Finding Your Place

The economics of homelessness

David Brancaccio, Erika Soderstrom, and Hannah Baggenstoss Jun 2, 2023
Heard on:
Spencer Platt/Getty Images
Finding Your Place

The economics of homelessness

David Brancaccio, Erika Soderstrom, and Hannah Baggenstoss Jun 2, 2023
Heard on:
Spencer Platt/Getty Images

As part of a special series, “Marketplace Morning Report” decided to explore how debt ceiling talks are further stalling progress on big priorities like the housing crisis, which is pushing more and more people out of their homes.

The current debt ceiling deal looks to curb federal budget growth for the next couple years. But, if anything, experts say we need more aid to tackle big issues in our country like homelessness. Below is a compilation of our recent coverage of the challenges of homelessness in the U.S.

First up, let’s look at the Biden administration’s plan to end homelessness – Yes, that’s the word they use: end. The administration’s near-term goal is to reduce the number of unhoused people by 25% over the next couple of years. But here’s the catch: there isn’t a whole lot of new money in the plan. And getting people off the street is expensive.

Joseph White, 59, has lived in a government-subsidized apartment in downtown Washington, D.C., for four years. His share of the monthly rent is $300. The apartment is mostly furnished with stuff other tenants had thrown out, which White found next to the building’s dumpster. 

That includes his couch, “that table, that desk, that printer,” White said, pointing to the furnishings in his living room.

White learned to be extraordinarily resourceful before he moved in, because he was homeless. White is an Army veteran. He left the service in 1994 and got hooked on drugs shortly after that. He was only able to get clean after about 20 years when he had a roof over his head.

“It helped me a lot because I was able to start thinking about what I needed to do without worrying about what’s around me or who’s going to hurt me,” he explained.

Joseph White stands in a room with gray walls, white trim, a black door and a black wall decoration behind him. He has his arms crossed, is wearing a white polo shirt and is looking directly at the camera.
Joseph White is an Army veteran who was formerly homeless. (Nancy Marshall-Genzer/Marketplace)

This is the premise behind the Biden administration’s plan — a theory known as Housing First. The idea is to get an unhoused person housed, then tackle drug addiction, mental health and other issues.

Jeff Olivet is a big fan of Housing First. He’s the executive director of the U.S. Interagency Council on Homelessness, a federal agency.

In a conference room just a mile and a half from White’s apartment, Olivet said that, on average, it costs roughly $10,000 per year to get an unhoused person into a permanent home. 

And the problem is widespread. “On any given night in the United States, more than 580,000 people are homeless,” he said.

Olivet added that Biden asked for more money in next year’s budget to tackle the issue, but Congress would have to approve that.

“I’m keenly aware of the political nature of how things get funded in Washington, D.C., and it’s a complicated situation right now,” he said with a sigh.

Charitable foundations and the private sector should pony up more money to help the homeless, Olivet said, as should cities and counties. But you need federal money on top of that to really make a dent in homelessness, according to Sarah Hunter, director of the Rand Center on Housing and Homelessness in Los Angeles.

“Every day, more and more people are falling into homelessness. So without new support, that will continue to occur, and it’s bad for everyone,” she explained.

Hunter is happy that the Biden administration is paying closer attention to homelessness. The plan does provide teams of federal workers to help communities cut through red tape to access existing programs.

But “there’s nothing really innovative or new about the plan,” she said — because that would cost money.

-Reported by Marketplace’s Nancy Marshall-Genzer

Now we move on to take a look at the data on housing. Gregg Colburn is an assistant professor at the University of Washington’s College of Built Environments and co-author along with Clayton Page Aldern, of the book, “Homelessness Is a Housing Problem: How Structural Factors Explain U.S. Patterns.”  Below is an edited transcript of his interview with “Marketplace Morning Report” host David Brancaccio.

David Brancaccio: Let me go through a couple of possibilities for how many people explain what’s happening with homelessness in America now. Substance abuse – is that the dominant driver?

Gregg Colburn: There are probably three dominant narratives, I would say substance use is right at the top of the list. Poverty and mental illness are probably the other two. There’s clear evidence that those factors and attributes increase the risk of experiencing homelessness at the individual level. But what we demonstrate in the book is that is not why our coastal cities have really, really high rates of homelessness.

Screenshot from UC Press of “Homelessness Is a Housing Problem.”

Brancaccio: And you’ve gone through the data. You’ve gone through the data across the country. And what then would explain it?

