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Studies have shown that the most cost effective way to increase economic mobility in the US is to increase the access to affordable housing. Housing is the most important factor for reducing intergenerational poverty. Raj Chetty, a Stanford economist, found that children who moved to lower poverty neighborhoods had about 31% higher earnings as adults and a lowered likelihood of becoming a single parent. Also, children living in homes that were stable and affordable were more likely to excel in school.
Not only does providing low income housing benefit the renters/buyers but it also affects the American economy. Researchers believe that the growth in GDP between 1964 and 2009 would be about 14% higher if there was increased access to affordable housing. For many people, housing takes up a substantial portion of their income. In the US, a common indicator to determine if a household is “burdened” by housing costs is if housing expenses exceed 30% of the household income. In 2019, 30% of all households in the US were considered housing cost “burdened”. About 14% of Americans were spending over 50% of their income on housing. About two-thirds of economic activity in the US is from consumer spending. So, if people are spending a significant amount of money on housing, there is less money that can be spent on other things. This is a concern, since spending on goods and services stimulates growth and employment gains.
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