The Economics of Homelessness: A Potential Win-Win-Win-Win 

The most fulfilling job I ever had was working for a mental health agency developing housing and job opportunities for its clientele. Many of the clients were, or had been, homeless and my team was tasked with providing them with a bridge to recovery, which meant being housed and largely self-sufficient in an environment with wrap-around support. The medical and clinical staff helped clients deal with their disorders through therapy and dispensing psychotropic drugs that were becoming more effective. Unfortunately, we all had to deal with the tendency of some clients to self-medicate with drugs and alcohol and had to learn the skills of de-escalation.

Given my role of creating jobs for people suffering from mental illness, I chose to hand out business cards instead of spare change to the “homeless” I encountered on the street. During the month I tried this approach, only one young woman accepted the offer. Unfortunately, she called on her start date telling me she would not be coming to work as her boyfriend threatened to beat her if she did.  

The economics of homelessness are complex. According to the Colorado Coalition for the Homeless (CCH), only 1 percent of homeless individuals live unhoused by choice. Fifty-three percent have jobs and simply cannot afford housing. Other sources indicate most of the homeless are over the age of 25 and male with a rapidly growing age cohort being 50 to 64 who need access to more affordable health care in addition to housing.

The majority of homeless women escaped domestic violence. Thirty percent of the homeless are part of a family. Less than a third are addicted to drugs and alcohol, approximately 14 percent are veterans, and 25 percent suffer from some sort of mental illness. With more resources dedicated to veterans in the last decade, the number of homeless veterans has been cut in half. Unfortunately, the affordable housing crisis is having a negative impact across the board and the legalization of sports betting promises to exacerbate addiction problems, pushing more young people into homelessness.  

Development of more supportive housing programs holds promise to assist those experiencing long-term homelessness. The CCH reports the cost of supportive housing and services to be $13,400 per person annually compared to $21,000 to $40,000 spent for a range of services delivered on more of a revolving-door basis such as health care, incarceration, detox treatment and shelter services.

Unfortunately, false narratives on negative impacts of supported housing on surrounding communities are often exaggerated. The biggest concern centers on criminalized vagrants or abnormal behaviors such as loitering, which can escalate with poorly trained responders. A recent study of Colorado inmates found former homeless inmates are less likely to be incarcerated for violent crimes and more likely to have drug offenses and trespassing convictions. Such narratives combined with a lack of funding hinder expansion of such programs. 

Summit Economics recently documented the socio-economic impacts of the Fort Lyon supportive housing facility on Bent County. Systematic higher crime levels resulting in arrests were not evident in the data. There is greater demand for health services as the homeless moving into supportive housing have often gone years with inadequate medical care except at expensive emergency rooms. We found many local residents appreciate supportive housing given the positive impact on individual lives and the surrounding community. Community engagement among those who graduated from Fort Lyon and stayed in Bent and Otero counties is impressive. In fact, the local American Legion Post is the first in the country established by formerly homeless individuals.  

READ: Housing Affordability Crisis in Colorado: Denver, Colorado Springs and Grand Junction See No Signs of Improvement

The strongest support in Bent County came from local businesses that, like most businesses today, struggle to find enough reliable workers. There were numerous accounts of Fort Lyon residents, present and past, filling jobs across the skills spectrum, and I sensed the potential for an emerging entrepreneurial culture among graduates. The only problem was similar to what I encountered when developing vocational opportunities years ago. The need for labor results in employers wanting recovering individuals to work full-time. This is not necessarily beneficial to people in early recovery as job stressors and money can trigger negative behaviors that took them to homelessness in the first place.  

Visiting with supported housing residents and graduates at Fort Lyon took me back to my days working in the mental health agency, giving people a place to live and more money that comes from even part-time employment. We found dramatic declines in the need for therapeutic and medical treatment for clients engaged in work or volunteerism who had a roof over their head. Dramatically reducing homelessness through supportive residential programs is a win-win-win-win for the individual, businesses, communities and society as a whole.  

Tom Binnings is a senior partner at Summit Economics in Colorado Springs. He has more than 30 years of experience in economic and market research for public policy, strategic planning, business analytics and project finance. He can be reached at [email protected].