Colburn: Well, what we argue in the book is that access to affordable housing is the primary driver of homelessness. And in places like Seattle, San Francisco, Los Angeles, Boston, New York, Washington D.C., access to housing is very, very limited – even with people with good incomes. And what happens then is when housing is scarce, it’s not available, and it’s very expensive, if you’re vulnerable in any way – you’re poor, you’ve been discriminated against because of your race or ethnicity, you’re physically disabled, you’re mentally ill – you’re far more likely to experience homelessness. And what we demonstrate in the book is that the reason Seattle has five times the per capita rate of homelessness of Chicago is not because we have more people with vulnerabilities, it’s because our housing is really expensive, and it’s scarce.

Brancaccio: Yeah because we’re talking about housing access, let’s just be clear, you’re talking about numbers of possible dwellings, but you’re also very much talking about supply and demand. You’re talking about how much it costs to find adequate housing.

Colburn: That’s exactly right. And one of the more interesting stories that we tell in the book is Detroit, Michigan, which is the most impoverished city in the United States, has far lower rates of homelessness than very affluent communities like Seattle and San Francisco. And the reason for that is, is that housing is relatively affordable in Detroit as compared to other places.

“…that’s a reckoning that we as a nation are going to confront. And to date, we haven’t done a very good job of that.”

Brancaccio: So I mean, you’ve been confronting this data for a while now. I mean, where are you left in terms of the areas that are most ripe for making policy changes that would help this. Is it making it easier to build, relaxing zoning rules and other rules like that?

Colburn: There’s a couple of levers that we could pull. One is certainly a regulatory lever, which is we need to think about our land use. And in many of our cities, we have to confront the fact that we’ve had relatively exclusionary land use in the sense that we’ve only allowed single family housing many of the residential parcels in our cities, and that’s going to have to change. Our cities are going to have to be denser, we’re going to need to go up, we’re going to have to have more people living on each parcel in order to accommodate all the people who are in these cities. We also have to confront the fact that there’s a significant segment of the population who will not be able to afford market rate housing. As a society to date, we’ve kind of said, “Well, that’s tough, we’re gonna let the market figure this out,” because we have such a small program that provides housing to low-income households. And so we need to confront at the federal, state and local level, how are we going to ensure that there’s housing that people can access and either that is giving people subsidies, or it is subsidizing housing that’s affordable for people with lower incomes. And the scary thing about that is that’s an expensive endeavor, because housing is expensive to construct and it costs a lot every month. And so that’s a reckoning that we as a nation are going to confront. And to date, we haven’t done a very good job of that.

Research funded by the real estate site, Zillow, found that when communities are forced to spend more than 32% of their income on rent, homelessness goes up. 

-Produced by Marketplace’s Erika Soderstrom

As the previous interview explains, there are many misconceptions about the drivers of homelessness. Substance abuse and mental illness can increase the likelihood of becoming homeless. But homelessness can also contribute to mental illness and substance abuse. Living without a safe place to call home is what life is like for hundreds of thousands in the U.S. who are disproportionately people of color.

Addressing mental health and homelessness is a difficult funding process as well.

Advocates will quickly tell you that the main cause of homelessness is the affordable housing shortage. But mental illness can also play a role. More than 20% of unhoused people have a serious mental health condition, according to the National Alliance on Mental Illness. That’s compared to 5.5% for the general population.

“People who have certain disabling conditions — mental health disability, substance use problems — are at higher risk of losing out in tight housing markets, so they are more likely to become homeless,” said Dr. Margot Kushel, who runs the Benioff Homelessness and Housing Initiative at the University of California, San Francisco.

“Nobody is the same way all the time, even though you try to be. But sometimes things happen that cause you to act other than you normally would.”

Charles Gregg, a client of the group Pathways to Housing DC, on how the stress of homelessness contributes to his PTSD.

Without stable housing, Kushel said, managing mental illness becomes almost impossible.

“Homelessness is devastating to one’s mental health,” she said. “The constant violence that people are exposed to … the lack of sleep, the stress and uncertainty, the humiliation — all of these worsen people’s mental health. And homelessness really limits people’s access to treatment.”

That’s something Grace Lee sees while walking the streets of Washington, D.C., doing outreach for the nonprofit Pathways to Housing.

Grace Lee sits on the corner of a low indoor fountain. She is a Black woman with locks wearing jeans, white sneakers, and a blue t-shirt that says "Pathways to Housing DC". She has a big smile and black lanyard around her neck with her ID.
Grace Lee does outreach for Pathways to Housing D.C. The group says a large portion of the homeless clients with whom they work are also struggling with some kind of mental illness. (Kimberly Adams/Marketplace)

“So it’s one thing if you and I have depression or bipolar or whatever. We just go to the doctor,” Lee explained. “When you’re homeless, where do you go? What do you do?”

