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Socio-Economic Plan: Homelessness

Homelessness is a significant public health problem impacting millions of individuals within the United States. Its prevalence has been associated with inadequate low-income housing. In response to the soaring housing prices, several states have adopted rent control and stabilization regulations to curb the widening socioeconomic disparities. Approximately 182 cities and municipalities in the U.S have active rental rules. While the intentions of these policies are unquestionable, their effectiveness in resolving this issue is debatable. Rent controls indeed protect tenants, especially those from low-income households, from exploitation and adverse economic shocks. However, these procedures are not only unnecessary but can also have negative socioeconomic consequences. The purpose of this paper is to critically evaluate the changes in socioeconomic factors that affect the homeless and the influence of various stakeholders on the issue. This writing also provides a potential solution that can effectively resolve homelessness in the United States.

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Contrast the Different Change Forces Affecting Homelessness

During the 1870s, the homeless were mainly travelers traversing across the U.S, searching for manual labor. The public perception of the vagrants was characterized primarily by disdain toward the manual laborers. They were termed tramps, lazy, incorrigible, depraved savages, and aimless men who had lost the cultural norms of domestic life (National academies of sciences et al., 2018). The solution to homelessness during that era was through the provision of jobs rather than housing assistance. The itinerants mainly comprised whites, alcoholics, males of 50 years and over, and the disabled (National academies of sciences et al., 2018). Additionally, they lived in structures such as cheap hotels, single room hotels, lodgings, and flophouses.

Unprecedented changes in socioeconomic issues led to modern-day homelessness, which started in the early 1980s. The factors that led to the contemporary-era homelessness include renovations of inner cities, high unemployment rates, economic recessions, deinstitutionalization of the mentally ill, and inadequate housing supply (National academies of sciences et al., 2018). The renovation of inner cities led to the disappearance and destruction of single-room occupancy hotels (SRO). These were low-income shelters mainly located in Skid Row areas and were occupied by impoverished and low-income households. However, the renovations led to a dramatic increase in downtown regions’ property values as most SROs and temporary residences were converted into apartments and condos. While the rent in low-income areas increased, the income levels of individuals remained the same. The disparity between the community members’ wages and the rental burden triggered an economic burden that saw several families and individuals move to the streets.

Contrast

The early versions of homelessness were facilitated by industrialization and urbanization as foreigners trickled into the country in search of labor. In contrast, the crucial changes observed in modern-day homelessness seem to emanate from economic recessions, social issues, and changes in legal policies. In response to the economic recessions, the government made significant cut downs on funds spent on social programs and legislation that supported the vagrants. For example, California’s hospital beds decreased from 37,000 to 2,500 in less than three decades (National academies of sciences et al., 2018). Budgetary cuts in institutionalized centers also triggered an influx of mentally ill people living on streets and temporary shelters. Today, due to limited funding from the federal government, only a handful of eligible individuals and families can receive housing assistance. Coupled with low wages and unemployment, the rate of homeless people increased gradually.

Changes in government regulations, mediated by economic recessions, also contributed to modern-day homelessness. In 1937, for example, the local government initiated the building of houses and provided jobs to the unemployed to solve the situation. Until the late 1970s, the program successfully subsidized all capital costs in selected housing dwellings. Under the plan, eligible households received voucher assistance covering the gap between what the tenant paid and what the landlord charged. It also covered 80% of all eligible families, unlike the current system, where assistance is only available to the severely low-income family (Quigley, n.d.). The 1984 Social Security Disability Benefits Reform Act also made significant adjustments that cut down the financial assistance of the derelicts and mentally disabled. The massive contraction of economic activities led to substantial changes in pro-homelessness legislation that affected many people.

Changes in social issues also contributed to the face of homelessness. Until 1990, the homeless were mostly single, white males, males, aged 50 and above, alcoholics, and the poor. The current homeless population is mainly characterized by families, women, youths, and veterans. However, whites and males still account for the highest population of derelicts (“State of homelessness,” 2020). The shifts in homelessness demographics were attributed to social and health issues such as the burden of medical conditions, psychiatric disorders, and the cost of substance use. National academies of science et al. (2018) asserted that the burden of medical conditions was the primary cause that led women and families onto the streets. In addition, the homeless in the industrialization and urbanization periods mainly lived in lodgings, hotel rooms, and SROS. Ironically, most homeless individuals of that era fit into the Housing and Urban Development definition of “housed” and, therefore, would not be considered vagrants according to today’s standards (National academies of sciences et al., 2018). A majority of homeless people today live and sleep on the streets.

