Youth homelessness threatens Minnesota’s future. More than 50,000 Minnesotans experienced homelessness at some point during 2018, of whom 22,500 were children with their parents, according to the most recent estimate from the Wilder Foundation. There were also 7,500 youth, 18-24, who were on their own, referred to as “unaccompanied youth.” The pandemic has only exacerbated this human crisis.
In response, state Rep. Aisha Gomez, D-Minneapolis, is proposing to spend an additional $55 million of taxpayer money each year to help families with school-aged children that are experiencing homelessness. The program would work with county governments to distribute relief payments to roughly 10,000 families with school-aged children that are experiencing homelessness. By helping families who are struggling to remain housed, the hope is to prevent families from losing housing, and reduce the number of young adults who become separated from their families. At this writing, her proposal remains under consideration at only 50 percent of the original request.
The cost of homelessness
It is in taxpayers’ financial interest to invest in families’ housing stability now to reduce the number of future unaccompanied youth facing homelessness. Why? Because of the enormous lifetime cost to taxpayers of homelessness. The full cost has not been well understood until recently, and even those who administer services to the homeless fail to grasp the lifetime costs across multiple government agencies.
Focusing on unaccompanied youth, an economist colleague and I added up the annual and estimated lifetime taxpayer expenditures for a group of 1,451 youth who visited YouthLink, Minneapolis’ largest drop-in center for youth at risk of or experiencing homelessness. YouthLink and other such facilities help youth between 16 and 24 who have become separated from their families or guardians, and who now fend for themselves on people’s couches or the street. They are overwhelmingly Black, disengaged from their educations, and unable to find sufficient, sustained work.
Including only the excess costs beyond what taxpayers spend for average youth in the general population, we calculated what taxpayers spent on this group, including temporary shelter, health care services, work training programs, social welfare payments, criminal justice costs and lost tax revenue from lower earnings. These expenditures comprise the modest safety net that taxpayers provide for these youth.
If they continue to rely on government services, as most of them will, this one group of 1,451 unaccompanied youth will cost taxpayers a whopping $427 million over the course of their lives to age 64, expressed in present value, with future expenditures discounted at 3.5 percent per year. That’s nearly $300,000 per person.
Over time, huge savings
That’s the status quo, and it is so costly that if just 89 of the youth we studied — 6.1 percent — became financially self-sufficient by age 20, over time we would cover a full year’s cost of all of the aid we provide to the entire group. In fact, if we succeed in helping just one in five to end their dependence on services, over time we would generate $50 million in savings for taxpayers.
The implications of these findings should bear heavily on the conversation about Gomez’s proposal. The proposed grants would reach families still connected to schools, meaning the intervention would arrive before more severe and longer-term problems set in. These grants would be an upstream investment to reduce taxpayers’ future burden for unaccompanied youth and likely long-term dependence on taxpayer-funded services.
Yet we know that, even with our best efforts, some families will be unable to sustain housing and some children will join the ranks of unaccompanied youth. Funding aid and support for them also makes financial sense, because the lifetime cost — the one we are already paying — is so great.
But, while compelling, this opportunity is not simple. The cost of prevention is immediate and substantial, while the savings will be less visible and accrue over many years. It is always difficult to quantify expenditures that would have been incurred without intervention, but that doesn’t mean the savings are not real.
Gomez’s youth homelessness program offers help during a critical window of opportunity to prevent a long-term loss of economic value, and to avoid considerable taxpayer costs. Clearly, there is a compelling financial case for investing in prevention in this area, but it will require a visionary group of leaders, leaders who see the big picture and take the long view, to make this investment. Are there enough such leaders to fully fund this critical investment?
Steven S. Foldes, Ph.D., is the principal of Foldes Consulting LLC, an independent research consulting practice, and an adjunct Associate professor of epidemiology and community health at the University of Minnesota. He collaborated on this project with economist Andrea Lubov, Ph.D.
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