what's the marginal cost of stay in homeless shelter? why don't they grow into flophouses?

I guess this is two separate questions.

  1. I often read about how shelters run out of space. Well, what’s the economics behind this? Are there draconian restrictions on creation of new shelters and expansion of existing ones? Or are the marginal costs of a night’s stay at the shelter (as paid probably by the shelter itself, from its charitable funding) too high to offer more of this service? If the shelters were to transition to a more efficient mode of operation (say, staffed by volunteers as opposed to PhDs in homeless studies with loans to pay) would the problem have gone away?

  2. homeless shelter appears to be one of the cheapest, low quality housing legally available in America. In a way, I find this to be hearkening back to the good old days of the flophouse, skid row and the modern Japanese capsule hotel - i.e. all examples of no frills housing for people (mostly male) who want it cheap because they don’t value spacious housing and sanitary norms as highly as the well paid civil service bureaucrats do. Well, so how come we don’t see paid “shelters” that, allegedly, are for the homeless but in practice are just very low cost hotels, let’s say for people who are looking for a cheap roommate situation but in the meantime need to stay somewhere for two weeks? Can a shelter actually charge people for staying there in the first place?

I can’t speak for all situations but the shelter the congregation I belong cooperates with has sanitation and insurance as their two biggest expenses; large enough to preclude a flophouse type situation really being profitable. As for creating new shelters or trying to develop seasonal shelters to handle things like severe winters ---- “not in my back yard” comes into play even in the inner city. Those who own or rent their own homes just don’t want that kind of facility around and actual downtown property is often too expensive.

Most people do not want hundreds of homeless coming to the neighborhood all the time. Crime definitely rises as does the number of mentally ill wondering about… It’s also not a very good place for someone to stay at as their belongs will get stolen the second they are not alert.


why should the shelter be located downtown? Why not locate it wherever you get a permit and then drive people there and back by bus?

Harmonious Discord,

if we have ladders to put people on the roof, why can’t we design a shelter where your belongings will NOT be stolen? Seriously, provide some lockers, maintain discipline and so forth. Housing many people under the same roof is not rocket science. Plus, people who have any belongings and want to stay can be advised to store them somewhere else. I would think that it is the prevention of assaults that would be a bigger issue, but that, again, should be amenable to the “when there is a will, there is a way” principle.

I think hostels are the closest equivalent now, offering dorm living for $10-30 a night even in expensive cities like Chicago, NYC, San Diego, San Francisco, etc.

I’d like the Japanese cubicles over dorm living myself, but don’t know if/where we have that in the US.

I think Wesley Clark brings up another excellent point. Yes, so prices we see in many hostels are low compared to what people often end up paying for rent, even in roommate situations. So, how come all these hostels are booked long in advance and you need to belong to some elite class (like backpacker from another city) to get in? Why don’t we see a massive expansion of hostels to service the locals who want to save on rent? Why is a business with many potential customers unable to expand to serve them?

You would probably learn a lot about the answers to these questions by going and being one of those volunteers at a homeless shelter, even once or twice.

Are there draconian restrictions on expansion of homeless shelters? Yes. The zoning/ neighborhood associations in any location are tremendously resistant to even the smallest expansion. Find a newspaper article or notes of council meetings about any homeless shelter creation or expansion and read all about it. Plus the challenges of getting a lease or mortgage based on a fairly insecure revenue source. Many shelters are in donated space where the owner of the property gets a tax deduction for donating the space. This is more likely to be an unused warehouse than a purpose-built homeless shelter.

Also, what on earth makes you think homeless shelters aren’t already staffed by volunteers? They may have some hired staff, but many of those positions aren’t even full-time. In a situation where you may have hundreds of homeless people planning to spend the night, you can’t really expect to leave that up to just trusting that the volunteers will be there and know what to do. Smaller shelters may well be 100% volunteer run, though. Like I suggested above, you should check it out.