Stakeholders

A community is well-positioned to bring systematic changes through effective coordination among various Stakeholders. The associates involved in combating homelessness in the United States include public housing authorities, legislators, state and federal agencies, and community-based agencies. The Department of Health and Human Services (HHS), U. S. Interagency Council on Homelessness (USICH), HUD, state and local governments, service providers, advocates, and Veterans Affairs work collaboratively with the government to ease homelessness (“Strategic Action Plan,” 2018). The HHS coordinates the delivery of treatment and health services to the homeless. The agency is responsible for identifying and promoting the use of evidence-based interventions that are specifically focused on the needs of the derelicts.

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The interventions include planning for effective transitioning, discharge, and release of the homeless from health centers. In liaison with service providers, HHS also coordinates and connects the homeless with housing services. USICH is the only federal government agency whose main agenda is to put an end to the situation – homelessness in the United States (“Ending veteran homelessness,” 2018). It works with 19 federal agencies to improve the conditions of the homeless. It also develops strategic plans against homelessness and helps local stakeholders in all states to implement best practices that will enhance homelessness with their community. It also assesses the effectiveness of federal programs throughout the nation and advice local communities on funding opportunities.

While the federal government is responsible for policies concerning housing subsidies, state and local directorates administer policies such as service provision, occupancy, and regulation of homeless shelters. They also implement national approaches aimed to combat the issue within their geographical areas. Through the federal government’s funding, states allocate finances for subsidized housing, food stamps, and homeless shelters to different municipalities. They also identify high-risk populaces and create response plans to minimize the risk of individuals losing their residences and ending up on the streets.

California, New Jersey, Maryland, and New York have implemented rental control laws to help curb homelessness within their states. Ironically, New York, California, and Maryland are among the top ten states with the highest homelessness rates despite the enforcement of the rental control policies (“State of homelessness,” 2020). Veterans face a unique set of challenges when transitioning from military life to civilian life. The transitions are characterized by substance use, disabilities, economic hardship, mental illness, and post-traumatic stress disorder that ultimately lead many veterans to homelessness. Veteran Affairs is a federal agency that provides health services to eligible veterans. The VA offers explicitly homeless services such as housing, mental health services, substance use, and economic assistance to veterans.

Influence of Stakeholders on Homelessness and How They are Affected by the Issue

The collective efforts of these stakeholders have significantly impacted the vagrants. A recent report by USICH indicated that 79 communities and three states in the U.S have succeeded in ending veteran homelessness (“Ending veteran homelessness,” 2018). Another record by the National Alliance to End Homelessness revealed a 12% decrease in the rate of homelessness since 2007 (“State of homelessness,” 2020). Within the same timeframe, the incidence of derelict families decreased by 29%, the unsheltered by 10%, and the chronically homeless by 9% (“State of homelessness,” 2020). The aforementioned data highlights the efficacy of the strategies employed by different organizations to end homelessness.

Contrarily, there has been a significant increase in the incidence of homelessness among individual men and women in the last three years. According to the report, the aforementioned populace recorded an eleven percent surge (“State of homelessness,” 2020). State-wise data shows that Michigan, Kentucky, and New Jersey have had significant homelessness reductions since 2007. Michigan has achieved a 70% reduction while Kentucky and New Jersey have made 47% reductions in overall homelessness within their states (“State of homelessness,” 2020). The shift of public policies from financing derelicts’ shelters to promoting permanent housing has led to a 20% increase in permanent housing beds and 87% in rapid housing assistance (“State of homelessness,” 2020). States such as California, Florida, New York, and Texas have the highest homeless population in the U.S (“State of homelessness,” 2020). The high rates of homelessness are attributed to the cities’ large populations and the cost of housing.

Potential Solution and Justification

Rent control regulations is likely to facilitate the homelessness debacle in the long-run. To prevent this from happening, state and local governments should do away with rent control regulations. Proponents base their argument on the need to protect tenants’ interests to curb the market power of landlords – several studies support this view. For example, an empirical survey on the effectiveness of rent control policies in San Francisco, New York, and Cambridge showed that these statutes lowered rent for selected housing units and prevented forced evictions due to rental increases (Rajasekaran et al., 2019). There is considerable evidence showing that rent is the largest expenditure of most individuals and families in the United States and, therefore, controlling rent can significantly reduce occupancy costs.

