This kind of housing is still common in NYC, mostly in Queens. It’s all under the table and obviously illegal, but it’s the most affordable option in a prohibitively expensive city. I would say most are run by slum lords who are not dealing with tenants fairly in someway, for example price gouging or prejudicial application processes (no Muslims, must be Japanese, must speak Spanish, etc.).
The city has tried to squash these because they’re dangerous. During the last major floods hundreds were injured and many died due to these basement boarding units flooding.
I agree with sibling posters when I say making these more prevalent would be a step backwards. Source: I used to live in one!