Prioritizing Rent While Managing Material Hardship: Insights from Unconditional Cash Recipients

• In Event: How Timing, Dosage and Place Influence Guaranteed Income Programs

Abstract

Background

Half of US renter households are housing cost-burdened (spending more than 30% of income on housing), and for many low- and moderate-income families, rent is often their most substantial monthly cost. These households frequently experience insufficient economic resources, leading to sacrifices in spending on essential needs and thus material hardship. While material hardships co-occur, specific domains (such as housing, food, and medical hardship) are empirically distinct, and households work actively to manage their financial precarity and mitigate material hardship. However, little is known about how rent, compared to other routine expenses, may be prioritized when households manage risks of material hardship. Unconditional cash transfer (UCT) payments offer an opportunity to examine these strategies. Spending data from guaranteed income pilots suggest that UCT payments are rarely spent on housing costs (<10% of spending), although these data cannot determine how cash withdrawals are allocated (Stanford Basic Income Lab). Seeking context for this spending trend, qualitative data from interviews with UCT recipients about how they think about their monthly spending reveals a more nuanced narrative around managing housing costs and material hardship.

 

Methods

This study uses data from a subsample of the Los Angeles County Breathe Guaranteed Income program, which randomly assigned 2,000 individuals to a control group and 1,000 individuals to receive $1,000 a month in UCT income over the course of three years. Now 2.5 years into payment disbursement, 12 treatment and 14 control group participants took part in 60-to-90-minute semi-structured interviews from November 2024 to January 2025. Interviews were transcribed, de-identified, and double-coded by two doctoral-level researchers, and thematic content analysis was conducted.

 

Results

Interview data provides evidence that rent is kept sacred as a monthly expense to be paid first and avoided missing at all costs. For instance, when asked about what expenses are paid first in a month, most participants reported allocating money for rent out of existing income and not relying on their guaranteed income payments, even when rent was due at the end of the month. The control group participants prioritized spending in a similar fashion. Evidence also suggests that cash benefits of $1,000 a month mainly go towards supporting family needs and child health, and not to support rent, even after multiple years of predictable benefit receipt. In almost all cases, participants experiencing material hardship sacrificed spending on their children’s goods, services, and bills including credit card and utility bills prior to sacrificing all or part of rent payments.

 

Implications

These findings have implications for UCT programs targeting housing stability and material hardship. Existing homelessness prevention programs in Los Angeles are heavily reactive, typically targeting households with rental arrears. Monthly spending data from qualitative interviews suggests that rental arrears are a distinct form of hardship, and many households are precarious without rental arrears. Pathways to homelessness can come from these routine forms of material hardship rather than rental arrears. Taking this evidence into account, prevention funds should consider proactive cash transfers to address more common forms of material hardship.

Author

• Keenan Leary, University of Chicago
  Presenting Author