ON-THE-RECORD PRESS CALL
BY SENIOR ADMINISTRATION OFFICIALS
ON THE CEA REPORT ON THE STATE OF HOMELESSNESS IN AMERICA
Via Teleconference
4:31 P.M. EDT
MS. SLOBODIEN: Thank you everyone for joining us. Today we are joined by Acting Chairman of the Council of Economic Advisers Tomas Philipson who will provide on-the-record remarks about the state of homelessness in America. After his remarks conclude and time permitting, we will open the lines up for question and answer. At that time, we may have additional senior administration officials speak on background. I will now turn things over to Tomas.
ACTING CHAIRMAN PHILIPSON: Thank you, Rachael. And thank you everyone for joining in our call today to discuss CEA's newly released report which provides an in-depth look at the state of homelessness in America and the supply and demand factors in the housing market that may actually cause it.
The Trump administration's overall economic agenda has been involved in an extensive amount of deregulation that has lowered costs of the supply side of the economy and thereby increased economic activity and GDP growth.
In several previous CEA reports, we have documented large economic value to the U.S. economy from the deregulatory agenda. CEA's report today on the state of homelessness in America continues this effort by focusing on how government barriers in the housing market limit supply and thereby raises prices. These barriers can be reduced by deregulation that increases competition on the supply side, reduces prices, and thereby lowers homelessness.
More specifically, as our report discusses, harmful local government policies in select cities, along with ineffective federal government policies of prior administrations, have exaggerated the homelessness problem. Therefore, the Trump administration is working to reverse the failed policies of the past, and instead implement policies that address the underlying causes of homelessness.
Before discussing the finding of this report, I'll offer an outline on what it entails.
In this report, CEA first describes the homelessness barriers across the United States and analyzes the major factors driving these differences, especially harmful local government policies.
Next, we discuss the shortcomings of previous federal policies to reduce homelessness populations.
And finally, we describe what the Trump administration is doing to improve federal efforts to reduce homelessness through increasing both the supply and demand for homes. I will now go over each of these three parts in turn.
Our first part was on the state of homelessness across America. On any given night, over half a million Americans are homeless, which is about 0.2 percent of our population. Approximately 65 percent of homeless people are found in a homeless shelter, and the other 35 percent are found in unsheltered -- or found unsheltered on our streets and places not intended for human habitation, such as sidewalks, parks, cars, or abandoned buildings.
Contrary to reported trends that suggest that more than 94,000, or 15 percent, of a reduction that’s taken place since 2007, it is unclear whether homelessness in the United States has actually decreased. At least in part, the reported decline in homelessness may be a result of an inconsistent definition of people living in transitional housing versus rapid re-housing, and miscounting of the unsheltered homeless population.
Today, unsheltered homelessness remains concentrated on the West Coast, where sheltered homelessness is concentrated in the Northeast. First, we document several facts in this report on unsheltered homelessness. In total, almost half, or 47 percent, of people sleeping on the streets in the United States are found in California, although the state only represents 12 percent of the U.S. population.
Almost one-fifth, or 19 percent, of all people sleeping on the streets in the United States are found in Los Angeles County, although the county only represents 3.1 percent of the U.S. population. Of the five cities with the highest rates of unsheltered homelessness, four are in California, the fifth being in Seattle.
The highest rates of sheltered homelessness are in the three cities in the Northeast: Boston, New York, and Washington, D.C. The rates of sheltered homelessness in these three cities are more than twice as high as the rate in every other major city.
In fact, over 20 percent of all people sleeping in shelters in the United States are found in New York City, although the city only represents 2.6 percent of the U.S. population.
One of the questions this CEA report addresses is: What is the reason for the higher concentration of homelessness in Northeast and on the West Coast? What’s responsible for these differences? In particular, have state and local government policies in these regions contributed to the problem?
The simple answer to this question is yes. Specifically, overregulation of local housing markets has reduced supply and raised prices, making the cost of a home out of reach for more people. In fact, as this CEA report finds, deregulating housing markets with excessive regulations would result in major reductions in homelessness in a number of key metropolitan areas.
