The Homelessness Epidemic in America: How does growing wealth-inequality lead to more people living on the streets?


Homelessness, an issue that has been around for centuries, has steadily increased since the early 19th Century. During the Panic of 1837, many banks failed, resulting in mass homelessness sparked by an economic downturn (ProQuest Staff). Hundreds of thousands of people were searching for employment, overwhelming the ability for charities to provide aid. Around one-hundred years later, another extreme rise in homelessness occurred during the Great Depression in the 1930’s, as failing banks called in their mortgages and unemployment skyrocketed. Throughout American history, we have seen the same pattern of events which have caused these waves of mass homelessness. These waves revolve around rapid economic changes because they create market uncertainty. While America’s past history of homelessness has been marked by economic downturns and failing banks, today as we see extreme economic fluctuations, our low-income, disadvantaged communities bear the burden while the top 1% of the population is able to advance.


I am personally interested in the topic of homelessness because I encounter this crisis everyday and it has impacted me emotionally. Not knowing anything about this epidemic has led me to want to learn more and seek solutions. More than three times a week, my mom and I drive through the Berkeley traffic on Route 80. Every time we exit onto Gilman to bypass the traffic, I can’t help but notice how the homeless population has grown over the years. My mother, who has lived in California for over 20 years, is astonished by the growth of the homeless population in the Bay Area. She says that this little patch of land off of the freeway used to be all green grass, but now it is cluttered with garbage and people who appear to be barely getting by, living in makeshift tents. As I conducted my research, I explored the past and present manifestations of homelessness in America, investigating the causes of the epidemic and the reasons for the rapid population growth of people on the streets today. I also wanted to identify solutions to help homelessness so that not only could I get involved but encourage others to do the same.

(“Why So Many Americans Are Homeless | This New World“)


Homelessness has been a prominent issue in North America dating back to the 1640’s, but was declared a central issue in the United States during the Reconstruction Era in the late 1800’s. The first instances of mass homelessness in the US occurred earlier, during the Panic of 1837 and the Panic of 1854-55. Both of these Panics were a result of the banks failing and the stock market plummeting. The first Panic of 1837 lasted until 1845 and had a major impact on the working class, specifically in New York City. At this time, the unemployment rate was estimated to be 33%, leaving many with no jobs, housing, or food (Nelson). 

The third Panic of homelessness occurred in the early 20th century when the US transitioned from an agricultural to an industrial economy (Bernstein). At the time, many immigrants from Europe came to cities like New York City to work in the textile, steel and coal industries. In 1894, parts of Manhattan recorded the highest population density in the world (Beito).

Overpopulation, along with low wage, high risk jobs and expensive housing resulted in a steady increase in homelessness. With the exponential growth of population from immigrants, finding space for affordable housing in the city was near impossible. Instead, they turned to tenement housing. The tenement living conditions were unsanitary and overcrowded, leading to the spread of disease.

Like the first and second wave of mass homelessness, the fourth Panic was also driven by a stock market crash, occurring in 1929 and leading to the Great Depression in the 1930’s. During this time, “homeownership in the US was less than 48%. After the crash in 1929, homeownership rates fell to 44% and unemployment rates spiked to 25%,”which led to a rise in shanty towns or “Hoovervilles” across the country (Kanovsky). Through the housing and unemployment crisis, these cardboard box towns became common as they spread throughout America. In 1934, Franklin D. Roosavelt established The New Deal which operated to help the homelessness disaster. As part of the New Deal, the Federal Housing Administration (FHA) was created by the National Housing Act to help restore stability to the nation’s housing markets, which created jobs and made home loans more available.


Today, mass homelessness has reached an all-time high, stemming from rapid economic changes, lower incomes, and minimal access to housing. The combination of economic and population growth has led to higher housing prices and inflation throughout the country (Vo). Many low income families are unable to afford rent because housing prices have skyrocketed. “In cities such as San Francisco and New York, a consistent 2.5% annual appreciation above inflation in housing prices and rents has resulted in a quadrupling of housing costs since 1950” (Fidler, Derek). With housing prices being almost four times the average income, mortgage debts as a percentage of GDP grew from 15% to 80% within the time span of 1949 to 2018 (Fidler, Derek). Even though a raised minimum wage has been an implemented solution in order to help people afford housing, homelessness continues to rise at “rates not seen since the Great Depression” (Fidler, Derek). According to the Economic Policy Institute, median hourly wages in the US have barely changed, from $16.74 in 1973 to $17.86 in 2016. But in New York, the hourly wage required to comfortably rent a one-bedroom is $27.29, and in Los Angeles, it is $22.98 (Gee), which is 30% and 50% above minimum wage (Fidler, Derek).

Not only is the cost of housing exploding, but there are simply not enough homes available. Vacancy rates in New York and Los Angeles are low and construction of new homes is lagging. “The state of California estimates that 180,000 new housing units are needed each year in order to keep up with population growth. Over the last decade there was an annual average of less than 80,000 units [built per year], because developers often face a long review process and local opposition [to build low income housing]. When housing costs are taken into account, California has the highest poverty rate in the nation, at 20.4%.” (Gee). With the lack of funding and limited space in cities like Los Angeles, people are more susceptible to staying on the streets rather than getting off of them. But, there are solutions.


Many organizations have been created to help the homeless population. These organizations provide services such as programs for affordable housing, distribution of resources such as food, and job employment programs. Even though these programs have helped tremendously, they are not able to support as many people as they would like. The ultimate limitation for these organizations is a lack of funding, which starts with governmental and local involvement. 

Ultimately, homelessness will not stop increasing until more people get involved and take action. This includes more volunteer work and donations, as well as additional federal funding for these organizations to prosper and extend their services to more people. Below are ways in which we can help as individuals on a local level and how the government can help support the homeless on a wider scale.

Micro-level Solutions: (What can you and your community do to help)

  •  Local organizations: One easy way to help the homeless population is to get involved with local organizations, such as food banks and churches, where people can donate resources for people in need.
  •  Schools need to get involved: Another positive approach for helping the homelessness epidemic stems from school programs that provide education to the homeless youth population.
  •  Job Support for the homeless population: One last way to help reduce the numbers of homelessness is by creating more job opportunities. Not only will these jobs provide monetary gains, but they will promote housing stability and create a better way of life.

Macro-level Solutions: (What can the government do to help) 

  •  Affordable housing/subsidized housing: More Governmental funds need to be raised to support organizations like the DHS that want to extend permanent housing services.
  •  Health Care: Homeless people are very susceptible to not only contracting illnesses but also spreading them (Fuller). The government can help the health of the homeless by implementing more accessible and widespread health care systems.
  • Anti-discriminatory Actions (like The Fair Housing Act): The government needs to create more organizations and acts that reach out to different minorities of the homeless community so that they can be provided with an equal chance of getting off of the streets.

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