The Economics of Homelessness

The Economics of Homelessness 
Everyone deserves to be housed. Yet, the skyrocketing housing costs, stagnant wages, and barriers to medical services are some of the reasons that hundreds of people in our community are housing insecure. There is a ripple effect in our communities when anyone remains unhoused. It impacts the availability of healthcare resources and affects crime and safety, the workforce, and government spending.  It is clear that economic factors contribute to loss of housing. As an economic problem, it demands an economic solution.

The costs to be housed in Lexington  
The average median household income in Fayette County is $54,918. Approximately 15.4 % of Fayette County residents live below the Federal Poverty Level (FPL).  With COVID-19 pandemic job loss unaccounted for in this data, the number of people below FPL may be higher.

The 30 percent threshold is an accepted indicator of affordability for housing in the United States. Keeping housing costs below 30 percent of income is intended to ensure that households have enough money to pay for other life costs such as medical needs, transportation, groceries, taxes, and utilities; households who spend more than 30 percent of income on housing costs are housing cost burdened. 

In some Fayette County zip codes, residents are disproportionately impacted with housing costs: In the 40508 zip code, over half of renters (54.9%) pay over 35% of their household income in rent.  Approximately 30% of residents living in the 40508 zip code identify as black, which is significantly above the state average. 

More than 37% of households with less than a high school diploma and 20% of minority households live below the poverty line (as opposed to close to 5% of white households)

There is a lack of affordable housing in our county: The percentage of Fayette County residents who pay $1,250 per month or more has almost doubled since 2012 and the percentage paying less than $650 per month is less than half the percentage in 2012. Comparatively, the minimum wage has not increased in 11 years ($7.25 an hour), effectively making this an unlivable wage. 

There is also a lack of subsidized housing to address the growing demand: On average, households were on a waitlist for about 20 months before accessing their subsidized unit.

 For the thousands of cost-burdened households in Fayette County, all it takes is one event–a job loss, a medical emergency, the death of a spouse, injury–to lose their home. Once someone loses their home, the community feels the impact. 

The costs of being unhoused in Lexington 
A chronically homeless person costs the taxpayer an avg. $35,578 per year. A lack of  stable housing results in high public costs due to the burden on jails, emergency rooms, and detoxification centers, in addition to other public health and safety costs. 

The cost savings of permanent supportive housing

In nearby Louisville, KY, a recent study found that for each person who is chronically homeless that is housed, the city has a cost avoidance of approx. $26,146 per year.

Investing in permanent supportive housing not only makes economic sense, it is also proven to be effective in reducing homelessness. 

Since investing in affordable housing and in creating the Office of Homelesness Prevention and Intervention, with the help of LEH’s Continuum of Care partners, the community has seen a decrease of homelessness by 61  percent.

The network of providers that make up our Continuum of Care help address the barriers to securing housing and accessing the resources people need to not only survive, but thrive. 

The public cost of a self-sufficient community member is $0. 

The benefits to the community are endless. Housed people contribute to local taxes, fill needed jobs, and purchase goods and services. 

Ending homelessness isn’t just the right thing to do; it’s the smart thing to do. 

But, we can’t do this alone. 

Providing financial support helps our partners ensure that people have the tools they need to remain housed. 

For as little as $10.00 a month, you can be a “Community Hero” and help people to access the resources they need to become housed and self-sustaining. Your donation can offset the costs of rental application fees for a household, or to help to fund a monthly bus pass. 

Join the “Leader’s Circle” to make a direct and widespread impact, making long term and sustainable housing options available to stop the cycle of homelessness.

Become a champion in ending homelessness.  Donate now.  Visit us at

Coalition for the Homeless, Inc and Louisville Metro Office on Homelessness. The Cost of Housing the Homeless.

Five-Year Strategic Plan to Reduce and Effectively End Homelessness and Enhance Affordable Housing in Fayette County 2021-2025. Jan. 2021. 

National Alliance to End Homelessness. Ending Chronic Homelessness Saves Taxpayers Money.