Lee helps the people she encounters get signed up for Medicaid, food assistance and free phones, all while working to transition them into stable housing.

“When you’re homeless, [mental illness] kind of takes the back burner,” she said. “All they’re concerned about is their next meal, how they’re going to pay for that phone or whatever is the issue of the day.”

One of Lee’s clients, Charles Gregg, has been homeless in D.C. for about two years. He said treating his post-traumatic stress disorder and depression isn’t as much a priority for him as trying to get housing.

But Gregg said the stress of being homeless doesn’t help his conditions.

“Nobody is the same way all the time, even though you try to be. But sometimes things happen that cause you to act other than you normally would. And so sometimes, that’s attributed to my PTSD,” Gregg said. “Because sometimes people say something or do something, and … when I get excited, sometimes I talk real loud. … And I don’t do it on purpose, but it’s just the way it comes out.”

Charles Gregg stands outside the glass-walled entrance to the First Congregational United Church of Christ. Gregg has a short white beard and a blue surgical mask under his chin. He's wearing a blue jacket and tan pants, and is standing in front of a 12-pack of toilet paper and a 3-pack of paper towels plus some other supplies he has on the ground next to him.
Charles Gregg is working with the group Pathways to Housing DC to get signed up for Medicaid and try to get housing. He says he’s struggled with depression and PTSD, and has stopped treatment since becoming homeless. (Kimberly Adams/Marketplace)

Pathways to Housing CEO Christy Respress said getting people into housing not only provides a foundation for treating mental illness, but it can reduce other costs for the broader community.

“Once people move into housing with the right support services,” Respress said, “their interaction with the legal systems go down. Their interactions with the ERs and hospital emergency rooms, the psychiatric emergency rooms, goes down.”

And using those services, Kushel of the Benioff initiative said, is much more costly over time than providing people with a place to live and the services to keep them there.

-Reported by Marketplace’s Kimberly Adams

The policy approach known as “Housing First,” was initially adopted during the George W. Bush administration. Some fiscal conservatives, for instance, liked the plan because it saved money down the road while also addressing homelessness. But there’s now a growing pushback against this approach. Some places are trying to outlaw sleeping in unapproved locations. David Brancaccio spoke about this with Ann Oliva, the CEO of the nonpartisan National Alliance to End Homelessness. Below is an edited transcript of their conversation.

David Brancaccio: Give me a sense of what you’re seeing in several states about what you might term “criminalizing homelessness.”

Ann Oliva: So what we’re seeing across the country is a rise in the number of people who are living unsheltered. And in fact, the number of people living unsheltered, that means on the streets or in their cars, has been going up every year since 2015. And part of the reaction to this increase in visible homelessness has been a move by sometimes state legislatures or local city councils or mayors to pass ordinances or pass state laws that make it harder for people to simply exist outside, even if they don’t have a place to call home.

Protesters demonstrate on Sunset Boulevard against the removal of a homeless encampment at Echo Park Lake on March 25, 2021 in Los Angeles, California.
Protestors demonstrate against the removal of an encampment in Los Angeles, California, during the spring of 2021. Mario Tama/Getty Images.

Brancaccio: I’ve seen moves calling for bans on encampments, where unsheltered people gather ad hoc. But then where do they go, is the question that’s left dangling.

Oliva: That is always the question that’s left dangling. Right now, we are in an unprecedented situation in terms of an affordable housing crisis and moving to criminalize people simply for existing outside when they have nowhere else to go. What that does is it harms them. It harms the people who are experiencing homelessness, personally, for a variety of reasons. It also makes the jobs of service providers, which are already very difficult jobs on the front line, even more difficult, because then they have to go track people down in other locations. And it also costs the system money. It makes the system less effective and less efficient. So there’s a variety of reasons why we shouldn’t be criminalizing people who are experiencing homelessness, yet it seems to be persisting.

“I think it’s really easy and pretty lazy to say that because there are more people who are experiencing homelessness now than a few years ago…that homeless policy or a housing first approach doesn’t work.”

Brancaccio: Let’s talk about some ideas out of the Cicero Institute, a think tank started by Joe Lonsdale, who’s the co-founder of the big data analytics firm Palantir. The Cicero Institute released a blueprint for how states can push laws to, what it sees as reduce homelessness. It’s not how you would prefer to go about doing things.

