MFI is a Deception

A rant against the smokescreen, switcheroo, and bamboozle that is the MFI.

MFI is a Deception
Credit: Shahan Bedrosian

I know I've met a "wonk" when they get furiously angry about some seemingly trivial feature of governmental policy.  In that instant, I know I've met a kindred soul.  Because I get furiously angry about the MFI.

Politicians have created this term "Affordable housing" to make it sound like they're creating low-cost housing to help the poor.  When you ask what they mean by "affordable", the politician will say something like "It will be available to families earning less than 80% of the MFI".  The average citizen hears that "affordability" is being supported by a technical term like "MFI" and walks away happy.

But MFI is a deception, and not a thin one, but one with layers like an elaborate con-job.

The surface-level deception is a smokescreen, letting politicians and city staff say "80% of the MFI" instead of an actual dollar amount like $88,000.

If voters heard $88,000, they would immediately recognize that this "Affordable housing" is not helping the poor but available to middle-class people.  And, if they're part of the middle class, they might become curious.  They might ask about the length of the waiting list and recognize that a long waiting list doesn't serve them.  They might ask who knows about the list, who is on the list, and recognize that politically connected insiders are better served than themselves.  Those questions are a danger to the politically connected insiders, such as the politicians and city staff themselves.

But the MFI's deception goes so much deeper.  It's next layer is a switcheroo, because its full name "Median Family Income" makes anyone who know the definition of "median" think that its value is equal to the median of families' income.  It is not that at all.

The MFI is a number (or set of numbers) calculated by the U.S. Department of Housing and Urban Development, also known as "HUD".  The HUD bureaucrats calculate a number for every size of family in every major city.  So, there's an MFI for a family of 4 in Austin.  Its value for 2022 is $110,300.  That MFI number contains a droplet of truth to it: HUD's reference is the family of 4, so the MFI for a family of 4 actually is the mathematical median income of families with 4 people in them.  And, for Austin, the families used to calculate it live in the Austin metro-area as defined by the Census Bureau.  But for other sized families, it isn't.  And for other cities, it may not be.

I said that HUD's reference is the family of 4.  So what does it do for other-sized families?  It just multiplies.  If a family has fewer than 4 members, HUD lowers the MFI by 10% for each person less.  So, a 2-person family has an MFI that is 80% that of a 4-person family.  If the family has more than 4 members, the MFI is 8% higher for each person.  So, the MFI for a family of 6 is 116% that of a family of 4.

Why 10% and 8%?  I don't know!!

This arbitrary design using 4-person families as the reference causes distortions worse than a fun-house mirror.  This is because most families of 4 have 2 people working and most smaller families don't.  Most families of 4 have 2 adults and 2 kids and American women are no longer stay-at-home June Cleavers --- we have corporate-climbing Holly McClanes.  That means a family of 4's median income is about twice that of the median worker's income.  But two-worker families are not most families.  4-out-of-5 households have 3 or fewer members and those are mostly single-worker families.  And, as you can probably guess, their income is half that of two-worker families.

Thus, to the disbelief of anyone who studied probability, more than half of all households have an income below what HUD calls the "median family income".  I suspect that more than half of families qualify at the "80% of MFI" level that HUD calls "low-income".  Yet, we allow the people running the government to call housing for this majority "Affordable".

The last deception by "MFI" is a bamboozle.  Even if you cut through the screwy math to know that the MFI is about $110,000 in Austin, terms like "80% MFI" or "30% MFI" don't really give you the context to understand the policy.  I know I wouldn't like living on $33,000 in Austin, but I don't know how many people are getting by with that income.

We need to ditch not just the MFI definition but its whole usage.  It is just a means for deception.

As much as I dislike this product of the HUD bureaucracy, we do need a bureaucratic measuring stick for income.  We need a dividing line where people below it get help from the government for housing, food, and other necessities.  And I think we should borrow a number from Occupy Wall Street.  That movement popularized the term "top 1%" and everyone seems to understand what that means.  For government support, we should talk about the "bottom 1%".  Or, for a mathematician like myself, the "bottom 2.2%" (below 2 standard deviations) or, more generously, the "bottom 15%" (below 1 standard deviation).

To put a dollar amount on it, the bottom 15% of all households would be those earning less than $21,700, nationally.  That's far below HUD's 30% MFI which they consider "extremely low-income".

We can compute a "bottom 15%" figure for each family size and, if we thought it appropriate, for the number of working-age adults in each family.  It would be so much better than the deceptive MFI.