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With Unemployment at Record Lows, Why is Homelessness Still on the Rise?

Despite unemployment - in our city and across the nation - being the lowest it's been in decades, there are still so many people living in city shelters.

Unemployment, in our city and across the nation, is at the lowest level it’s been in decades.  These drops are being seen even within demographic groups that historically have had – and still do have – higher than average rates of unemployment.  Further, the rate of workforce participation, and the size of the workforce, are on the rise, as those who had stopped looking for work have resumed their searches, many with success.  (Supporting data from the NY Department of Labor, can be found here). Why then, with more people working than ever before, are there still so many people living in city shelters? And what are we doing at BRC to help them get out, and stay out?

While more people are working, wages aren’t rising fast enough to keep pace with the cost of housing

To be sure, there are non-economic factors contributing to why many people don’t have a home: undiagnosed or untreated health, mental health, and/or addictive disorders.  At BRC we work with thousands of individuals who are homeless because of these issues.

Yet there has always been a significant number of individuals for whom the barrier to stable housing has been primarily economic: either they lack employment, or they have a job and income but aren’t earning enough to make ends meet.  BRC works with people in these situations of economic hardship just as effectively. In fact, individuals living in BRC’s shelters who participate in our Horizons Workforce Development Program have an average length of homelessness that is 135 days shorter than the citywide average, resulting in a savings of over $12,500 per person.  It costs us only $2,500 to achieve that impact, yielding a 5:1 return on investment.

So why, with unemployment at historic lows, are people with jobs still homeless?

Infographic: 135 fewer days living shelters compared to citywide averageWhat we see at BRC is consistent with trends citywide. Across the workforce, average hourly wages have remained relatively flat when adjusted for inflation. Were it not for the statutory increase in New York’s minimum hourly wage, real wages might have actually gone down. And while over the past several years the average hourly wage has been rising modestly, these gains have been offset as the average number of hours worked each week has been steadily dropping, negatively impacting overall annual earnings. Meanwhile, the cost of living, and in particular the cost of housing (rent, food, utilities), as well as healthcare, have been increasing.

Further compounding these pressures is the ratio of the cost of rent to what poor people earn. Even as their wages are rising, well over half of low income New Yorkers (those who earn less than 80% of the average median income) are “rent burdened,” paying over 30% of their income for rent.  And the poorer people are, the worse they fare: over 75% of those making between 30% and 50% of the average median income are rent burdened, rising to over 85% of those with incomes below 30% of the area median.  Most of the people BRC serves fall into these last two categories, helping to explain why they continue to struggle with homelessness.

BRC is closing the gap by attacking the problem from both ends – building housing affordable to those with extremely low income, and using an unconventional but effective approach to helping people find and maintain employment

Recently I shared with you BRC’s innovative approach to develop housing with rents affordable to the extremely low income people we serve. The Apartments at Landing Road, which opened in April, are just about fully occupied, with tenants paying $470/month for a studio, $714/month for a 1-bedroom, and $1,058/month for a 2-bedroom (you can learn more about Landing Road from this video). BRC plans to build a pipeline of replication projects, as we also share our approach with others.

Yet even with increased access to extremely affordable housing, it is still a challenge for the people we serve to find stable employment, and to keep it. That’s why BRC’s Horizons Workforce Development program not only assists clients in finding a job, we provide them the skills to stay continuously employed. Six months after entering the workforce, nearly 2/3 are still working; after a year, more than 40% are still employed, and have seen their average wages increase by over 5%.

It all sounds well and good, but how do you know BRC’s approach is truly effective?

Infographic: Horizons' average 3, 6 and 12 month retention rates Data by the Benchmarking Project, an independent multi-year, nationwide workforce development initiative, funded in part by the Annie E. Casey Foundation and run by the Corporation for a Skilled Workforce, has consistently demonstrated that the outcomes of BRC’s Horizons Workforce Development Program are well above the 3-, 6- and 12-month retention rates of other workforce development programs that primarily serve homeless individuals. In its 2016 report, the average employment retention rates at these milestones for comparable programs were 73%, 52% and 37% respectively.  For that same period, BRC’s performance was above average at each of these milestones, at 80%, 63% and 41%. 

As a result, our clients are able to leave shelters and find housing faster. The average length of stay in shelter for a BRC Horizons client is 220 days, compared to a citywide shelter system average of 355 days. With an average shelter cost of $95/day, this means the success of the integrated Horizons model at BRC’s shelters saves the City an average of $12,825 for each we client serve.

