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The Progressive Economics Forum

Recession’s Impact on Homelessness

I recently wrote a paper on the recession’s impact on homelessness, looking at Toronto as a case study.  I presented it on Friday at the Annual Conference of the Canadian Economics Association (May 28-30, Quebec City).  The paper’s title is “Calm Before the Storm,” as I believe that, based on the outcome of the last major recession in the early 1990s, the real impact of the recession on homelessness will only begin to be seen in the next 2-4 years.  The paper can be accessed here.

Enjoy and share:


Comment from Nick Rowe
Time: May 31, 2010, 1:19 pm

Slightly off-topic:

OK, there’s a lag in homelessness increasing when GDP and employment fall. And the reason, as per your paper, is probably that people who get into difficulties run down any savings etc., before going on the streets when all other options finally run out.

What about the lag in the other direction? When recovery starts again, and employment rises, is there a similar lag before the homeless start getting off the streets? Is that second lag even longer? Presumably, even with all other things equal (and even though they won’t be), it must be harder finding a job when you are homeless?

I have images of two different types of economy:

1. A simple cash economy. “You work for me, I pay you cash, you start now”. “You want an apartment, so give me the cash and I give you the key to the apartment now.” Nothing more.

2. A complex bureaucratic economy. “To apply for a job, please visit our HR department and fill out forms giving your address, etc. etc.” “Please fill out this Application for Rental Agreement listing your SIN, names of previous landlords, etc., etc. and we will contact you.”

And it’s a lot harder to get off the streets in an economy type 2, which is the way the “modern world” is heading.

Does that ring true?

Comment from Travis Fast
Time: May 31, 2010, 4:47 pm

Is heading? Has arrived. But why? Why do capitalist economies generate increasing levels of both private and public bureaucracy?

Comment from Nick Rowe
Time: May 31, 2010, 5:22 pm

Travis: yes, it has arrived. But what I mean is it seems to be getting even more bureaucratic. And I think you are right about both private and public. It’s too easy to say “government regulation”. I suspect that’s just a symptom of something deeper. And God help the homeless if even simple cash disappears, and we need cheques and debit cards for everything.

Comment from Purple Library Guy
Time: May 31, 2010, 8:50 pm

I think it’s all about hierarchy.
Capitalist economies tend, until they hit a crisis and maybe correct it, to be all about getting more money for capitalists, right? I mean, that’s not just the practice, but it’s also the theory, the point of the exercise: Capital is invested to make profit which is more capital which can be invested, never-ending spiral of more money. OK, and in practice this capital gets more concentrated, and inequality of wealth increases.
But to maintain inequality of wealth, you need inequality of power–you need control structures of hierarchy. The greater the inequality of wealth grows, the more hierarchy you need. In order for a hierarchy to exist and maintain control it needs information. Both the hierarchy itself and the structures gathering and keeping track of the information are bureaucracies. That’s not the only thing bureaucracies are good for–some bureaucracy can be useful; I’m a bureaucrat myself, in a library, and we do good stuff. But it’s a big part of why there’s so awfully much of it in our society.

In general I’d say the more wealth, and particularly the more inequality in that wealth, the more bureaucracy will be needed.

This has gone way off the paper’s topic, which is rather scary.

Comment from Travis Fast
Time: May 31, 2010, 9:06 pm

But what is the impetus for an increasing bureaucratisation of the labour contract? One of the profitable distinctions Marx made was between labour power and the specific labour tasks preformed. On this view labour is not bought or sold on the labour market but rather the abstract capacity of humans to engage in purposeful labour. Both unions and HRM departments are a response to the problem created when those who sell their capacity to labour are not the ones who control the labour process nor the distribution of the surplus that arises from, in the phrase of Alchian and Demsetz, “joint production.”

Bureaucratic management is thus the consequence of this separation. For the firm this separation is regrettable because it imposes a cost of doing business that must be regulated. All the elements you point to are an attempt by management to divine which of the applicants will be the most reliable in this regard: a permanent address, a home phone number, a SIN number all indicate (signal) that the potential applicant will be not just reliable but amenable to bureaucratic control.

What makes this increasing so the case?

Comment from Nick Falvo
Time: June 2, 2010, 4:57 pm


Sorry for my delayed response on this.

On the issue of a homeless person finding work in Toronto, I don’t have a simple answer to your question. I did spend three years (1999-2001) working as an employment-support worker in Toronto at one of Canada’s only HRSDC-funded programs with a primary aim to find work for homeless people. There were a lot of challenges. First, there was the stigma. It took me, essentially, three years to figure out that, if you want an employer to hire someone, don’t tell them they’re homeless! Second, competition. We forget sometimes that, even in low-wage employment, there is rather intense competition for work (i.e. 30-40 applications for a minimum-wage job, not to mention an expectation that the newly-hired person will be prompt and reliable, always). Now, if a person without a home is up against 29 people *with* a home for said job, guess who won’t have the advantage!

And most of the homeless people I helped find work were single without dependents. I won’t even begin to get into all of the additional challenges involved for a homeless mother or father, whose small children are with them in their shelter.

Another matter (that you did not raise directly) is the issue of “housing help” assistance for those in a homeless shelter. As I discuss in detail in a 2009 policy paper (here’s the link:, Toronto went through an evolution in terms of how it helped the homeless access housing. Twenty years ago, there were very few resources available to help the homeless acquire housing. Today, there are more.

I guess I still didn’t answer your question…

Comment from Nick Rowe
Time: June 3, 2010, 1:13 pm

Nick: You’ve reappeared!

You sort of answered my question. As much as it’s answerable, without a lot of data anyway. Confirmed my hunch that it’s extra difficult for them to find work, even when the economy recovers. Which means their unemployment is probably a lagging indicator on the upswing.

Comment from Travis Fast
Time: June 5, 2010, 7:08 pm

Sure its a lagging indicator (Nick Rowe) but that strikes me as paradox from your intellectual point of view. Why should spot contractors have a harder time finding work than more credentialed and, ceteris paribus, more permanent employees. The spot contract should be, from the neoclassical point of view, the first to get hired not the last. Why is this not so? Does not science demand a consistent theory?

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