Homelessness would fall by 54 percent in San Francisco. It would fall by 40 percent in Los Angeles. It would fall by 36 percent in Washington, D.C., and 23 percent in New York City, if markets were deregulated.
Homelessness would fall by an average of 31 percent in the 11 metropolitan areas with excessive regulation that significantly drives up the cost of housing. These 11 metropolitan areas currently contain 42 percent of the overall homeless population in the United States.
A second major factor that increases homelessness is the tolerability of sleeping on the street. Unsurprisingly, unsheltered homelessness is much more likely in warmer cities. But not all warm places have high rates of unsheltered homelessness.
The report finds that states like California, Oregon, and Washington have rates of unsheltered homelessness over twice as high as would be predicted given their weather, home prices, and poverty rates. On the contrary, states like Florida and Arizona have lower-than-expected rates.
Local policies, including the role of the police, could play a role in these differences. When paired with effective services, humane policing may be an important tool to help move people off the street and into shelter or housing where they can get the services they need, as well as to ensure the health and safety of homeless and non-homeless people alike.
A third major factor that increases homelessness is the quality and availability of shelters. Boston, New York City, and Washington, D.C., have rates of sheltered homeless over 2.7 times as high as the rate in every other city. Each of these cities has the Right to Shelter law that guarantees shelter of minimum-quality level.
Of course, it is important to provide shelters to those who need it, but Right to Shelter laws can be an inefficient way to ensure people remain housed.
Finally, the prevalence of individual risk factors that lowers demand for housing, such as mental illness and substance abuse, can increase homelessness as well.
Our second part of the report discusses the failed policies of the past. In addition to shortcomings at the local government level, decades of misguided federal government politics have largely been ineffective. The federal government has supported a major expansion of permanent housing assistance targeted to homeless people over the past decade.
Though well intentioned, these policies may be less effective in the long run as permanent housing assistance delays transitions into private, as opposed to public, housing.
The failure is evidenced by the lack of reduction in homelessness correctly measured. Falling homeless counts over the past decade do not represent the actual hardship of the homeless population in that they are likely a result of inconsistent definitions of homelessness across assistance types and miscounting unsheltered homeless populations.
Lastly, our third part of the report discusses the Trump administration’s policies to reduce homelessness. The administration is dedicated to reversing the failed policies of the past by addressing the root causes of homelessness. To this end, President Trump has signed an executive order on removing regulatory barriers limiting housing supply. This regulatory effort would reduce the price of homes and, in turn, reduce homelessness. This executive order continues the President’s overall effort to deregulate the economy for better performance.
In addition to addressing factors that limit supply, the Trump administration is also addressing factors that reduce demand for housing, and thereby raise homelessness.
These actions include successful efforts to stem the illicit drug prices, improve the federal response to mental illness, improve the prospects for people exiting prison, and increasing incomes and opportunity for those at the bottom of the income distribution.
The President’s policies to reduce the supply of illicit drugs entering the United States, prevent new people from becoming addicted by ensuring proper use of prescription drugs, and provide treatment to those with substance use disorders have been successful in finally reducing drug overdose deaths.
The Trump administration is also supporting the police in their efforts to promote safer cities. When paired with effective social service provisions, the police can be an important partner in moving highly vulnerable people off the streets into shelter or housing where they can receive the help they need.
As potential evidence of better-supported police, the violent crime rate fell slightly, by 0.9 percent, in 2017 after increasing by 7 percent between 2014 and ’16. According to preliminary data based on the first six months of 2018, violent crime in 2018 fell by 4.3 percent.
Under the Department of Housing and Urban Development’s lead, federal homeless assistance programs have been improved by providing flexibility for communities, if they choose, to require people who use homeless assistance to participate in provided supportive services that address their underlying problems after they have been stabilized in housing. Programs have also been improved to more strongly encourage self-sufficiency.
Finally, strong economic growth, historically low unemployment rates, and reductions in poverty have increased the incomes of people at the bottom of the distribution and can reduce their likelihood of falling into homelessness.
During the second quarter of 2019, the weekly wages for the 10th percentile of full-time workers -- meaning, the 10 percent of the lowest compensated workers -- was up 6.6 percent year-to-year, according to BLS data. This is higher than the median 3.7 [percent] year-to-year growth and higher than during the Obama administration, particularly so for lower-income individuals.
