There are a little over 330 million Americans.
Around 221 million of us live in a house, condo,
apartment, or mobile home that we own.
Another 103 million rent,
2.7 million live in dorms,
2.2 million live in jails and prisons,
1.3 million live in nursing homes,
and 360,000 live in military accommodations.
At least 600,000 of us, however, live nowhere.
Of course, nobody lives nowhere. Homeless people live in
the woods, on commuter trains, in alleys, doorways, parks, encampments,
or cars. Some crash with friends or relatives. Others get
vouchers to spend a few nights in a motel. Many live in shelters.
What do 600,000 homeless people mean for America? Labor
markets, housing markets, and a suite of public policies aimed
at low-income and homeless people put a roof over most of our
heads, but they do not eliminate what is one of the hardest facets
of American life. Many people do end up on the street. Many
more fear that they will.
“Homelessness captures the well-being of some of the most vulnerable
in the country,” said Krista Ruffini, assistant professor at
Georgetown University and co-author of a recent summary article
on homelessness interventions. “It is illustrative of what’s going on
at the very bottom of the income distribution and so it warrants a policy response.”
But what might a solution to homelessness look like? Increasingly,
economic research considers not only outreach teams serving
people on the street, service organizations expanding shelter
space, or counselors addressing addiction but also broad changes
to markets and safety nets that involve—and affect—all of us.
When I sat down in a St. Paul, Minnesota, men’s warming
shelter one night in January 2023, I met a stream of men with
nowhere else to go. I had signed up to help the Department
of Housing and Urban Development (HUD) count America’s
homeless population. Many men arrived on foot and waited in
the cold until doors opened. Some showed up after their work
shifts ended. A shuttle driver stopped every so often to drop
off more men who would not have been safe on a night with
temperatures in the teens.
“I think of homelessness as a late 20th century, early 21st
century phenomenon,” said Brendan O’Flaherty, a Columbia
University economist who has been studying homelessness
longer than almost anyone. In his 1996 book, O’Flaherty
recounts how in New York City, social scientists uncovered
so few people sleeping on the street in 1964 that they stopped
counting. Researchers in Chicago and Newark found a similar
situation. But by the 1980s a homelessness problem was
obvious. One HUD report concluded that there were between
250,000 and 350,000 homeless people in 1984. In the first
attempt at a nationwide homeless count, the Census Bureau
found 228,000 homeless people in March 1990. Its methodology,
however, may have missed half of the unsheltered population.
By 2007, HUD mandated that local areas conduct the
modern Point-in-Time counts.
“I had a luxury apartment about 10 minutes from here, a very nice apartment. … The woman who was renting [us] that house, she was evicted from that home because it turned out that the rent money we were giving her, she was using it to gamble. … I am currently two years in for my bachelor’s now. … My major is supply chain management, working towards becoming a logistics manager. I’m working towards my goals, regardless of what my circumstance is here.” –ENNIX BLACKMON
It was not hard to count the 30 or so men in the warming
shelter that night in January, but counting all the people experiencing
homelessness in the Twin Cities—or the country—is
much easier said than done. Even defining homelessness
presents a major challenge. In the U.S., if you sleep outside in
shelter not designed for habitation (like a bus station), in an
emergency shelter (including domestic violence shelters), or
in a longer-term homeless shelter, you are homeless. You are
not homeless if you are an adult staying with friends or family,
but if you are a student doing so, you are homeless. You are not
homeless if you sleep in a hotel that you pay for with your own
money, but you are homeless if you pay with a public voucher.
You might not be homeless if you live in an RV, but you are
homeless if you live in a car.
The second difficulty comes in applying this definition.
Many unsheltered homeless people cannot be found. Others,
like two men I spoke to, refuse to be counted. And because
HUD counts people who are homeless on one night, they miss
the majority of people who are homeless for brief periods
during a year. A 2018 study suggested that the number of people
across the state of Minnesota who experienced any period
of homelessness in a year was about 2.5 times as many as were
homeless on a given night.
Despite the conceptual and practical hurdles, shelter workers,
public employees, and volunteers counted about 5,000
homeless people in the counties containing Minneapolis and St. Paul in January 2023, a number mostly unchanged since
2007. That number is 2 percent of people in poverty and about
0.3 percent of Twin Cities residents, which is about two-thirds
higher than the national rate.
