Noah Smith: Homelessness is a tragedy the U.S. can afford to fix

If homelessness continues to be the problem of local governments, the problem won’t get solved.

Tammy Perry, 53, sits outside the apartment she is staying in after getting released from jail, as a homeless friend is kicked out by the tenant in LaFollette, Tenn., Monday, April 23, 2018. "That's the only thing I would change about my whole life is the first time I did drugs," said Perry, whose daughter is currently in jail and also is an addict. (AP Photo/David Goldman)

First the good news: Homelessness in the U.S. is down. In the mid-2000s, President George W. Bush’s “housing first” program made substantial inroads against the problem. President Barack Obama continued the campaign with the Homeless Prevention and Rapid Re-Housing Program in 2009 and a follow-up program in 2010. As a result of these efforts, the nationwide homeless population has continued to fall:

That happy trend shouldn’t be minimized. But it masks substantial regional inequality in access to housing. In some states, homelessness has dropped a lot, but in other states it has gone up:

Regionally, homelessness appears to be moving out West, to states like California, Washington and Colorado. Western cities, in particular, have experienced an epidemic — in Los Angeles, for example, homelessness is at an all-time high. San Francisco has the second-highest rate of homelessness in the nation, while Seattle ranks third. Since 2015, 10 or more cities on the west coast states have declared states of emergency with regard to homelessness.

Homelessness has two main sources. First, housing in big cities is expensive, and getting more so. By one count, 71 percent of homeless San Franciscans lost their homes while living in the city. Second, homeless people move to other locations — perhaps to take advantage of local services like shelters and addiction clinics, in the hope of getting a job or to be close to family.

But homeless mobility creates a big problem for local governments. When homeless people can choose where to move, they will tend to move to places with more generous policies, such as better shelters and more social workers. That creates an incentive for cities to skimp on services, since generosity will simply encourage homeless inflows that strain local tax revenues.

This perverse incentive might be one reason why unsheltered homeless individuals in major cities have increased by about 40 percent since 2014, although the number of sheltered homeless individuals has fallen slightly. In addition to rising rents making it more expensive to provide shelter, local leaders may be worried that caring for their homeless population might simply give their region a reputation that encourages more homeless people to move there.

The human cost of that bad incentive is high. International visitors visiting San Francisco are shocked at the dirty, dangerous conditions of the tent cities that fill the streets. Lack of shelter itself is an incredibly stressful experience, and it’s compounded by the ease with which the unsheltered are victimized. The presence of so many homeless people on the streets also creates dangers for many other people — many hundreds of used drug needles are gathered every year from public spaces by San Francisco officials.

Instead of caring for their homeless populations, many cities are shipping them out of town. A 2015 investigation by the Guardian found that the practice of busing homeless people to other towns — usually places with lower income — is rife in the U.S. Cities with reputations as sanctuaries for the homeless, such as San Francisco, are often the most enthusiastic about busing them elsewhere. Smaller and poorer towns are often the ones to suffer, as influxes of homeless people put a strain on their more limited social services and smaller tax bases.

But this, too, is the result of incentives. When homelessness is a problem to be solved by local governments alone, there is every reason to ship them out rather than care for them. The way to solve this problem isn’t to shame and scold the bad morals of local leaders — it’s to change the incentive system that forces their hand. For this reason, the federal government, not local governments, should be responsible for ending homelessness in the U.S.

About 3.5 million Americans will experience homelessness at some point in time, but only about a half-million are homeless at any given time, and roughly 87,000 of these are chronically homeless. By some estimates, housing a homeless person and providing them with a caseworker to see to their needs costs about $10,000 a year. That means for less than a billion dollars a year, chronic homelessness could be ended in the U.S. If temporarily homeless people were housed in temporary housing, and if each temporary residence were occupied half the time, homelessness of all kinds could be eliminated for about $10 billion a year. That’s less than a seventh of what the government spends on food stamps.

The spending would be worth it. Homeless people are the country’s most destitute and needy citizens, and every day they spend on the street is a human tragedy. It’s hard to think of a better way to use a tax dollar than on housing a homeless person. What’s more, a federal initiative to end homelessness would utterly transform many of the country’s cities, making them more pleasant for all residents and raising productivity.

If homelessness continues to be the problem of local governments, the problem won’t get solved. Only the federal government can fix the tragedy playing out on the country’s streets. It needs to finish what Bush and Obama started, and give every homeless American a roof over their head.

| Courtesy Noah Smith, op-ed mug.

Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.