fall 50 percent below an area’s median income, who either pay 50 percent or more of
their monthly income for rent, or who live in substandard housing.”
14
Origin of the 30-Percent Standard
The 30-percent standard probably originates in the set of rules that determine how much
families in federally assisted housing must pay in rent. Until the late 1960s, public
housing was the predominant form of federally assisted housing. In the public housing
program as originally formulated, the federal government entered into agreements with
local entities, known as public housing authorities (PHAs), under which the federal
government would pay for the construction of public housing and PHAs undertook to
manage the public housing projects and cover all operating costs from rents collected
from tenants. These arrangements, which governed the public housing program from its
creation in 1937 to 1968, had one problem: the poorest of the poor could not afford to
live in public housing because they could not pay the rents required to cover operating
costs and still have income left over for other necessities. Because of this shortcoming,
Senator Brooke convinced Congress in 1968 to mandate that no family would have to pay
more than 25 percent of its income toward rent in federally assisted housing.
15
In 1981,
Congress changed the minimum payment to 30 percent of income. This change was
primarily designed to reduce the costs of federally assisted housing but it presumes, at
least implicitly, that households should be able to provide for their non-housing needs
with 70 percent of their income.
The authors do not know why the Brook Amendment established 25 percent instead of
some other percentage as the maximum required contribution. There were three potential
sources of data that could have been used to calculate an appropriate standard. First, the
1960 decennial census collected data on mortgage payment, rents, other housing costs,
and incomes. The 1960 Census reported that the median ratio of housing costs to income
was 19 percent for owners with mortgages and 10 percent for owners without mortgages;
the 1960 Census did not publish the ratio of rent to income.
16
Second, according to the
national income accounts, expenditures on housing, including payments for utilities,
averaged 14.3 percent of personal income in 1968.
17
The ratio of housing costs to all
expenditures probably varies substantially across income strata, so the 14-percent average
may not reflect expenditure patterns among lower income households. The ratio of
housing costs to personal income was 12.2 percent in 1981 when Congress raised the
standard to 30 percent; in 2005 it was 17.4 percent.
18
Third, the Bureau of Labor
14
Committee Report to accompany H.R. 5158, The VA-HUD Appropriations Act for FY 1991 (S. Rpt. 101-
474) as reported on page 7 of Affordable Housing Needs 2005: Report to Congress, May 2007, U. S.
Department of Housing and Urban Development,
http://www.huduser.org/publications/affhsg/affhsgneed.html
.
15
As a consequence of the so-called Brooke Amendment, the federal government now makes annual
contributions to PHAs to help them cover the difference between rental income and operating costs.
16
1960 Census of Housing, Volume V Residential Finance, Part I Homeowner Properties, page XXIX, at
http://www2.census.gov/prod2/decennial/documents/10959455v5p1ch1.pdf
.
17
1970 Statistical Abstract of the United States, Tables 476 and 480.
18
1982/83 Statistical Abstract of the United States, Tables 692 and 698, and 2008 Statistical Abstract of the
United States, Tables 656 and 662.
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