By Cornall Hirsch-
New York City has launched a program to give direct cash payments monthly to 40 young adults aged 18-24 to fight youth homelessness, which could increase substance abuse.
The program, known as the “Trust Youth Initiative” was developed by Chaplin Hall, a policy research group which studies homelessness. The initiative extends beyond payments, and will also include optional resources for peer support, connections to care, financial coaching, and housing navigation.
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The scheme signifies a break with previously used methods by the city to combat homelessness, which normally come in the form of subsidized housing and shelter funding. Although New York has a right to shelter policy and funds youth crisis services, these programs are not designed to become pathways to permanent housing.
Under the new scheme, the homeless will get the monthly cash for up to two years, with no limits on how they spend it — and larger up-front payments available to get into housing.
A “rigorous evaluation” will then “compare the outcomes and experiences” of the target group with others getting smaller stipends and regular homeless services, such as access to shelters, City Hall said.
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The initiative is positive and progressive, but there are questions about the potential risks it could pose to substance users and alcoholics.
Many of Newyork’s homeless are alcoholics and drug addicts, and cannot be trusted to spend free money in a productive way. A system that identifies the vices of various homeless people and assists them accordingly may in fact be more helpful. Otherwise extra government funding for misguided addicts could be even more catastrophic for their well being.
There are ofcourse respectable individuals who became homeless due to circumstances beyond their control. Individuals belonging to those brackets may have more discipline than those hooked on illegal substances without restraint. A system that effectively identifies those who fall into different categories may be more beneficial to the homeless altogether.
Chaplain Hall claims there is evidence internationally to suggest that cash transfer programs are “one of the most evidence-based and scalable interventions to help address a range of outcomes for vulnerable populations.”
“Contrary to common beliefs, studies have shown that cash transfers to people experiencing adversity do not result in money poorly spent, increased substance use, or reduced motivation to work,” he says. Mr.Halls claim is flawed, as some studies have actually shown the contrary.
One study, the Alaska’s permanent Fund dividend, sought to examine the effect of cash transfers on substance abuse We exploit the exogenous timing and amount of the PFD payment to identify the average treatment effect of the PFD on the daily number of police calls. The program has been continuously running for over 35 years (since 1982) and based on its political popularity it has been largely viewed as a permanent institution.
Researchers found a 17%increase in the average number of substance-abuse-related police calls for the first full day after the PFD payment is issued, and elevated levels for a full two weeks after the PFD. That percentage figure may not even give an accurate impact of the effects of cash payments on substance abuse, since not all those who sue illegal substances necessarily get caught up in a substance abuse police related incidence.
Another observation was that substance abuse is sensitive to the size of the payment during the week after the PFD payment is issued. A ten percent increase in the size of the PFD payment results in a two percent increase in the average daily number of substance-abuse-related police calls.
Property crime was also influenced by the PFD for a full two weeks after the PFD is issued; however, it is not statistically sensitive to the size of the PFD payment. Finally, we find that police calls requesting medical assistance during the week after the PFD payment increase by two percent with a ten percent increase in the size of the PFD payment.
Other researchers like Mullainathan say that cash transfers afford recipients the opportunity to misuse the cash for temptation goods such as drugs and alcohol, and other studies have shown that morbidity and mortality among recipients increase following cash transfers due to increased levels of substance abuse.
Cash transfers also increase the possibility of increasing financially motivated crimes such as burglary, robbery and theft, by increasing the supply of cash available to offenders in the streets.
Critics of schemes like these recommend the in kind nature of payments under welfare programs such as SNAP that only allow people purchase eligible items, such as food, thereby limiting a recipient’s ability to purchase ineligible items like controlled substances.
Mayor Bill de Blasio insisted the cash “will help uplift young people and reinforces our commitment to ending youth homelessness once and for all.”
“The project’s flexible approach aims to improve young people’s stable housing and well-being by providing the means to afford the types of housing they choose and the supports to make investments in their own goals, education, and career development,” City Hall said in a release.
The city is currently experiencing its highest levels of homelessness since the Great Depression of the 1930s, and shelters are 39% more crowded than they were ten years ago.
A 2018 study by Chaplin Hall found that 1 in 10 young adults aged 18-25 had slept on the streets, in shelters, run away, been kicked out of home, or couch-surfed in the previous year.
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The program is designed to allow youths to be supported financially to find and retain housing so they can focus on investing in their educations or finding gainful employment. The theory behind the pilot is that if homeless youths have access to stable independent housing, they will be given greater opportunity to succeed in early adulthood.
It is a plausible theory, provided the authorities monitor their system effectively to ensure payments are going to people who in fact are working towards those future plans. Without careful consideration of the potential consequences of the initiative, it could turn out to be counterproductive in some ways, serving only to fulfil a semblance of worthwhile innovation.
If a sizeable fraction of the programme’s recipients increase their consumption of illegal substances, or become higher targets of crime, the scheme would become negative.
Cole Giannone, senior advisor for Youth Homelessness at the NYC Office of the deputy mayor for Health & Human Services, stated that long-term stable housing and homelessness prevention were areas which needed improvement. ‘These young people don’t have generational wealth to fall back on when they’re experiencing homelessness. Sometimes the answer is, it could just be cash’ says Giannone.
While direct cash programs are rarely used in the United States, this program aims to improve the options for participants by eliminating the stressors caused by housing instability.
While the program seems expensive at first, it may actually prove to be much more cost effective than existing schemes. The cost per head of operating a homeless shelter in NYC is roughly 130$ per night, which would total 3,900$ per month. If the program proves successful, each participant would end up receiving only a third of the current shelter cost, as well as providing a longer term solution than shelter housing.
The experiment will also feature a control group of youths who will not receive the payments, but instead will be compensated for completing surveys. Researchers will compare this group with those who receive the payments and determine whether they are effective.
While there is no preliminary existence in the US to support direct payment programs, similar initiatives in other countries have shown promising results. If the scheme proves successful, it will provide actionable evidence to support a program which will be more cost effective in combatting youth homelessness than the current initiatives in place.
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