Recipients of housing assistance under welfare reform: Trends in employment and welfare participation

Between 1994 and 2001, the employment of low-skilled single mothers increased dramatically and the welfare rolls shrank. Did these gains extend to single mothers who received federal housing assistance? This question is important because these women constitute a large, highly disadvantaged group and because housing assistance may work at cross-purposes to welfare reform by fostering dependency on public support. The prospect of deep cuts in housing programs adds to the timeliness of this research. We find that employment increased as much for single mothers who received housing assistance as for those who did not. Although welfare participation appears to have declined somewhat less for single mothers getting housing assistance, this may be due to inadequate data. Demographic differences do not appear to matter. Gains from increased employment more than offset welfare losses, for an estimated annual net savings of approximately $265 million in government outlays for housing subsidies in 2001.