In 2018, half of homeless people in the Twin Cities earned less than
$600 per month, putting them in the poorest 5 percent of the population.
Between 2017 and 2021, people who used homeless services in Minneapolis
died at three times the rate of similarly aged Minnesotans.
Whether this is a small or large number depends on your
frame of reference. But the deep costs of homelessness for the
people who experience it and the way this population affects other
people and public systems add up to a substantial problem.
Homelessness imposes costs on all of us.
For most, these costs are indirect. Seeing people openly use
drugs or in mental distress can be scary or dangerous. That
fear has implications for many public services. For example,
a few hundred homeless people ride the Twin Cities light rail,
which is legal, warm, and open almost all night. Their presence,
however, puts off riders and requires so much attention
from transit workers that the state is considering boosting
security to “reset” the culture and perception of the system.
Elizabeth Flores/Star Tribune via AP Photo
Other costs relate to space. Unsheltered homeless people
live in public places by definition, but parks and sidewalks
full of tents are no longer really parks and sidewalks. From
January 2022 to March 2023, Minneapolitans made more
than 1,700 calls to 311 to register complaints about homeless
encampments. One such call, detailed in a City of Minneapolis
report on homeless encampments, stated “the children
in the school have not been able to play at the playground
due to the presence of these individuals, their drug paraphernalia,
and human feces.”
Polling suggests that the burden of homelessness is widely
felt. The overwhelming majority of respondents to recent
polls—typically more than 80 percent—agree that homelessness
is a major issue, and in areas with large homeless populations,
like California and Oregon, a plurality of respondents
think it is the most important issue.
Ultimately, though, the Americans who are homeless suffer
the most. In 2018, half of homeless people in the Twin
Cities earned less than $600 per month, putting them in the
poorest 5 percent of the population. One-quarter of homeless
adults in Minnesota were physically or sexually attacked while
homeless. Between 2017 and 2021, people who used homeless
services in Minneapolis died at three times the rate of similarly
For the chronically homeless,
research tells us what to do:
Give them housing.
Because we all experience these costs, albeit to wildly
differing degrees, we share a need for solutions. The United
States Interagency Council on Homelessness provides one
vision in its 2018 Federal Strategic Plan: Make homelessness
“rare, brief, and one-time.” This would shrink homelessness
counts, protect vulnerable people from becoming homeless,
and alleviate burdens on public budgets and spaces. But
devising such policies, especially given the diversity of the
homeless population (described in “Taking stock of homelessness in the United States”),
is daunting. Increasingly, researchers are taking on that task.
For the chronically homeless, including people whose substance
use or mental illness creates the largest costs to their
communities, research tells us what to do: Give them housing. Instead of offering temporary housing and mandatory treatment,
the predominant approach in the 1980s, the approach
called Housing First immediately gives people a stable place
to live. Specific rehabilitation services are offered but, crucially,
Randomized trials repeatedly show that Housing First
keeps people housed. One study took a group of families
staying in homeless shelters and offered some a permanent
housing voucher, while others received the shelter’s normal
services. After three years, 16 percent of the permanent
housing voucher group had been homeless or doubled up
with friends and relatives in the previous six months, compared
with 34 percent of the families receiving the usual care.
Another study of homeless veterans with psychiatric or
substance use disorders came to similar conclusions. And Elior
Cohen, an economist at the Kansas City Fed, conducted a
large-scale study of applicants for homelessness assistance in
Los Angeles County and found that housing reduced the probability
of homelessness by two-thirds after 2.5 years.
“Go look at the price of an apartment. What was $800 is now $1,200. They want first, last, and a deposit. They want credit ratings over 700. One out of 20 people I know may pass that. Most people burned up their credit already. That’s why they’re here. So now you built this wall [and] they’re boxed out. How do you get them back into society?” –CHARLES HAKE WITH DAUGHTER JENNIFER
Perhaps the most striking feature of Housing First, though,
is that in some cases it does more than just house people who
are homeless. Mothers offered permanent housing reported
lower rates of intimate partner violence (a major finding given
that one-third of homeless women are fleeing domestic
abuse), less psychological distress, better food security, and
fewer behavioral problems with their children. Cohen found
that in Los Angeles, providing housing reduced criminal activity
and increased employment. What’s more, these positive
impacts do not appear to involve a trade-off for Housing First
clients: People given housing and voluntary treatment services
do not report higher rates of drug or alcohol use than
people made to complete treatment programs first.
