Where We Sleep: Costs when Homeless and Housed in Los Angeles

Abstract

The central question investigated in this study is the public costs for people in supportive housing compared to similar people that are homeless. The typical public cost for residents in supportive housing is $605 a month. The typical public cost for similar homeless persons is $2,897, five-times greater than their counterparts that are housed. This remarkable finding demonstrates that practical, tangible public benefits result from providing supportive housing for vulnerable homeless individuals. The stabilizing effect of housing plus supportive care is demonstrated by a 79 percent reduction in public costs for these residents.

The study encompasses 10,193 homeless individuals in Los Angeles County, 9,186 who experienced homelessness while receiving General Relief public assistance and 1,007 who exited homeless by entering supportive housing. Two different methods were used to independently verify changes in public costs when individuals are housed compared to months when they are homeless.

Public costs go down when individuals are no longer homeless: 79 percent for chronically homeless, disabled individuals in supportive housing, 50 percent for the entire population of homeless General Relief recipients when individuals move temporarily or permanently out of homelessness, and 19 percent for individuals with serious problems – jail histories and substance abuse issues – who received only minimal assistance in the form of temporary housing.

Public costs for homeless individuals vary widely depending on their attributes. Young single adults 18 to 29 years of age with no jail history, no substance abuse problems or mental illness, who are not disabled cost an average of $406 a month. Older single adults 46 or more years of age with co-occurent substance abuse and mental illness, and no recent employment history cost an average of $5,038 a month. A range of solutions is required that match the needs of different groups in the homeless population.

Public costs increase as homeless individuals grow older. There is a strong case for intervening early rather than deferring substantive help until problems become acute. Most savings in public costs come from reductions in health care outlays – 69 percent of the savings for supportive housing residents are in reduced costs for hospitals, emergency rooms, clinics, mental health, and public health.

Higher levels of service for high-need individuals result in higher cost savings, as shown by the much higher savings from supportive housing compared to temporary housing, and by the higher saving for supportive housing residents in service-rich environments. One of the challenges in addressing homelessness is housing retention – keeping individuals who may well be socially isolated, mentally ill and addicted from abandoning housing that has been provided for them.

Keywords: 10th Decile, Avoidance, Chronic, Cost, Data, Disability, Economic, Gender, General Relief, Health, Homelessness, Hospital, Housing, Jail, Justice System, Linkage, Los Angeles County, Mental Illness, Permanent Supportive, Planning, Poverty, Prevention, Priority, Record, Risk, Social Services, Welfare

JEL Classification: C81, D63, H11, H51, H53, I18, I31, I32, I33, J64, R31