One-time handout to the homeless reduces social costs

It may seem counterintuitive to give cash to homeless people. Didn’t their poor money skills get them on the street in the first place?

image: Vintage Fitness

The University of British Columbia decided to find out in an experiment. In cooperation with a charity, Foundations for Social Change, they gave a one-time handout of $7,500 cash to 50 people who been homeless for an average of six months and tracked them over the next year. They also tracked a control group who received no payments. Both groups received counselling.

The homeless group moved into stable housing faster, ate and were clothed better, and even saved $1,000 after a year. They spent 39 per cent less on alcohol, cigarettes and drugs.

And they reduced the social cost of homeless-shelter services that amounted to $8,100 a year.

The results of the experiment challenge stereotypes of the homeless –that if they just stopped begging on the streets and shooting up toxic drugs, if they got a job and tried harder, they wouldn’t be homeless. But sometimes life delivers hard knocks.

Sometimes, all it takes is for someone to believe in you and to trust that you will spend money wisely. If others believe in us, we can believe in ourselves.

As a high school teacher in Electronics and later an instructor at Thompson Rivers University, I’ve found that when you expect students to do well it’s a big motivator.

The same is true for the homeless. Given a hand up can go a long way to restore confidence, empower people to find housing, regain stability, and bring back dignity and a sense of well-being. Cash handouts are not merely a gesture of help. It is a signal that society believes in them.

One participant said: “I had hit rock bottom. You couldn’t get any lower than where I was. I had no hope and then when the money came and I found housing and then daycare it just all kind of came into place. It was so nice, you know?”

The pandemic has made it glaringly clear how cash transfers have kept people out of poverty. The Canada Emergency Response Benefit (CERB) helped many but that’s ended, replaced with more targeted programs.

According to a popular pandemic quote: “We’re all in the same storm but not the same boat.” Job losses owing to COVID-19 are heavily skewed toward working-age Canadians at the low end of the income scale – restaurant and hospitality workers, young adults, new immigrants and women.

Charities, such as the food bank, the Mustard Seed and Salvation Army, have a role to play in alleviating suffering. But charity reflects and amplifies the gap between the ones giving and the ones receiving. I feel good when I give to a charity but the imbalance in power is obvious.

If something isn’t done to help Canadians through this crisis while preserving their dignity and confidence to survive; if the gap between the rich and poor increases; we will all be worse off, including the rich.