Longitudinal Impacts of Income Volatility on Housing Stability

Background/Purpose: Income volatility is measured by comparing variation in income over some period. Historically, we have witnessed an increase in the number of households facing growing volatility in income. 77 percent of the lowest earners will experience income volatility, with women, younger individuals, and African-American households disproportionately so (Goldin, 2009). Yet, few studies have looked at the outcomes of income volatility on a monthly basis.

The relationship of income volatility to housing instability, measured by missing housing payments, has yet to be explored. In this study, we discuss how income volatility may be a key under-explored driver of the affordable housing crisis.

Methods: Data and Samples. This study uses the 2014 Survey of Income and Program Participation (SIPP). Those in the sample that do not pay anything for their housing were excluded from the analysis. The number of participants totaled 27,431 heads of household.

Measures: The dependent variable was housing stability, measured as a binary variable where 0 = respondent had not missed a housing payment in the past year, and 1 = respondent had. The independent variable of interest was the monthly income volatility coefficient of variance (CV). This was calculated by dividing the standard deviation of monthly income by mean monthly income. Covariates included gender, education, race, marital status, age, and number of children in the household.

Results: A t-test comparing the income volatility CV of those who have missed a housing payment rather than those who did not in the past year was significant (13.8% compared to 25.1% CV). Using binary logistic regression, we compare the income volatility CV and find that a one standard deviation unit increase in the CV of monthly income volatility is related to a 17% increase in the odds of a reported missed housing payment (OR=1.17). Some of the other significant variables included decreasing odds of a missed payment across all education categories as they increase. Women face a 21% increased odds of missing a housing payment compared to men (OR = 1.21). There is a slight decrease in odds a housing payment will be missed for each year aged (OR = .983). Regarding marital status, a 115% increase in the odds of a separated household missing a housing payment was found (OR = 2.15). An increase in the number of children in the household increases the odds of a missed housing payment by 16% (OR = 1.16). Those who identified as Black had nearly twice the odds of missing a housing payment compared to Whites (OR = 1.94). Also, those identifying as Hispanic or Latin had a 47% increased odds of reporting a missed housing payment (OR = 1.47). *All p values = .000

Conclusions and Implications: This research shows the relationship between income volatility and housing stability, and indicates the risk of housing stability may be much greater for populations who face systemic oppression. As research in this area emerges, future policy should address the frequently changing incomes that are now commonplace in the American household.