What are the key factors that enable BRC to succeed?

There’s no secret to our approach, though it is bucking the trend – what we see as a risky trend – in the workforce development sector.  We succeed by focusing on the needs of each individual. Our theory of change is that if an individual is well-prepared for employment, then they will stand a more competitive chance with multiple employers in multiple sectors. Further, they will be more likely to succeed not only in obtaining employment, but in maintaining it, and be better positioned for advancement. BRC’s approach, reinforced by evidence, is to focus on the development of soft skills: proper and responsible conduct in the workplace, such as attitude, time management, communication and listening skills.

We leave employer-specific training to the employer. Why? Because by-and-large this is what employers prefer. In a 2016 article published in the Wall Street Journal, employers across the United States say it is becoming increasingly difficult to find applicants who possess the soft skills—like communicating clearly and problem-solving—to effectively do their job.  In fact, in a 2015 WSJ survey of nearly 900 executives, 92 percent said soft skills were equally important or more important than technical skills; but 89 percent said they have a very or somewhat difficult time finding people with these attributes.

Despite this data, a growing trend in workforce development training is to provide hard skills training toward a specific sector or even a specific employer.  We think this “flavor-of-the-month” strategy is risky. Employers and industries come and go. Investing our scarce time and financial resources to provide our clients with in-depth training on one specific skill is costly to us, and leaves clients with fewer options in the long run, even if there is an employer willing to hire them in the short run. Further, because BRC’s clients’ histories, skills, experience and interests are so varied, employer-specific and industry-specific partnerships would be inefficient. Bottom line: what employers need is an individual with a basic foundation in what it means to be a valued member of their workforce. BRC prepares our clients to meet that need.

From the Desk of Muzzy - Horizons Workforce Development
The Horizons internship program allows clients to gain the skills and certifications they need to secure competitive wages

While employer-specific and industry-specific training is not at the core of our approach, we do provide our clients with paid work experience (20 hours/week at minimum wage, for 3 months) in BRC facilities.  These internships enable clients to apply the soft skills they’ve acquired to the expectations common to all workplaces: showing up on time, responding to supervision, working in teams, providing customer serve, and communicating effectively. Data from the Benchmarking Project shows that programs incorporating paid or unpaid work experience activities as a core program strategy have significantly higher job retention rates than programs that did not offer direct work experience.

Which employers are willing to take a chance on a homeless person?

Consistent with our belief that one size does not fit all, last year Horizons helped 228 individuals find employment at a total of 365 jobs, across a wide range of sectors and employers.  Among the most common sectors were food service (29 percent), security (13 percent), and maintenance work (12 percent). And well over 200 employers – including BRC – hired our clients, many without knowing that the applicant was homeless or in a workforce development program. Why? Because our clients don't want pity. They want to compete as equals, and BRC enables them to do just that with success.

Horizons Workforce Development - Fiscal Year 2017 Job Placements
“Other” sectors include customer service, warehouse, transportation, retail and telemarketing.

What’s on the Horizon for Horizons?

Having demonstrated success, this year BRC doubled down on our workforce development efforts for individuals who are homeless. Already co-located at two BRC-operated shelters – the 117-bed Palace Employment Residence on the Bowery and the 103-bed Lexington Avenue Women’s Residence in Bed-Stuy, in early 2018 BRC opened the Reaching New Heights Residence, a 200-bed shelter in the University Heights section of the Bronx, where we have co-located the Horizons program. Expanding Horizons to Reaching New Heights will roughly double the capacity of the existing Horizons program each year—allowing us to help hundreds more New Yorkers achieve independence.  This milestone further validates our strategy, longevity and impact.

Horizons is a true public-private partnership. While BRC operates its shelters with funding from the New York City Department of Homeless Services, our Horizons Workforce Development program is funded entirely by philanthropic support, from both foundations and individuals.

Whether it is the City, foundations, individual donors, providers or simply people who care, all should expect that the programs designed to help those in need are doing just that, not simply making an effort, but having a powerful impact.  At BRC, that’s what we do.

What do you think? I'd love to know.

Sincerely,
Muzzy Rosenblatt, President & CEO, BRC

 

 

 

From the Desk of Muzzy

While more people are working, wages aren’t rising fast enough to keep pace with the cost of living

Muzzy Rosenblatt,
CEO & President