On the strength of this evidence, Housing First programs are
the main way that local providers treat homelessness today—a
big shift from 40 years ago. True, permanent housing costs
more than the usual care offered by shelter services, because
agencies must pay landlords for as long as recipients remain
eligible. But to the extent that secure housing stabilizes clients’
lives, it sometimes lowers public spending in other domains.
Housing First, however, cannot realistically eliminate
homelessness in the U.S. Too many people live on the precipice
of losing their housing. HUD found that in 2019, 44 percent
of low-income people spent over half their income on
rent. They are housed, but unstably—an unexpected medical
expense or a job loss could push them into homelessness. So
even if policymakers want to or could house every person who
is homeless today, what would happen tomorrow?
to live securely
“I used to think, like many other people, that homelessness
was a mental health problem,” said Ayse Imrohoroglu, economics
professor at the University of Southern California
Marshall School of Business. “But then I realized that a very
large fraction of the homeless are homeless due to shocks, and
economists know how to deal with shocks.” Inspired by the
soaring homelessness around her in LA, Imrohoroglu decided
to study homelessness not with randomized evaluations but
with economic theory.
With co-author Kai Zhao, Imrohoroglu constructed an
economic model of people who not only purchase homes,
rent apartments, consume, save, and work but also lose
jobs, get sick, and sometimes become homeless. By building
in interactions with policy and housing markets, the
model shows that preventing homelessness is key, and the
reasons why people become homeless shape which policies
keep them housed. Rent subsidies for the cheapest units or
expanded housing voucher availability, for example, ensure
affordable options for people who might otherwise have
been homeless for a short time. However, these programs
do little for people unable to work for long periods. Income
support, especially for those with health problems, can protect
this group from chronic homelessness, but to do so on
a large scale, this protection needs to be both generous and
well targeted to poor people.
Data also support the importance of preventing rather than
just curing homelessness. For example, every year 75,000 people
call a Chicago hotline that provides a few hundred dollars
to people facing eviction, but because funds are limited, only a
fraction of them get help. About 3 percent of the callers whose
requests get no money because they happen to call when
funds are already exhausted use homeless services in the following
six months. The share is less than 1 percent for callers
who do get financial help.
“I had to move because I had a couple of floods in my apartment. Landlord didn’t fix it. It started to mold. … They do have senior apartments, but some want three times your security. Well, nobody has that laying around. I make two times the rent. I make $2,200. And I lived in a motel for a while thinking I can find me an apartment and move in. Nope. That didn’t work out either. So I ended up here in a shelter until I could find me a place that I can afford.” –MARILYN FORTE
Because homelessness is so hard to predict—even among
those who call prevention hotlines—help has to be broadly
available to reach the people who might actually become
homeless. It also has to help people afford the housing that is
available at prevailing prices. Another line of thinking, however,
focuses on the price side of the equation, widening the
scope of homelessness discussions to include housing markets
A collection of suggestive evidence supports the idea that
housing markets are responsible for homelessness. For
instance, city-level homelessness is more related to rents than
it is to poverty, substance use, or mental illness. This is not
to say that individual challenges don’t matter—they do—but
the housing view emphasizes that when rents are high, even
small disruptions can make people homeless. Turning a story
about housing markets into effective homelessness policy is
difficult, however. “The best policy is probably to reduce housing
prices,” O’Flaherty said, “but we don’t know how to reduce
One common housing market reform to lower prices
involves making it easier to build by removing regulations.
Housing economists suggest two ways that new market-rate
construction, which many zoning reforms seek to encourage,
might ultimately lower the prices faced by people at risk of
homelessness. First, through the movement of tenants: New
units attract residents who vacate other units, creating more
vacancies that must be filled, and so on. Upjohn Institute
economist Evan Mast, in research presented at a Minneapolis
Fed 2019 Institute conference, traces those moves and shows
that higher-rent construction creates substantial vacancies for
people in the middle of the income distribution.
