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The Impact of Homelessness on Economic Competitiveness Photo from the U.S. Department of Housing and Urban Development

The Impact of Homelessness on Economic Competitiveness

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By: Caroline Julia von Wurden, ASP Adjunct Junior Fellow

Homelessness is a growing problem that negatively impacts the nation’s economic competitiveness. According to the U.S. Department of Housing and Urban Development’s (HUD) 2017 Annual Homeless Assessment Report (AHAR) to Congress, homelessness in the United States increased for the first time in seven years, and increases in the numbers of unsheltered individuals in the 50 largest cities accounted for nearly all of the national increase. In fact, on a single night in 2017, 553,742 people were experiencing homelessness in the United States. Unsheltered homelessness is particularly high in California; 68 percent of California’s homeless population is unsheltered, contrasted with 24 percent in the rest of the nation.

The United States Interagency Council on Homelessness (federal council) updated Opening Doors, the Federal Strategic Plan to Prevent and End Homelessness in 2015. Opening Doors says that “homelessness is costly to society because people experiencing homelessness frequently require the most expensive publicly-funded services and institutions. Homelessness is also costly in terms of its negative impact on human life, health, and productivity.”

A recent report by the California State Auditor highlighted several detrimental effects of unsheltered homelessness on individuals and their surrounding communities:

“The unsheltered homeless population also has an increased risk of exposure to communicable diseases. According to [the California Department of] Public Health, as of February 2018, California was experiencing the largest person to person hepatitis A outbreak not related to a common source or a contaminated food product in the United States since the hepatitis A vaccine became available in 1996, and four counties had declared local outbreaks of the disease. The homeless populations in… Los Angeles, San Diego, Santa Cruz, and Monterey counties, which have rates of unsheltered homelessness ranging between 60 percent and 80 percent, have been affected by these recent outbreaks. For example, according to minute orders approved by the San Diego County Board of Supervisors, from September 2017 through January 2018, San Diego County experienced a local health emergency caused by a hepatitis A outbreak in the homeless and illicit drug using populations. [The California Department of] Public Health reported that as of February 2018, 580 cases, 398 hospitalizations, and 20 deaths were associated with the hepatitis A outbreak in that county.

Homelessness and lack of shelter for the homeless population can also affect the surrounding communities financially and physically…. For example, according to the administrative officer for the city of Los Angeles in a 2015 report, although only four agencies and departments had budgetary allocations for homeless programs, at least 15 regularly engaged with homeless people, with some departments incurring large costs. For example, the report cited that the Los Angeles Police Department estimated it spent from $53.6 million to $87.3 million in one year on interactions with homeless people and the Bureau of Sanitation spent at least $547,000 in a year on cleanup of homeless encampments.

Conversely, housing the homeless population can help decrease some public costs. According to a 2015 Economic Roundtable report on the cost of homelessness in Silicon Valley, some public costs can decrease substantially when homeless people are housed. For instance, the estimated average annual cost of an unhoused homeless person in Silicon Valley who made significant use of public services like emergency rooms was just under $62,500, while the estimated cost for a housed homeless person in the same area fell to just under $20,000. Unsheltered homelessness can also have a physical impact on communities. According to the Los Angeles 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 the Bel Air community in the city of Los Angeles.”

The federal government administers homeless assistance grants through the U.S. Department of Housing and Urban Development’s (HUD) Continuum of Care (CoC) Program. This program “is designed to promote communitywide commitment to the goal of ending homelessness; provide funding for efforts by nonprofit providers, and State and local governments to quickly rehouse homeless individuals and families…; promote access to and effect utilization of mainstream programs by homeless individuals and families; and optimize self-sufficiency among individuals and families experiencing homelessness.” In 2017, HUD awarded about $1.96 billion through the CoC program for homeless services, an increase from the $1.94 billion it awarded in 2015. Although HUD made approximately $2 billion available in the 2017 CoC Program Competition Notice of Funding Available (NOFA), it disclosed that the available amount of funding may not be sufficient to fund all anticipated eligible renewal projects.

In a guidebook about its CoC program, HUD recognizes that significant resources are needed to address the various housing and supportive service needs of people who are homeless or at imminent risk of becoming homeless. HUD states that it has become increasingly difficult for homeless programs to rely on CoC Program funding alone to address a community’s homeless needs, and as a result, it is critical that continuums seek out other resources to ensure that adequate housing and supportive services can be provided at every stage in the homeless service system and beyond. Investing in homeless services makes economic sense. Because of the negative impact homelessness has on human life, health, and productivity, federal, state, and local governments must continue to work together and with other partners to identify resources, develop strategies, and implement plans to prevent and end homelessness.