Monday, May 31, 2010

Homelessness -- Can we "cure" it? Should we care?

In Minnesota, a state blessed with resources, should we have 13,000 or more people who are homeless, nearly half of whom are under age 21? What if we could solve the problem for a thousand homeless people, at a cost of $1.75 per year, per state resident? I know that we want “no new taxes”, but might such an investment have some value?

Minnesotans can take pride in the fact that we have initiated efforts to end homelessness. Without such efforts, we would likely find ourselves in a worse situation. However, as Wilder Research has reported, many homelessness trends have moved in a bad direction.

Is this issue intractable? Is the cost of a solution insurmountable? I performed some “back of the envelope” calculations to help think about this.

A portion of the homeless population just needs housing. Some low-income, low-skilled adults fall into this category; so do some women and children fleeing domestic violence. With a place to live, they can handle their lives without intense supportive services, and just with the normal sort of assistance that all of us need at significant transition points in our lives.

What might housing cost for 1,000 homeless people, who need no special supports beyond housing? Assume a housing cost of $750 per month per person. Calculate the total yearly cost; divide it by the number of residents in the state of Minnesota (5,446,420). You will discover that we could house 1,000 homeless people – who just need a place to live – for a cost per year of about $1.75 per state resident.

Many homeless people, of course, require supportive services; they cannot live on their own. Suppose that supportive housing costs $1,500 per month. Do the math again. You will discover that we could house 1,000 homeless people – who require supportive housing – for a cost per year of about $3.50 per state resident.

Is that an insurmountable cost? Not really. Although I do realize that resources are finite, and if you use the “just pennies a day” formula with every possible good thing to spend money on, eventually resources will exhaust themselves. However, the will to do something may have greater importance than the amount of available resources.

Homeless people must have the will to improve their life situations. Many of them have that will. They have the same desire and drive as anyone can; they pursue exactly the same goals as middle and upper income people. Yet barriers get in their way, including low income, severe mental illness, poor credit histories.

In addition to these individual barriers, structural barriers create place severe limits on what people can achieve. What do we mean by structural barriers? Very simply, if 110 people needed housing, but only 100 places were vacant, 10 people would not have housing, regardless of their abilities and determination.

Analysis by one set of economists** suggested that just a small increase in the vacancy rate (an economic structural factor) can produce a major decrease in rates of homelessness in a community. Why? Well, understandably, a greater number of available units, in combination with likely rent reductions, will enable some low-income individuals and families to afford housing.

So, as we seek to end homelessness, our strategies must focus on both structural and individual factors.

What does it cost us if we do not address homelessness? Well, homelessness increases chronic health problems; homeless teens have much lower graduation rates than do other teens. Again, you can do some math. In the Wilder Research 2009 survey, 42% of homeless adults had used a hospital emergency room during the previous six months. At $1,000 or more per visit, costs add up. National data suggest that the cost of not receiving a high school diploma averages $260,000 over the course of a non-graduate’s lifetime. (Remember, the individual incurs those costs, but so do all of us in the form of lower productivity, lower tax receipts, etc.)

The Family Housing Fund found that “the cost of supportive housing for a chronically homeless family is less than half the cost of public services required if they remain homeless.”

We can make choices; we do have resources. We can make a dent in this problem, if not solve it.

A recent study in the sporting world showed that penalty kick takers in soccer matches score their point 92% of the time when the score will produce an immediate win for their team; but they score their point only 60% of the time when the point will simply tie the match. That shows the power of psychology. Might we take a similar approach to social policy? If we feel we can succeed, if we have that will, we produce a much greater likelihood of success.

I encourage you to take a look at the results of the recent research on homelessness on the Wilder Research web site,

**“Homeless in America, Homeless in California”. Quigley, Raphael, Smolensky. The Review of Economics and Statistics, February 2001.

No comments: