‘Big Homeless’ Grows Richer While America’s Homelessness Problem Worsens

A merica spends billions of dollars each year trying to address homelessness, yet the problem continues to grow. The five states with the highest homelessness rates offer a troubling look at what happens when public policy focuses more on managing homelessness than ending it.

Although geographically distant, Hawaii, New York, Oregon, Vermont, and California share expensive homelessness systems embarrassingly short on positive results for the taxpayers funding them or for the homeless populations they are ostensibly designed to serve. Even more disturbing, California, Colorado, Oregon, and Washington — states with huge homelessness services budgets and politicians who publicly proclaim deep concern for the homeless — have seen their homeless populations grow just as compensation for homelessness executives has climbed.

That should force policymakers to diligently pursue an important question: What exactly are taxpayers paying for: homelessness solutions, or big salaries?

Research from the Cicero Institute provides data on this troubling trend. Between 2013 and 2024, revenue at nearly 1,500 nonprofits receiving federal homelessness funding more than doubled, from $16.5 billion to $37 billion. The amount spent on salaries and other compensation climbed from $6.5 billion to $14.2 billion. Are our homeless neighbors receiving double the care? Are they being treated for mental illness and drug addiction, returning to their communities, restored at higher rates than ever before? On the contrary, homelessness is hitting record highs, and we are now seeing more and more brazen accounts of fraud, such as the case of two Los Angeles homelessness executives who spent $7.5 million on luxury vacations.

Although these numbers show that the homelessness industry became substantially larger and better compensated while homelessness also grew, not every nonprofit is wasting money, or operating without caring social workers or staff serving those living on the streets. What these numbers do show, in a dramatic and heartbreaking fashion, is that many organizations are not ending homelessness, but merely managing dependency.

Payroll by the median provider increased 113.3 percent between 2013 and 2024. Eighty-four percent grew payrolls faster than inflation, while 54 percent more than doubled payroll, and 29 percent more than tripled it. The rise in executive compensation is even more disturbing. Cicero’s data show that CEO compensation at homeless service providers reached $167,000 in 2024 — a 54 percentage point increase in ten years, well over inflation.

Homelessness is a complex problem without an easy fix. It requires expertise in resource management and administration. But organizational growth and rising compensation without measurable improvements in homelessness rates are unacceptable, as demonstrated by the five highest-homelessness rate states. A system built on rewarding failure will never meet its goals.

Hawaii recorded approximately 811 homeless people for every 100,000 residents in 2024. New York had about 790, Oregon 536, Vermont 534, and California 475. These numbers occur in states with very different levels of government spending and very different approaches to homelessness.

California is perhaps the clearest example that simply spending more is not enough. We know this because things can change on the ground if officials have the will — even with an inappropriate incentive. The Golden State has allocated approximately $24 billion to homelessness programs between 2018–19 and 2022–23. Yet more than 180,000 Californians were homeless in 2023, a 53 percentage point increase from 2013. But in November 2023, before a high-profile visit from Chinese President Xi Jinping, San Francisco rapidly cleared homeless encampments and cleaned up its streets. Can’t they deliver the same results year-round?

Cicero’s examination of homelessness programs identified recurring problems in many states, including inadequate monitoring, questionable or unverified spending, fragmented data, weak enforcement, and strategic plans that lack measurable outcomes. Government programs are often judged by how much money they distribute, beds they provide, or people they serve. Those are inputs and activities — not outcomes.

A program designed to end homelessness should be judged not just by how many people it has served, but how many received appropriate mental illness and addiction treatment, become self-sufficient, and entered the workforce. Without that information, taxpayers and researchers cannot distinguish between programs that work and programs that merely consume resources, making it impossible to identify and replicate success.

Persistent street homelessness affects businesses, residents and public spaces. Encampments create sanitation problems, public drug use, and unsafe conditions. Police and emergency medical personnel become de facto providers of services homelessness programs were supposed to address. Their salaries and resource costs are not included in the nonprofit compensation numbers but are also paid by the taxpayer.

Homeless people pay the highest price for misplaced allocation of funds. Leaving someone indefinitely on a sidewalk is not compassion. Allowing untreated addiction or serious mental illness to continue unchecked is not a solution. Providing services without measuring success is not accountability.

The answer is not to abandon people who are struggling, but to demand the billions already being spent produce demonstrable results. There should be transparency following every dollar, independent spending oversight, and consequences when providers fail to meet performance standards. An overhaul of the system is required that changes incentives in such a way that executives are no longer compensated for managing the dependency of others. The federal Department of Housing and Urban Development (HUD) is on the right track, but certain states are resisting reform at every turn.

The five states with the highest homelessness rates are a warning to policymakers everywhere: America does not need a larger homelessness industry. Certainly, the homeless don’t. As Christopher Calton of the Independent Institute noted in a previous article for National Review, youth homelessness is also escalating, expanding the level of concern and need for solutions for our national future.

Ideological policies and ineffective incentives leave people trapped in cycles of homelessness while taxpayers pay more with little hope of better results. Policy discussions about homeless people should keep the people struggling with it first. States should be asking whether their homelessness systems are moving people toward stability and self-sufficiency — or simply sustaining suffering.

—Dr. Chris Sharp is the chief of staff at the Cicero Institute. Caleb Jacobs is a Cicero Institute Visiting Fellow. They are co-authors of Cicero’s groundbreaking research, The Case for Pay-for-Value in Federal Homelessness Funding.