The high cost of homelessness
For most of his life, Murray Barr was an ordinary American. Everything changed abruptly when his story of personal tragedy and period of homelessness created a media frenzy.
Malcolm Gladwell, in his article “Million Dollar Murray,” used Murray as an example of how homelessness was costing taxpayers in Reno, Nev., around $1 million despite Murray not having a permanent home. Murray’s story shocked many because it seemed unfathomable that homelessness cost money.
People without a home, and lacking supports for mental illness and addiction, can draw significantly on social services for survival, including shelters, social agencies and hospitals. They also tend to interact more frequently with police, fire and paramedic services. This all costs money.
In Canada, for persons struggling with homelessness and mental illness, the annual costs are $53,144 per person. This number comes from research published this summer from the At Home Chez Soi (AHCS) project which calculates the cost of those often termed “hard to house.”
The AHCS study assessed the effectiveness of Housing First in five cities — Vancouver, Winnipeg, Toronto, Montreal and Moncton. The project was massive, using $110 million to end homelessness by providing housing and key supports delivered by specialized teams with small caseloads. The outcome demonstrated clearly that Housing First is a much more effective model than the current fractured set of supports, where costs can rapidly escalate like they did with “Million Dollar Murray.”
The Housing First model saves money by curbing the overconsumption of services. Not only did the project prove Housing First effectively ends homelessness for an estimated 15 per cent of the homeless population struggling with mental illness, but it also concluded it can offset much of the $53,000 per person cost of doing nothing.
It is important to note that the average cost of homelessness ranged from just more than $29,000 in Moncton to a high of $59,000 in Toronto (Vancouver fell in the middle at $53,000, while Winnipeg and Montreal sat at $45,500 and $53,000 respectively). The recent research also highlights a tremendous range when looking at the highest users of services, which varied from just more than $15,000 to $340,000 per person per year for the highest consumers.
Why does it cost so much to be homeless?
Not surprisingly, the biggest allocation in each city was the provision of health-related services, with 48 per cent of Vancouver’s costs going toward health. Both Montreal and Toronto had just more than 40 per cent directed to health services, including substance use treatment, emergency room visits and psychiatric services. The second-largest cost was related to legal issues, including incarceration, police interaction and court appearances. This translated into a high of 25 per cent in Toronto or nearly $15,000 per person. The other cities ranged from 15 per cent to closer to 20 per cent.
A third key area was the cost of shelters and supported housing. Again, there was a range, with Montreal hitting close to 18 per cent while the other cities hovered between 10 per cent in Winnipeg to about 14 per cent in Toronto.
The variations among cities tell us that each has a unique set of factors that must be addressed with local solutions and plans. But the overall pattern of spending and need is clear: health, legal issues and shelters cost money. Homelessness is costly.
For the highest need users, the Housing First model costs $22,257, while those with more moderate needs cost $14,177 per year.
The research tells us is that we need to address the underlying health and socio-economic circumstances of those transitioning from homelessness. There is real hope for success if we can provide access to the right set of services using a Housing First approach. Only then can we reduce the heavy economic burden of homelessness.