Second, through housing deterioration: Studies show that
as a property ages, its price falls and it tends to pass to poorer
people. This “filtering” of housing down the income distribution
is another link between construction now and housing
supply for lower-income people later.
Both stories capture some truth, but a direct connection
with homelessness is hard to establish. Mast found that up to 15 percent of moves created by new market-rate construction
were made by people living in the poorest 20 percent of neighborhoods,
but it was impossible to learn if any of them would
have been homeless had they not moved. Nationally, one 2007
study found positive correlations between the stringency of a
state’s housing regulations, housing cost burdens, and homelessness.
But this is at best a long-run relationship, because
building takes time and filtering takes even more time.
A fundamental factor that keeps deregulation from being
a quick and effective homelessness policy is that building is
very expensive. The average new home in 2022 cost $168 per
square foot to build, putting the cost of a 1,600-foot house
(close to the 25th percentile size in 2022) at $268,800, well out
of reach of lower-income Americans.
As a result of high costs, most new affordable housing gets
built because of subsidies. Consider the Minneapolis Public
Housing Authority’s current plan to build 84 new units.
Officials estimate a total cost of $34 million dollars, or over
$400,000 per unit. To fund it they tapped pandemic relief
funds from the City of Minneapolis, economic development
grants from the City and the Metropolitan Council, federal
loans earmarked for affordable housing, Low-Income Housing
Tax Credits (LIHTC), and traditional mortgage financing.
Ted Soqui/SIPA via AP Photo
The housing built with these subsidies does reduce homelessness,
to an extent. Research by Boston Fed economist
Osborne Jackson and University of Michigan economist Laura
Kawano shows that LIHTC-funded developments increase the
supply of affordable housing in a neighborhood and reduce
county-level homelessness rates. Kevin Corinth, an economist
at the American Enterprise Institute, found that 100 new beds
in permanent supportive housing units, which incorporate
rehabilitation services on-site, reduced aggregate homeless
counts by about 10 people.
But these reductions in homelessness are not very large
and come at a high cost, which limits what subsidy dollars can
do. Reducing those costs is therefore key to getting housing
markets to serve low-income people more effectively. Localities
could start allowing single-room occupancy buildings, Corinth points out, lowering per-unit costs by making the
units smaller. In Minneapolis, a new transitional housing
space, Avivo Village, does just that by providing 100 indoor
tiny homes, which cost just $22,000 per unit to build.
Minneapolis Fed economist James Schmitz has another
idea: Let factory housing in. Manufactured housing, in which
entire structures are produced efficiently en masse and delivered
to a site, cost just $88 per square foot in 2022—half the
cost of site-built housing. Today just 9 percent of new housing
in the U.S. is manufactured housing, but places where it
is most common, like Mississippi, have some of the lowest
homelessness rates in the country, according to data Schmitz
gathered from the Manufactured Housing Institute.
Manufactured housing faces many barriers, however, said
Libby Starling, senior community development advisor at the
Minneapolis Fed. Legal restrictions limit where such homes can
go. It’s difficult to tailor mass production to hundreds of local
building codes. But breaking through these barriers may not
only reduce homelessness, said Schmitz, it could have implications
for the location, size, and cost of housing for many of us.
In the U.S., people are homeless when poverty and
instability collide with expensive housing. Reducing
building costs is therefore key to getting housing markets
to serve low-income people more effectively.
Policymakers across the world struggle with issues
of housing affordability and homelessness, albeit very differently.
Two-thirds of Viennese renters live in public housing,
much of it gorgeous. Turkey technically has only a small
homelessness problem, Imrohoroglu told me, because very
poor people build shacks and consider themselves housed.
In the U.S., people are homeless when poverty and instability
collide with expensive housing. But whether it is best to take
on poverty or housing remains an open and vital question.
Franklin Delano Roosevelt, in the midst of the homelessness
crisis created by the Great Depression, proposed a second
Bill of Rights which included the right of every family to
a decent home. “We cannot be content,” he argued, “no matter
how high that general standard of living may be, if some
fraction of our people—whether it be one-third or one-fifth
or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.”
Today homelessness is an acute disaster for some and a nuisance
for others. The conditions that create it, however, matter
deeply for all 330 million Americans who share a simple reality:
People need a place to live.