Housing the Homeless as Economic Development Strategy

We could view homelessness as a moral failure… or a failure of capitalism… or a failure of individuals to live productive lives… or a problem in need of resources we can’t afford to commit…

Or… just spitballin’ here… a waste of potential and precious human capital.

For this discussion, we’re leaving out the moral and ethical dimensions of the issue. We’re not declaring an obligation to protect our most vulnerable. We’re putting on our green eyeshades and considering homelessness from a purely bottom-line point of view.

To hear the Scott administration tell it, extending the emergency motel voucher program is kind of like taking a pile of money and setting it on fire. It produces a bit of transient warmth, but it’s otherwise a waste of resources. Legislative Democrats and even some housing advocates often fall for this: They tacitly accept the premise instead of making the economic case for (a) giving everyone a roof to sleep under in the short term and (b) ending homelessness in the longer term.

When you look at it that way, you find that we can’t afford not to end homelessness. There is abundant evidence that addressing homelessness is an economic winner — not just in the long term, but almost immediately. So let’s stop talking about whether we can afford $72 million for another year of motel vouchers or $31 million for a stripped-down version of the program or a few hundred million to provide enough housing for all. Instead, let’s talk about the economic positives of a humane policy choice.

(I don’t pretend that any of this is my idea, but it ought to be more of a factor in our policy debates.)

The lack of secure housing contributes to a raft of social ills that drain the public purse. Illness, crime, substance use, unemployment, education, and more. Plus, let’s not forget the multiplier effect: Public funds don’t simply vanish when the checks clear. They pay for goods and services. That helps fuel the economy, creating more jobs and generating more tax revenue. We saw the multiplier effect in abundance during the worst of the pandemic, when federal Covid relief funds actually strengthened Vermont’s economy and boosted tax revenues to the point where Our Betters could hardly spend it all.

But let’s get back to the economic burdens created by homelessness. In no particular order:

Health care. The unhoused are more likely to suffer illness or injury and less likely to have access to treatment, medication and health insurance. They more often end up in emergency rooms, the costliest and least efficient form of care. Mental and dental illness go untreated and get worse. The kinds of early intervention that help prevent serious illness are out of reach.

Employment. The belief that the homeless are incapable or just lazy is greatly exaggerated. A University of Chicago study found that 53% of the sheltered homeless and 40% of the unsheltered were employed full- or part-time. It is, of course, harder for them to hold on to a job or move up the ladder because they are housing-insecure.

Reliable housing would add productivity. We have a workforce crisis with a shocking number of jobs going unfilled, right? So I hear. Housing the homeless would bring a lot of people into the job market.

Public safety. People living on the edge are more likely to commit crimes and to be victims of crime. It adds up to a greater demand on police and the criminal justice system, to say nothing of the trauma inflicted on those who can least afford to cope.

The image of public safety. Whether the fears are justified or not, people feel unsafe when they see homeless people or live near an encampment. Business owners feel that their livelihoods are threatened (and they sometimes do stupid stuff in response). These fears can hamper local economies and add to the demands on police. And add to the resistance against sensible criminal justice reform.

Education. The U.S. Department of Education estimated that during 2021, more than a thousand Vermont public school students experienced homelessness. The adverse effects of childhood homelessness are well-documented. Housing for all would improve academic achievement, reduce the burdens on school staff, and give kids a foundation for a better life.

A 2017 report from the California state auditor laid out some of the public costs of homelessness in stark detail:

— A single outbreak of hepatitis-A among the unhoused in San Diego County led to “580 cases, 398 hospitalizations, and 20 deaths.”

— In Los Angeles, “only four agencies and departments had budgetary allocations for homeless programs, [but] at least 15 regularly engaged with homeless people, with some departments incurring large costs.” The Los Angeles Police Department “estimated it spent from $53.6 million to $87.3 million in one year on interactions with homeless people.”

— From the LA Fire Department: “in December 2017 an illegal cooking fire in an encampment under a freeway caused the Skirball Fire, which burned more than 400 acres, destroyed six homes, and damaged 12 other homes.”

— In Silicon Valley, “the estimated average annual cost of an unhoused homeless person… was just under $62,500, while the estimated cost for a housed homeless person in the same area fell to just under $20,000.”

I’ve barely scratched the surface of the evidence that housing the homeless is an economic winner. It’s undeniable, and it should be a core principle of our current policy debate.

Too often, it boils down to “We can’t afford it” versus “We have a moral imperative to try.” That’s a false choice. We need to stop settling for lukewarm, half-hearted approaches. We need to stop wringing our hands and shrugging our shoulders, and get to work on a policy that will actually solve the problem and advance our economy.


4 thoughts on “Housing the Homeless as Economic Development Strategy

  1. Robertr Oeser

    Is this a wrong headed attempt to put a bandage on a bigger problem? Or is it a desperate attempt that needs guidance and resource?

    A local property owner was given 10 days to fix health and safety violations related to recreational vehicles that are being used as living space on his property. ….
    “This is not a perfect solution, but it’s a start,” he said, noting he has a composting toilet, bottled water and access to a shower in Daims’ home


  2. Guy Page

    John, you are on to something here. The problem is that Housing First rarely or never requires or even incentivizes recipients to take concrete steps to overcome the problems that resulted in homelessness.

  3. RuralProle

    As a communist obviously I have a number of disagreements with some of your assessments, but its refreshing to see someone who is willing to call the incompetent VDP out on its bs.

  4. Snafu

    “Our Betters could hardly spend it all.”

    You hit the nail on the head with the hammer with this quote. Homelessness is about American wild west capitalism and the American class system, how it benefits “our betters,” at our expense and suffering, and that if we cannot afford to pay them, we’re of no use to “our betters” whatsoever so we get forced out to live on the streets. Then “our betters” make the public pay to put us in motels or some such idiocy so they can look tough when they kick us out to “save money.”


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