Oliva: It is definitely not how we would prefer or really advise communities to address the issues of homelessness. And primarily because it again sort of dehumanizes people who are experiencing homelessness in really damaging ways, both to them and to the system. For example, it can be really damaging to young people, because the effects can really follow them for a long time at a sort of crucial point in their development. And it’s damaging for all people who are viewed as something that’s less than worthy, less than human. And so what our approach is, is that we really are working with our political leaders and elected leaders to make sure that we’re pushing for affordable housing – which is the thing that actually solves homelessness, criminalizing somebody, arresting somebody, putting them in jail or fining them is never going to solve their homelessness, but housing will and behavioral health services that people want need will. So we are really quite opposed to the way that the Cicero Institute and others who are like them, are pushing forward on encampments that are really what they’re saying is that we should be rounding people up and putting them into what I would call internment camps. And whenever we go down that road in this country, I think that we should all be cautious.

Brancaccio: Yeah, I mean, the Cicero Institute describes it this way: “States should direct funds away from expensive and ineffective housing first programs toward short-term shelter and sanctioned, police encampments,” which you read in this other way.

Oliva: Oh, I think I’m reading it exactly how they intended. When we talk about, again, criminalizing people and dehumanizing people, and we say, you know, “Other citizens, housed folks, who are in the community shouldn’t have to see that,” I think that that’s a statement about how worthy we think folks are of resources and attention. And I think that those kinds of camps that they are suggesting, we know it doesn’t work, we know it doesn’t solve homelessness. What we know solves homelessness, what the evidence tells us solves homelessness, is housing and services. And that’s where we should be investing our long-term funding to develop additional housing and services to address the needs of people who are both at risk of homelessness and who are experiencing homelessness now. I think it’s really easy and pretty lazy to say that because there are more people who are experiencing homelessness now than a few years ago, or unsheltered homelessness than a few years ago, that homeless policy or a housing first approach doesn’t work. I often refer back to a colleague of mine, Dr. Margot Kushel, who is saying, “That’s like saying chemotherapy doesn’t work because people still get cancer.” It doesn’t actually make sense, policy sense or financial sense.

Housing first takes money, time and commitment

Brancaccio: But homeless people are still suffering and people in places where homelessness is festering would be forgiven for wanting there to be some new thinking about doing something. I mean, affordable housing requires the long view, you know, zoning rules, changing public attitudes toward more development, that takes time.

Oliva: It does take time. And that’s why when we talk about what solutions need to be in place here at the Alliance, we often talk about what are the interim solutions that we can have in place, while affordable housing is being built? And what do those look like? How do those meet the needs of people who are experiencing homelessness? So for example, during the pandemic, a lot of communities stood up what we call noncongregate shelter in hotels. And the data and information that we’ve gleaned from that is that people did well in those programs in many, many communities and exited to housing at higher rates and were able to access services in those kinds of programs. So there is new thinking about how interim solutions can work while we are building the affordable housing system that we want and need. And we also have to push Congress to make sure that we’re getting the investments that we need in both the affordable housing side and on the services side.

Marketplace reached the Cicero Institute for comment. They told us, “Decades of the same failed homelessness policies have resulted in an explosion of unsheltered homeless in our cities and an explosion of dollars being thrown at the problem with no accountability.” The Cicero Institute says its policies “help the vulnerable homeless to get the shelter and treatment that they need.” 

-Produced by Marketplace’s Erika Soderstrom

Now to a paradox growing out of the strong U.S. labor market. Many government agencies and nonprofits are having a hard time recruiting staff to help people get off streets and into stable housing.

Three years since the onset of the pandemic, industries from hotels to health care are still struggling to find workers.

The same is true for the nonprofits and government agencies that provide homelessness services. They say those vacant positions are often a hidden barrier to getting their clients off the street and into stable housing.

A man sleeps outside the Homeless Help Desk kiosk in the Skid Row community of Los Angeles, California.
A man sleeps outside the Homeless Help Desk kiosk in the Skid Row community of Los Angeles, California. Frederic J. Brown/AFP via Getty Images.

Leticia Rosales is covering the front desk at the Hope Cooperatives’ Outreach and Engagement Center in Sacramento, which provides 24/7 services to people experiencing homelessness.

“It’s like a graduation,” Rosales said. “You know what I mean? You see them start from their first step onto the next step.”

Rosales makes about $22 an hour as an outreach worker. She was homeless as a kid, and says this job makes her feel good. But it’s not for everyone.

“It’s a high rate of turnover,” she said. “But I feel like the ones that actually get it, like get the point of working with the people are the ones that stay.”

Finding the ones that stay is as tough as it’s ever been, says Hope Cooperative CEO Erin Johansen. About 10% of her positions are basically always vacant.

“Many people who do go into the sector go in and are very surprised, disenfranchised, are not understanding…” said Donna Gallup, who teaches in the MSW program at Azusa Pacific University.

“We have a full-time recruiter, she spends all day every day trying to find us the right people,” Johansen said.

There are no good national statistics on the shortage of homelessness workers, but anyone in the field will tell you it’s a problem.

A study focused on Los Angeles County found the workforce needs to grow by 20%.

One particular type of worker has been really hard to get are licensed clinical social workers, according to Johansen. People with master’s degrees in social work are trained to work with people with mental illness or substance abuse issues.

“Right now there’s tremendous competition for social workers, and there are much more lucrative and much more pleasant work settings,” said Donna Gallup, who teaches in the MSW program at Azusa Pacific University.

Those competitors include the likes of schools and hospital systems, which typically offer better hours and less stress.

While Gallup says higher pay for homelessness workers would obviously help, many of her students need more exposure and support.

Gallup helps run a pilot program that places master’s students with Southern California homelessness agencies.

“They’re entering the sector with their eyes open,” she said. “Many people who do go into the sector go in and are very surprised, disenfranchised, are not understanding. Those are some of the reasons people burn out.”

Gallup said the early results of the pilot program are promising. While the official data isn’t out yet, anecdotally it looks like MSWs who participated are sticking with it.

-Reported by Marketplace’s Matt Levin

Then there are the many homeless people who hold down jobs. A new study found 11% of California workers in the fast food industry are homeless. Which reflects what Gregg Colburn said – a lot of people have jobs and still don’t have the resources to move out of extreme poverty. 

Reviewing the numbers from a report conducted by the nonprofit Economic Roundtable shows, fast food employees make up 11% of all homeless workers in California and 9% in Los Angeles County. “It’s a large labor force. It’s a lot of people with part-time hours and low wages and a hard time paying rent,” President of the Economic Roundtable, Daniel Flaming, told Marketplace’s David Brancaccio.

David Brancaccio: Is that the root cause of this, the fact that the pay, the compensation, is low for this type of work?

Daniel Flaming: Yes, the workers that we see when we go into a fast food restaurant, they work an average of about 26 hours a week. The cutoff point for being entitled to health care, paid by the employer in California, is 30 hours. And a full time job is over 35 hours by most other definitions. So the employers in most cases don’t have to pay health insurance for these workers. And that’s a way of cutting private costs.

Screenshot from the Economic Roundtable’s “Hungry Cooks” report.

Brancaccio: So keeping the hours lower in a given week, so they’re not counted as full time employees. But the net effect is you need more people to do the work, but that means you’re paying people less.

Flaming: And it also means that the taxpayers are paying for health insurance coverage through Medicaid. So close to half of these workers get their health care through publicly funded insurance.

Brancaccio: You can look at it through the other porthole here, which is housing is not affordable, and it makes those wages look low.

Flaming: It’s a double whammy both expensive housing in cities like Los Angeles and also very low wages for these workers.

Brancaccio: Tell me about some of the policies that would help align pay of fast food workers with what is needed to just get by and actually have a roof over your head. It has something to do with minimum wage.

Screenshot from the Economic Roundtable’s “Hungry Cooks” report.

Flaming: Raising the wage floor for the entire industry is one piece of the answer. Standards about scheduling, both number of hours and predictability of scheduling, are another piece of it. And we don’t see a path toward achieving this without the public sector setting standards for the industry.

Brancaccio: Right. In other words, some kind of government mandate for this. I mean, is there legislation pending?

Flaming: There actually has been legislation approved. There was Assembly Bill 257 in California, which would have created this government oversight. And the fast food industry was able to get a referendum on next year’s ballot on the law, so it’s on hold right now.

A fast food industry group rejects these figures and called the report biased. The Economic Roundtable denies bias and called for fast food employers to release their payroll data to allow further analysis.

-Produced by Marketplace’s Jarrett Dang

Let’s conclude this special report with that thing we do here at Marketplace … doing the numbers.

Starting with a key number called the RTI. That stands for the rent-to-income ratio. The government recommends that to be sustainable rent should be less than 30% of what you earn. According to Moody’s Analytics, using 2022 data we have now hit this threshold.

The national average rent is now 30% of income. and it is the first time that’s happened in twenty years of these statistics. In New York, where homelessness is rampant, the rent to income ratio is 68.5%. In Miami, 41.6%. Los Angeles, 35.6%. 

While other surveys show Americans want more affordable housing, they often don’t want it near where they live. 

This Marketplace special was produced by Erika Soderstrom with help from Jarrett Dang. The key page online was composed by digital intern, Hannah Baggenstoss. Our engineer who mixed this report is Mingxin Qiguan. Our senior producer is Meredith Garretson Morbey. Our executive producer is Kelly Silvera.

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