While rental controls have a seemingly positive impact on individual outcomes, they also breed systematic issues in their wake. From a personal perspective, rental control laws are unwarranted, groundless, burdensome, and most importantly, inefficient in resolving homelessness. According to Rajasekaran et al. (2019), tenants living in rent control units are less likely to move out. The improbability of a tenant moving out of a rental control unit is a double-edged sword. A tenant may not be willing to give up his rental-controlled housing unit even when his circumstances or income status changes. The outcome of such practices can make needy families to be locked out of subsidized rental opportunities.

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Second, the problem with rent control policies is that they create significant negative externalities, which can lower the houses’ investment value. Economic statistics show that the demand for houses in the US moderately depends on prices; therefore, reducing housing prices may have small effects on resolving the issue. Tenants in highly regulated houses spend more time debating houses’ consumption value instead of the investment values. The depreciating value of the housing market negatively affects developers and landlords. A similar crisis happened at the end of the 1970s when the government enforced programs that subsidized selected public housing capital costs. Since the rental caps were fixed at 25% to 30%, landlords who served low-income families faced major budgetary problems (Quigley, n.d.). With rental caps, landlords might cut down on maintenance costs, which may lead to deteriorating housing status. Rental regulations transfer the economic burden from tenants to developers and landlords.

Third, rental control regulations are ineffective with respect to increasing access to low-income houses. A recent study conducted by Diamond et al. (2018), and cited in Rajasekaran et al. (2019), showed that San-Francisco rent control laws enacted in 1994 led to a 5.1% increase in rent between 1995 and 2012. Similarly, Beacon Economic demonstrated that rental caps in California are ineffective in reducing the state’s homelessness. The survey showed that most low-income families were still incurring costs which amount to over 30% of their income on rent (Thornberg et al., 2016). The regulation has negatively affected low-income families living outside the rental control areas. The findings of Thornberg and his associates affirm the stance rental caps can look out for needy families out of essential housing. Similar to San-Francisco, the rental caps in California slowed down the growth of rental housing, which increased rental prices.

Fourth, rental caps may lead to a national economic burden on the country. Research conducted by the Organization for Economic Co-operation and Development (OECD) showed that rental market controls have severe negative implications on bottlenecks in housing supply and increase the risk for crisis and severity of the economic downturn (Cournède et al., 2019). The survey also suggested that rental control prevented the equal distribution of labor by discouraging low-skilled workers (Cournède et al., 2019). This study’s findings support the notion that individuals living in rental control units are less likely to move out, which can disproportionately affect those living outside these units. Because of the above reasons, state and local governments should eradicate rental caps. Abolishing rental caps regulations will result in positive outcomes among the homeless, low-income families, and landlords.

Conclusion

Rental regulation can result in tenure security by reducing the risk of eviction. However, the demand for houses in the US only moderately depends on prices; therefore, reducing housing prices may have small effects on resolving. Significantly, these laws will facilitate the homelessness debacle in the long-run. It can lead to the devaluation of housing properties and housing quality, lockout needy families from subsidized rental opportunities, and reduce the supply of housing units, which results in higher rent prices. Realizing the root causes of homelessness will help policymakers establish effective procedures and strategies that have a long-term impact on communities.

References

Cournède, B., Sakha, S., & Ziemann, V. (2019). Empirical links between housing markets and economic resilience. OECD. Web.

Strategic action plan on homelessness (2018). U.S Department of Health & Human Services. Web.

National Academies of Sciences, Engineering, and Medicine, Health and Medicine Division, Board on Population Health and Public Health Practice, Policy and Global Affairs, Science and Technology for Sustainability Program, & Evaluation. (2018). Addressing Homelessness in the United States. Nih.Gov; NCBI Resources. Web.

State of homelessness: Homelessness in America (2020). National Alliance to End Homelessness. Web.

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Quigley, J. M. (n.d.). Housing policy in the United States. Web.

Rajasekaran, P., Treskon, M., & Greene, S. (2019). Rent control: What does the research tell us about the effectiveness of local action? Urban Institute. Web.

Thornberg, C., Levine, J., Schrader, D., & Meux, E. (2016). An analysis of rent control ordinances in California. Beacon Economics. Web.

Ending Veteran Homelessness (2018). United States Interagency Council on Homelessness (USICH). Web.

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