Public Housing Isn’t the Solution

We should focus instead on easing restrictive zoning rules and allowing more private investment in new housing.

Recent weeks have seen a spate of articles praising "social housing," or "public housing" in American terminology, as the solution to the nation's urban housing ills. In a Slate column, for example, Daniel Denvir and Yonah Freemark argue that public housing is ready for a comeback, that it "would guarantee affordable housing for people across income ranges by adding to the national housing supply and offering new opportunities for vibrant, mixed-income neighborhoods." Their article is illustrated with a photo of a housing development in Vienna—a city often cited by advocates as the epitome of the social-housing concept. At about the same time as Denvir and Freemark's column, the New York Times Magazine published an article by Francesca Mari about Vienna's social housing. Annemarie Gray, executive director of Open New York, a pro-housing group, tweeted, "Great piece on what's possible in a world with an abundant housing supply + renter protections + a strong public sector + public commitment to dignified housing."

There's just one problem: housing socialism can't work in the United States.

Consider that in 2021, the most recent year available, Austria ranked third in the OECD club of 38 mostly rich countries in terms of its ratio of taxes to Gross Domestic Product (GDP), at 43.5 percent. The United States was 32nd of 38, at 26.6 percent. That Austrians tax themselves at a high level and provide lavish public services is a choice with implications. In 2021, Austria's GDP per capita was $51,067, while for the U.S. it was $61,796, about 21 percent higher.

The United States's lack of a European-style welfare state is often attributed to several unique factors. First is its constitutional structure, which constrains majority rule and protects private property. Additionally, positive public attitudes about getting ahead by one's own efforts and the nation's racial and ethnic fragmentation, which prevents politics from breaking down along purely class lines, have impeded the emergence of a strong socialist movement at the national level.

While states and cities could tax and spend their ways to bigger government and more generous services, they’re limited in doing so both by balanced-budget requirements in state constitutions and by the need to remain competitive with lower-tax neighbors. Thus, the Tax Foundation's annual scorecard of states’ tax burdens finds most of them bunched closely together around the median.

These factors help explain the failure of America's last great experiment in public housing, which began in the New Deal and reached its zenith in the 1950s and 1960s. Denvir and Freemark write that "in many ways, this program was successful," citing a 2008 history of the New York City Housing Authority (NYCHA), the nation's largest public-housing operator, by Hunter College professor Nicholas Dagen Bloom titled, unironically, Public Housing That Worked. In the New York Times Magazine piece, by contrast, Mari accepts that public housing did not work well but blames its failure on compromises that sponsors of the U.S. Housing Act of 1937 made with fiscal conservatives.

In fact, the Housing Act of 1949 was far more important in the history of public housing in America, but all along the program was fundamentally flawed. U.S. public housing was racially segregated from the start, and sites were assembled by displacing large numbers of households and businesses. Initially, public housing was meant to support operating and maintenance expenses by means of tenant rents, but the spartan design of most public housing, intended to discourage competition with the private housing industry, resulted in limited appeal to non-poor households with other living options. That led to financial problems, as tenants couldn't pay higher rents to cover expenses. Also, the program's design failed to reserve funding for the replacement of building systems, which became a big issue as the properties aged.

By the 1960s, Congress enacted public-housing operating subsidies and set rents at a percentage of tenants’ incomes. This improved public housing's finances but discouraged tenants from improving their economic status, or from staying in public housing if they did, since earning more would raise their rents. For many years, operating subsidies were generous, particularly for the high-rated NYCHA; this was the era described in Bloom's book. As time passed, however, Congress failed to maintain the inflation-adjusted value of operating subsidies, while repair needs in antiquated buildings skyrocketed. The generous pay and benefits, and low-productivity work rules, that NYCHA negotiated with labor in its flush days became insupportable. Today, NYCHA operates under the supervision of a federal monitor, cannot meet vast rehabilitation needs, and suffers from deteriorating conditions.

NYCHA is already a costly fiscal burden for New York City, and that problem is likely to get worse. It's hard to imagine that any governor or big city mayor would look at public housing's history of misbegotten congressional compromises and erratic funding, or at NYCHA's downward spiral, and say, "Let's do more of this type of housing, but this time we’ll design the program properly and give it the funding it needs, just like Vienna." American state and local governments do not have the administrative or fiscal capacity, or dependable support from Washington, to think that way.

In the same era in which it was building public housing, America did achieve a bipartisan political consensus on a completely different approach to housing: heavily subsidizing the development of single-family-home communities in the suburbs. Today, these homes are increasingly out of reach financially for the typical household, particularly in coastal metros where supply is constrained by restrictive zoning and other regulations. A wide-ranging debate persists on how to lift those barriers and allow more private investment in new housing, and some real progress is being made to do so. Denvir and Freemark call that effort "impoverished" because it doesn't include building new public housing. They’re wrong. What we’re seeing, in fact, is a remarkable movement that has notched some inspiring achievements already.

By all means, visit Vienna, a splendid city—but let's focus our housing activism on allowing a fourplex on every lot.

Eric Kober is a former New York City planner and a senior fellow at the Manhattan Institute.

Photo by PL Gould/IMAGES/Getty Images

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