An Economic Perspective on Homelessness: Wage Gap

Homelessness is an issue that impacts all of us, whether or not we experience it ourselves directly. It is hard to explain the particular circumstances under which a family or a person may become homeless. However, common economic causes can be observed such as low wages, high rents, and joblessness. As the gap between incomes and housing prices continues to grow, homelessness is affecting larger parts of the population, including those that once had the security of high paying jobs.

According to the 2011 National Alliance to End Homelessness State of Homelessness report, between 2008 and 2009, the homeless population in the US increased by 3 percent. Not only that but, they also listed risk factors for homelessness that became more predominant during this period:

  • 60 percent increases unemployment.
  • Real income for the working people decreased by 2 percent, with some states seeing declines of more than 10 percent.
  • A majority of households with incomes below the federal poverty level spent more than half of their monthly incomes on rent.
  • People living in doubled-up situations increased by 12 percent.

In the past few years, there have been reports in the media of economic growth and low unemployment rates. However, this begs the question of why homelessness persists, and, in some areas of the country, is worsening. One of the reasons of that includes stagnant or falling incomes rates in low-income families and part-time jobs that offer few benefits. Another reason is the need have to overcome the continued dramatic decline in wage growth and unemployment.


In the major cities where the percentage of homelessness is high, the average minimum wage in the U.S. does not provide enough for a person to afford housing and provide a living for their families. Therefore, low-income families cannot afford the necessities to live and have access to housing.

Helping decrease homelessness rates requires more than funding programs to people that already homeless. It requires closing the gap between incomes and housing costs in our economy. Therefore, jobs that offer a reasonable pay wage are critical. To the economy to strive and reduce homelessness in us, low-income populations should have access to opportunity to obtain and retain a job, which pays a living wage; moreover, the necessary supports and services such as child care and transportation to keep it.