required to participate in the voucher program, perhaps by making it a federal fair housing violation to discriminate on the basis of source of income? And, will any local housing authority have the institutional capacity to micro-manage such a complex, neighborhood-sensitive program?

Clearly, these questions are easier to ask than answer. But if a national Gautreaux plan is to be contemplated seriously, it must be “neighborhood friendly” and consider carefully how it will achieve the socially optimal destinations for new voucher holders. To be economically and socially advantageous for the community as a whole, vouchers should only be used in certain types of neighborhoods in certain maximum concentrations. Failing that, the resulting problems will undoubtedly create a severe political backlash to curtail the program.

George Galster is Clarence Hilberry Professor of Urban Affairs at Wayne State University. He holds a PhD in economics from MIT. Other of his recent writings include "The Effects of MTO on Sending and Receiving Neighborhoods," in Choosing a Better Life? Evaluating the Moving to Opportunity. eds. John Goering & Judith Feins (Urban Institude Press, 2003) and "An Economic Efficiency Analysis of Deconcentrating Poverty Populations" in Journal of Housing Economics 11 (No. 4, 2002): 303-329.

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