With the time remaining, I would be happy to take any questions. Thank you.
Q Hi, there. Thank you for taking the time. Just a quick point of clarification. The call is all on the record, but any comments other than Mr. Philipson -- Chairman Philipson, would be background? If you could just clarify that.
And, Mr. Philipson, I wanted you to address, again, the executive order. Did you say that was signed today? And could you give us any more detail on that?
SENIOR ADMINISTRATION OFFICIAL: Josh, this is [senior administration official]. Yes, you are correct in understanding of the ground rules. Everything that Chairman Philipson says is on the record. And then we also have senior administration officials who will be speaking on background.
And I’ll turn that over -- turn it over to them to answer the question about the executive order.
SENIOR ADMINISTRATION OFFICIAL: Yes, the executive order under question was signed on June 25th, so just a couple of months ago. It established the White House Council on Eliminating Regulatory Barriers to Affordable Housing.
Q Thank you.
Q Hi. Thank you for taking my call. Could you please -- could somebody please explain a little bit more how you reach these figures on how much homelessness would be reduced in these cities if you deregulated the housing market? I mean, this seems, on the surface, quite a leap. I mean, how can you tell that homelessness would go down 54 percent in San Francisco by removing housing regulations?
SENIOR ADMINISTRATION OFFICIAL: Sure. So I would definitely recommend checking the report. So we basically take estimates from Ed Glaesar and Joe Gyourko, who have a lot of research on the impacts of regulations in the housing market and driving up home prices.
So, basically, we assume that if you deregulated these housing markets, home prices would fall until hitting the cost to produce a home. We then translate that reduction in home prices into reductions in rent. And we use estimates on the academic literature to estimate how much debt reduction in rent would reduce homelessness.
Q Okay. Does it clarify what regulations you’re talking about?
SENIOR ADMINISTRATION OFFICIAL: I mean, we do list a large set of examples. There are a lot of different types of regulations that drive up home prices. And we do list a number of those in the report. Those are also areas that have been listed in the executive order on deregulation housing markets. And that will hopefully be addressed as well.
Q Thank you.
Q Hi. Thanks for doing the call. I was hoping you could just expand a little bit more about your findings in New York City -- what you're seeing about the state of homelessness there, as well as what Bill de Blasio and the city administration is doing that is helping or hurting the homeless population.
SENIOR ADMINISTRATION OFFICIAL: Sure. I think the main factor in New York City -- I mean, one factor is their higher home prices due to overregulation of housing markets. We do find that, if they were to deregulate their housing markets, you would see something like a 20, 23 percent reduction in homelessness.
Another factor with New York City -- and they share this characteristic with Boston in the state of Massachusetts and Washington, D.C. -- is a Right to Shelter law, which basically says, "We're going to provide shelter to all those who need it." Obviously, we do want to provide shelter to those who need it, but this type of provision does end up bringing in people into the system who otherwise would be housed on their own. And so, for this reason, we see much higher rates of sheltered homelessness in New York City than other places with similar characteristics.
Q And, forgive me, who is this speaking?
SENIOR ADMINISTRATION OFFICIAL: A senior administration official on background.
Q Okay. Thank you.
Q Hi. Thank you for taking my question. I wanted to ask about the portion of the report about conditions for sleeping on the streets and -- as it relates to policing. Are you saying that -- you know, areas like Los Angeles maybe, cities in California, are fairly heavily policed? So what exactly are you saying would be a change necessary that -- from police -- that would improve homelessness?
SENIOR ADMINISTRATION OFFICIAL: Yes. I mean, I think the main message from the paper on this is, you know, one of the major factors when it comes to unsheltered homelessness is obviously climate. If it's very cold out -- places like Minneapolis have very low rates of unsheltered homelessness. What we find is that if you look at warm places, such as places in California or Florida, there's lot of variation in rates of unsheltered homelessness. So, for instance, California has a much higher rate of unsheltered homelessness than Florida.
