Number of Homeless Families Climbing Due To Recession
Recovery Package Should Include New Housing Vouchers and Other Measures to Prevent Homelessness

PDF of full report (17pp.)

By Barbara Sard

January 8, 2009

Key Findings

  • New data show that homelessness among families with children is already mounting due to the recession.
  • If unemployment reaches 9 percent, as some experts predict, the ranks of the poor could expand by up to 10 million and the ranks of the very poor by up to 6 million (including up to 1 million very poor families with children), based on the relationship between unemployment and poverty in past recessions. Large increases in homelessness could result.
  • The housing market crisis adds to the risk of increased homelessness. Foreclosures have pushed many families into the rental market, driving up rents in many areas and making housing less affordable.
  • Congress should include in the forthcoming recovery package one-time funding for 200,000 new, non-renewable housing vouchers, along with a substantial increase for HUD’s Emergency Shelter Grant program to prevent an additional several hundred thousand families from becoming homeless. At a cost of one-half of one percent of the overall package, these measures would substantially diminish the increase in homelessness during the recession while also providing effective short-term stimulus. Congress can design these provisions in a way that does not create budget pressures after 2010.

Executive Summary

New data indicate that the number of homeless families with children has climbed in recent months and continues to mount.  Although the recovery package that Congress will consider in coming weeks is expected to include measures to restore several million jobs, an unusually large number of people are still likely to fall into severe poverty and to be at risk of homelessness, due to the depth of the recession.  As a result, it is important that the package include funding for effective homelessness prevention strategies.  Such measures could be included for a cost equal to just one-half of one percent of the cost of the overall package.

Goldman Sachs projects that the unemployment rate will rise to 9 percent by the fourth quarter of 2009 and continue rising into 2010.  If unemployment reaches 9 percent and the increase in poverty, relative to the increase in the unemployment rate, is within the range that occurred in the last three recessions, the number of poor Americans will rise by 7.5 – 10.3 million.  Moreover, the number of people in “deep poverty” — with incomes below half of the poverty line — will rise by an estimated 4.5 – 6.3 million if unemployment reaches 9 percent.  This would represent an increase of about 900,000 – 1.1 million families with children that fall into deep poverty and thus are at risk of housing instability and homelessness.[1]

New figures suggest that hardship and homelessness are already growing:

  • In July - November 2008, compared with the same period in 2007, the number of families entering New York City homeless shelters jumped by 40 percent.[2]
  • Massachusetts reports a 32 percent increase between November 2007 and November 2008 in the number of homeless families residing in state-supported emergency shelters.[3]
  • In Connecticut, family homeless shelters turned away 30 percent more families due to lack of bed space in September 2008 than in September 2007.[4]
  • Hennepin County, Minnesota (Minneapolis) reports a 20 percent increase between the first 10 months of 2008 and the comparable period in 2007 in the number of homeless families in emergency shelters.[5]
  • Los Angeles County reports a 12 percent increase between September 2007 and September 2008 in the number of families receiving welfare assistance who are known to be homeless.[6]

Two recent national surveys support these data.  In a fall 2008 survey by the U.S. Conference of Mayors, 16 of the 22 cities that provided data on the number of homeless families with children reported an increase in 2008, some of them substantial.  (Louisville reported a 58 percent increase.)[7]  In another national survey, one in five responding school districts reported having more homeless children in the fall of 2008 than over the course of the entire 2007-2008 school year.[8]

The housing market’s ongoing troubles heighten the potential for significant increases in homelessness during this recession.  Home foreclosures have pushed many owner and renter families into the rental market, driving up rents in some areas by increasing the demand for housing — despite falling incomes and rising unemployment.  In addition, a number of state and localities are beginning to cut back homelessness prevention programs due to large state and local budget shortfalls, even as the need for these programs grows.

Increased homelessness could have adverse long-term consequences, especially for children.  Various studies have found that housing instability and homelessness lower academic performance, increase the chances of repeating a grade, and reduce high school completion rates.  Homelessness also puts children at greater risk of serious physical health problems.[9]

To minimize the risk of large increases in homelessness, and these attendant educational setbacks and health problems, the forthcoming recovery package could include:

  • Funding for 200,000 additional housing vouchers.  Noted researcher and former HUD Policy Director Jill Khadduri has written, “An extensive body of careful research has demonstrated that housing vouchers are critically important both for preventing families with children from becoming homeless and for helping those who do enter the shelter system to leave it for permanent housing and not become homeless again.”[10]

    At a cost of roughly $2.1 billion, Congress could provide vouchers to enable 200,000 additional families to afford decent housing through the end of 2010.  Importantly, Congress can design this provision in a way that does not create budget pressures after 2010, as explained below.

  • A significant funding increase for homelessness prevention assistance through HUD’s Emergency Shelter Grant program.  With an additional $1.5 billion to $2 billion, states and localities, through existing networks of service providers, could provide short-term assistance to enable approximately 400,000 families to avert eviction or obtain new housing.

These two measures would not only help prevent an increase in homelessness but also constitute effective stimulus.  They would inject funds quickly into local economies and help bolster local housing markets.   All or nearly all of the funds would be spent before the end of 2010, the time frame when additional spending is badly needed to help turn the economy around.  The Appendix (see page 14 of the PDF) includes estimates of the number of families in each state that would be assisted if these proposals were adopted.

Click here to view the full-text PDF of this report (17pp.)

End Notes:

[1] Sharon Parrott, “Recession Could Cause Large Increases in Poverty and Push Millions Into Deep Poverty,” Center on Budget and Policy Priorities, November 24, 2008, http://www.cbpp.org/11-24-08pov.htm. This analysis found that if the unemployment rate increases to 9 percent by the fourth quarter of 2009, between 1.5 million and 2 million additional children will fall into deep poverty, based on the increases in poverty rates in recent recessions.  Repeating the analysis for families with children (as distinguished from children themselves) indicates that 900,000 to 1.1 million such families would fall into deep poverty.

[2] Data provided by the New York City Department of Homeless Services.

[3] Data provided by Julia Kehoe, Commissioner, Massachusetts Department of Transitional Assistance.

[4] Data from Connecticut Department of Social Services Homeless Shelter Reports.

[5] Memorandum from staff of the Minnesota Housing Finance Agency to the Board of Directors, December 18, 2008.

[6] Data from CalWORKS Program Division, Los Angeles County.

[7] Abt Associates, “U.S. Conference of Mayors 2008 Status Report on Hunger and Homelessness,” December 2008, http://www.usmayors.org/pressreleases/documents/hungerhomelessnessreport_121208.pdf

[8] Barbara Duffield and Phillip Lovell, “The Economic Crisis Hits Home:  The Unfolding Increase in Child and Youth Homelessness,” National Association for the Education of Homeless Children and Youth and First Focus, December 2008, http://www.naehcy.org/dl/TheEconomicCrisisHitsHome.pdf.  The voluntary survey was conducted October 24 – December 10, 2008.

[9] Jeffrey Lubell and Maya Brennan, ““Framing the Issues — the Positive Impacts of Affordable Housing on Education”  and  Jeffrey Lubell, Rosalyn Crain, and Rebecca Cohen, “Framing the Issues — the Positive Impacts of Affordable Housing on Health,” Center for Housing Policy and Enterprise Community Partners, 2007.

[10] Jill Khadduri, “Housing Vouchers Critical for Ending Family Homelessness,” Homelessness Research Institute, National Alliance to End Homelessness, January 2008, p. 6.

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