Promoting Upward Mobility Through Transportation Policy

Promoting Upward Mobility Through Transportation Policy

March 29, 2018  | Shima Hamidi

Transportation costs, after housing, are the biggest expenses in the budgets of most American households particularly for those settled along the urban fringe. Less costly alternatives to automobile travel, particularly public transit, are typically much less accessible and thus largely impractical in suburban and exurban locations relative to central cities.

When it comes to the provision of affordable housing for low-income and vulnerable population, looking solely at housing costs is a misleading measure of affordability and a disservice to low-income families. Households in 44% of all Multifamily Section 8 properties in the nation, spend on average more than 15 percent of their income on transportation costs, making these properties effectively unaffordable. The follow up study on the transportation affordability of Low Income Housing Tax Credit (LIHTC) program found a similar pattern; for more than 43.8 percent of low-income households living in LIHTC properties nationwide, transportation is unaffordable. Depending on the location, transportation costs for household under these two programs could vary between 2 percent and 42 percent of a household’s budget.

The federal government spends more than 50 billion dollars every year to provide affordability for low-income and vulnerable population. The LIHTC, for example, is the federal government’s largest tax expenditure targeting affordable rental housing. The approximate cost of the LIHTC in 2016 was $7.9 billion.

The High Cost of Transportation

However, at the end of day, a substantial percentage of households living in these housing units end up spending even more on transportation than on housing, making transportation costs the number one most expensive item on their budget and leaving little discretionary income left over for food, health care, and other household purchases.

Location efficiency also plays a long-term role in achieving opportunity and promoting upward mobility. It is not only the provision of affordable housing that matters, but also the availability of a supportive system to enhance the well-being and livability of people and communities. To achieve true affordability, development should be located where jobs can be reached, with access to major destinations such as schools and health care facilities. Affordable housing in the right locations further encourages the integration of low-income population into the economy.

Role of Federal and Local Governments

Federal policies could provide incentives for low income housing to be located close to public transportation facilities and could support multimodal transportation systems in order to provide more transportation and housing options. The existing unaffordable properties can be connected to major destinations through the improvement of operational transit services. This will allow many households to reduce their transportation costs and to encourage pedestrian, bicycle, and transit trips minimizing the need for automobile ownership. Expenses related to owning and maintaining cars are the majority of what a typical American household spent for transportation relative to gasoline cost which is only a fraction of total driving costs. Planners and decision makers can use the transportation affordability maps as well as maps of potential housing growth areas to plan for efficient transit lines and related services. This can help to increase connectivity in areas with little access to transit currently.

Study findings call for policy changes at the federal level to provide true affordability for low income households, but complementary local actions should also be considered. Cities could control land supply at strategic locations such as transit-oriented areas. Simultaneously, smart transit-oriented development can provide a funding mechanism for both affordable housing and transportation infrastructure. The government can capture the generated increase in land values to support transportation investments as well as the cost of affordable housing. These federal and local strategies would help low-income households in a short term to spend less on transportation, but also, by providing access to opportunities, increases their chance of upward mobility.

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