Is there a Clear Relationship Between Economic Factors and Homelessness?

written by Sam Batko
June 24, 2014

The Alliance’s recently released report, The State of Homelessness in America 2014, found that the overall economy is improving, but that those improvements are not penetrating to lower-income groups. Unemployment decreased in all but five states, but the number of people in poverty, the number of poor households paying more than 50 percent of their income toward rent, and the number of poor people doubled up increased in half of states.

A deeper look at these numbers shows something even more striking. Examining poverty and unemployment, you can see that income alone is not a determinant of trends in homelessness:

  • Mississippi has the highest poverty rate, but the lowest homelessness rate.
  • About half of states have poverty and unemployment rates above the national average and half the states have rates below the national average, but homelessness is concentrated in a smaller number of states with only 13 states having rates of homelessness above the national average.

This juxtaposition shows the importance of the cost of housing in a household’s overall well-being. For the most part, states with increases in the number of poor renter households with severe housing cost burden also saw increases in the number of people in poor households living doubled up. And, living in a doubled up situation is the most common prior housed living situation for people entering the homeless assistance system.

Often, people think that improving economic outlook can only help to end homelessness, but improving economic situations can serve as a doubled edged sword. In slow and struggling economies, the housing market can also contract and rents decrease. Decreased unemployment and increasing incomes can lead to more competition for rental units and translate to higher rents. In a situation where economic improvement does not appear to be reaching low-income populations, increasing rents and a recovering housing market may create an environment where more people struggle to afford housing and possibly become homeless.