There's lots of potential factors that could explain that. One of them could be policing. You know, we need more research on the extent to what types of policing policies, what types of ordinances affect that.
I think, policy-wise, obviously there's lots of options that are being considered. But it is important, we believe, to get people off the street and into the services that they need in order to address their fundamental problem.
Q Okay. So just to clarify, you didn't identify a specific policy or method of policing, such as, like, a broken windows policy that contributed to that difference.
SENIOR ADMINISTRATION OFFICIAL: Correct.
Q Thank you.
Q Hi, guys. Thanks for doing the call. One, I was wondering if you could address the rumor that the President is going to be making a visit to San Francisco on this topic as part of his trip this week.
And secondly, when you talk about regulation driving up housing costs, did you all consider factors like concentration, desirability of these cities -- when you talk about like a New York or a San Francisco, just in terms of inability to expand? Did you look at that as a factor in driving up the cost of homes?
SENIOR ADMINISTRATION OFFICIAL: On the second question, I can answer. I mean, there is certainly geographical constraints around building housing in places like San Francisco.
But, for the most part, you know, we're looking at metropolitan areas here. And there generally is room to build -- either more densely, building up higher. And so, there are real ways in which regulation -- even in these places with geographic constraints, these regulations really are driving up the price of homes. And with real deregulatory action, we could see reduction in rent and therefore reductions in homelessness.
SENIOR ADMINISTRATION OFFICIAL: And for the question about the President's schedule, I'd refer you to the White House Press Office.
Q Okay, thanks.
Q Yes. Thank you. Hi, thank you for taking -- making this call available. I'm -- there's been some discourse that this homelessness push is a punitive measure meant to punish states like New York and California -- in particular cities like San Francisco, New York, where the President is not popular. How do you -- how do you address that and how do you do this work -- how does this work have legitimacy in those places?
ACTING CHAIRMAN PHILIPSON: So basically -- this is Tomas Philipson again. Basically, this report basically only lays out the facts. So those facts are basically the ones I discussed, where it's concentrated in California for unsheltered homelessness, and in the Northeast for sheltered. And then we looked at the evidence on what are driving those patterns and we argued that deregul- -- or regulatory barriers to supply is an important component of the homelessness. And we're not necessarily singling out, we're just documenting the facts around the problem.
Q Hi, this is Ben Oreskes from the LA Times. Could you guys address sort of the reports from the Washington Post last week about using government buildings to build shelters in California, and whether or not there is any credence to the idea that you'd be kind of trying to find ways to compel people who are living on the streets without access to a shelter into these FAA facilities or other shelters that you might have in mind?
ACTING CHAIRMAN PHILIPSON: So this report is -- it’s Tom Philipson again. This report only addresses the evidence, which it -- basically therefore (inaudible) to past evidence on homelessness. And current deliberations on our policy agenda going forward is not something that the report addresses, and I'm not going to address it today.
Q But is there anything you could say, just broadly, about the administration's thinking about how they could help cities? I mean, the federal government's role in dealing with or addressing homelessness is new. This would be new. Can you say anything about what you guys are thinking may be ways you could help?
ACTING CHAIRMAN PHILIPSON: Well, obviously the President is very concerned with the unsheltered homelessness crisis in California. But today's talk -- today's call is only on this report and we will be discussing, you know, our initiatives in future calls.
Q Hi there. This is Alex Alper and Lisa Lambert. Will there be any policy announcements on Trump's trip to California this week on homelessness?
SENIOR ADMINISTRATION OFFICIAL: Again, I would refer you to the White House Press Office for questions regarding the President's travel.
I think we have time for one more caller.
Q Hi there and thanks for doing the call. Governor Newsom has come out with a statement saying that the administration is obviously proposing significant cuts to public housing, asking for 50,000 more vouchers. What is your response to the Governor? And do you see any room to work with California? Do you see any middle ground?
ACTING CHAIRMAN PHILIPSON: Yeah, so I think this is not the correct call for that. I think that you should discuss that with the Governmental Affairs Office, as opposed to the Council of Economic Advisers.
MS. SLOBODIEN: And with that, we're ready to wrap up our call. Thank you everyone for joining us today.
END 4:56 P.M. EDT
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