Just $1,000 in Cash Assistance Can Keep a Person From Being Homeless for Two Years

An unique new study seeks to answer a seemingly simple question: What happens if Americans on the brink of homelessness are given cash — even a relatively small amount?

In the United States, attitudes toward welfare vary widely — however, those who argue that welfare programs create a culture of dependency and entitlement have been gradually winning policy victories. Austerity measures have seen hundreds thousands of Americans thrown off food assistance in many states already — up to 1 million Americans are set to lose SNAP benefits by the end of the year.

This anti-welfare ideology, however, is not grounded in reality. In fact, as this new study demonstrates, the opposite is likely truer than many might have suspected.

Looking at homelessness programs in Chicago, economists from the University of Notre Dame tracked individuals facing life on the street who were given lump sums of cash. Because these programs’ funding can be wildly inconsistent, some assistance seekers were given aid, while others were not.

The results were stunning: The vast majority of those who were at greatest risk of homelessness and given an average of $1,000 in cash aid were able to avoid losing housing for at least two years.

These individuals, it is important to note, were required to prove they would soon be able to sustain their housing costs — in most cases, those at greatest risk were in a situation where they were faced with a large, unexpected expense.

The findings, published in Science, show that the risk of homelessness fell by 88 percent over the three months after being given financial assistance. Economist James Sullivan says that his team “found no evidence that this effect fades away” over the course of two years.

Cash infusions for those at high risk of having to live on the street — and the results — clearly provide a great benefit to vulnerable people. But what about the rest of America — what’s in it for taxpayers (aside from the moral aspects)?

Homelessness is costly, not just to those without a home, but to U.S. society in general. Though critics of welfare programs are often quick to lament the financial burden they impose on the economically secure taxpayer, past studies have shown that even a brief spell of homelessness, on average, equates to roughly $20,000 in social costs.

This figure comes from the cumulative costs of policing, emergency health care and the operation of shelters, among other things.

It is not wholly accurate to say that this breaks down to $1,000 compared to $20,000 — the study found that the mean cost for homelessness prevention is $10,300 (this factors in the cost of administering and operating these social programs). The researchers note, however, that if these programs targeted the highest risk individuals, this cost could be lowered to roughly $6,800 per person, on average.

But even at nearly half the expense of allowing a person to become homeless, the benefits are undeniable – morally and fiscally.

Creating or expanding other social safety nets could further reduce Americans’ risk of experiencing homelessness and the likelihood of needing a sudden cash infusion. A true single-payer health care system (currently a more popular option than the current state of Obamacare), would be one obvious step — as the authors of this study on homelessness noted, many of the at-risk individuals seeking cash assistance were grappling with an unexpected medical expense.

Instead of wasting money on humiliating, demonstrably pointless drug-testing programs for welfare recipients, taxpayer dollars could be spent on programs to actually help these people — and ultimately save money in the long run.

Photo Credit: nautiluz56 / Thinkstock

96 comments

Marie W.
Marie Wabout a year ago

Costs less than one B35 fighter craft.

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Rosslyn O.
Rosslyn Oabout a year ago

It is so true that many people scrape by with their job and school fees etc, but suddenly their circumstances change. These changes can range from the company closing down to severe illness of the 'bread winner', or having to care for a loved one. I therefore, can understand that a quick injection of funds, to cover the house/rent payments for a few months will save these families being evicted. With that trauma out of the way for a while, they then can concentrate on securing paid work again as soon as possible. It does make sense to me. It would even cut down on people turning to drugs and alcohol to 'drown' their problems, and even suicide, perhaps??

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Siyus Copetallus
Siyus Copetallusabout a year ago

Thank you for sharing.

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Telica R.
Telica Rabout a year ago

Thank you

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Sue H.
Sue Habout a year ago

Homelessness is a National disgrace.

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Janet B.
Janet Babout a year ago

Thanks

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Rose Becke
Rose Beckeabout a year ago

I agree Shirley

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Kevin Brown
Kevin Brownabout a year ago

Interesting stuff.

Maybe if we would stop stigmatizing and scapegoating the poor we could do more about the problem of poverty!

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Teresa Antela
Teresa Antelaabout a year ago

Shirley S. I agree with you.

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Janet B.
Janet Babout a year ago

Thanks

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