Providing permanent housing for vulnerable populations is not only a moral imperative but also a financially sound strategy. The current approach to homelessness—relying on shelters, jails, or hospital visits—comes at an extraordinary cost. By contrast, targeted basic income (TBI) programs aimed at providing direct financial assistance to the most housing-insecure populations are far more cost-effective. This distinction between Targeted Basic Income (TBI) and Universal Basic Income (UBI) is critical. While UBI provides unconditional payments to all citizens, TBI focuses specifically on populations at risk of homelessness, providing them with direct cash assistance that helps cover housing costs and prevent displacement. The current Section 8 Rental Assistance is, in essence, an inadequately funded version of this.

The True Costs of Homelessness: Shelters, Jails, and Hospitals

One of the most powerful arguments for targeted basic income in housing is the economic inefficiency of the current system. Homelessness is far more expensive than providing permanent housing. Studies consistently show that keeping individuals and families in shelters, jails, or hospitals costs significantly more than placing them in stable, affordable housing.

• Shelters: The cost of operating homeless shelters in New York City is astronomically high. On average, it costs the city $124 per day to house a single individual in a shelter, and $201 per day for a family. For a single individual, this adds up to over $45,000 per year, and for families, it can exceed $73,000 annually. These figures far exceed what it would cost to provide permanent housing or targeted basic income to cover rent for an apartment. Shelters provide only temporary solutions, often keeping people in unstable situations that prolong their housing insecurity. Individuals and families can spend over 500 days in a shelter before securing permanent housing.

• Jails: When homelessness intersects with criminalization, the cost of incarceration becomes an added burden. Many cities end up incarcerating homeless individuals for minor infractions like loitering, which does nothing to address the root cause of their homelessness. “Housing” a person in jail is even more expensive than a shelter, costing around $60,000 to $100,000 per year, depending on the facility and the state. Incarceration further destabilizes individuals, making it even harder for them to reintegrate into society and secure housing upon release.

• Hospitals: Homelessness often leads to serious health problems, exacerbating the need for emergency medical care. Hospitals frequently serve as de facto shelters for individuals with nowhere else to go, particularly for those with chronic conditions or mental health issues. A single night in a hospital can cost thousands of dollars, and recurring visits only add to the expense. For example, a single emergency room visit can cost between $1,000 and $3,000. These frequent visits can add up to tens of thousands of dollars annually for a single individual, costs that often fall on public health systems funded by taxpayers.

Targeted Basic Income as a Cost-Effective Solution

Targeted Basic Income (TBI) offers a straightforward and fiscally responsible alternative. Instead of spending tens of thousands of dollars per year per person on shelters, jails, or hospital stays, a targeted basic income program would provide direct financial assistance to housing-insecure individuals and families, allowing them to afford rent and meet basic needs. This would prevent homelessness before it occurs, stabilizing households and reducing the need for costly emergency services.

The idea behind TBI is simple: providing cash directly to people who need it most can have immediate and lasting impacts, particularly when it comes to preventing homelessness. By focusing on low-income individuals and families, TBI allows policymakers to address the housing crisis in a targeted and efficient way.

TBI could be used to supplement other housing assistance programs like Section 8 vouchers, providing additional financial support where needed. For example, in cities like New York, where rent levels far exceed the national average, many households may qualify for Section 8 but still struggle to cover the gap between the voucher amount and actual market rents (or, they may stay on a waitlist for decades before receiving a voucher they have been eligible for all along). A TBI program could provide monthly cash payments that directly help households meet rent costs and avoid eviction.

Targeting the Most in Need

By concentrating resources on low-income individuals and families, TBI can have a much greater impact than UBI in addressing housing affordability and homelessness. TBI would be means-tested, ensuring that funds go directly to those in greatest need. The goal is to provide enough financial support to prevent eviction, keep individuals out of shelters, and enable families to maintain stable housing situations. By preventing the downward spiral into homelessness, TBI can offer a cost-effective solution that is both humane and financially responsible.

A Pragmatic & Cost-Efficient Approach

In light of the immense costs associated with homelessness—whether through shelters, jails, or hospitals—it is clear that Targeted Basic Income is not only a compassionate solution, but also a fiscally responsible one. Providing stable and permanent housing and direct financial assistance is far less expensive than maintaining the status quo. With TBI, New York City and other municipalities could reduce homelessness, cut public spending on emergency services, and provide a more dignified solution to housing insecurity.

April, 2023

RESEARCH TEAM

Galia Solomonoff, Director

Eddie Palka, Adjunct Associate Research Scholar, ‘18 M.Arch

Kavyaa Rizal, Graduate Research Assistant, ‘23 MSUP

Jamon Mok, Graduate Research Assistant, ‘23 MArch

Lula Chou, Graduate Research Assistant, '24 MSRED, MArch