I’m not sure where you live, but every city I’ve lived in in the US has had cheap rentals by the day or week. The YMCA/YWCA are known for doing this on a non-profit basis. Maybe you’ve heard the song? Plenty of other landlords do it on a for-profit basis. Around here they tend to buy old motels. But see the paragraph above about people not wanting this type of housing provided in their neighborhoods. The same people who advocate for homeless shelters do advocate for low-cost housing, but run into very similar barriers–no one wants it near them.

And your idea about busing people elsewhere… Assuming you have a place “elsewhere” that’s willing to provide the space, now you’ve just added the expense of busses, CDL drivers with passenger endorsements, and insurance.

To the extent there’s money to be made providing low-income housing, there are people trying to make it.

$30 a night sounds cheap, and is a lot cheaper than a hotel I’d stay at, but is still $900 a month if you pay that every night. Even $10/ night is $300/ month, not far from what a person might pay as a roommate.

Why don’t you suggest opening such a facility in your own neighborhood and see how the suggestion goes over? In order to get their zoning approved, hostels have to assure their neighbors that they won’t attract the local low income/ homeless population. If you owned a swanky coffee shop, would you want someone to open up a facility for 100 homeless right next door? Probably not. If they were going to house 100 backpacking college students, you might see it as a market.

Harriet the Spry,

I am not an expert, but I do see some evidence on the web that SOME homeless shelters are less than efficient. E.g. this page http://www.denvergov.org/CouncilDistrict7/HomelessnessinDenver/tabid/383233/Default.aspx claims that a month’s stay in a (presumably very professional :slight_smile: ) shelter costs $775. That’s probably comparable to rent on a small apartment, especially with roommate. By contrast, it may well be that the shelter ran by the volunteers from kopek’s congregation (see above) does it much cheaper, although unfortunately kopek has not shared any hard numbers so far. Perhaps a shelter ran by McDonald’s would have been somewhere in between in terms of cost - pretty professional and organized, but operated by low cost hourly employees and hence cheap.

Back in the good old days there were entire neighborhoods dedicated to hostels - the so-called skid row. Then somebody (perhaps some combination of do-gooder crusaders, local authorities and well connected developers) apparently destroyed them and converted the land to other uses.

Well, so could the same practice be resurrected once again? E.g. if hostels could provide a lot more income per acre than the implied rent from suburban homes (especially in the foreclosure and prices-fall-like-a-rock economy), could somebody just buy up the whole neighborhood, have the zoning laws rewritten and convert it to hostel use?

$775/ month is less than $30/ day.

Also, note that 43% of those served were women and children. They may well be housing healthy young adult males for less, but families and the physically or mentally ill drive up the cost.

If you get involved and find ways to do it more efficiently, more power to you.

actually, I just had an interesting thought about hostels and discrimination against non distant city backpackers :-). Maybe it’s just a nice way to limit your clientele to well-behaved people without violating racial discrimination in housing laws. After all, there are many people in New York who are well behaved and would like to stay in hostel, but letting them in would also require letting in the non well behaved as well. By contrast, nowadays the backpackers are probably a generally nice bunch, regardless of skin color.

The corollary of the above would be that perhaps we could have more hostels in New York servicing other categories of people that are known to be well-behaved-on-average, but that are not racially defined.

Trust me, as someone who worked in a hotel with a “no locals” policy, it’s not race.

It’s the fact that if you are doing something at a hotel in your hometown, that means you are probably doing something you don’t want to do at home. Why don’t you want to do it at home? Probably because it’s bad. And that means there is a good chance that the hotel owner will end up having to deal with the police, jilted wives, pimps, drug dealers, and other unpleasant visitors who make the owners’ life a pain and drive away business.

Why would you put up with that, if you can find other clients that won’t bring those problems?

There are plenty of hotels that offer “weekly rates,” that basically serve as flophouses. But these rates are pretty high- much higher than rent. Why? It’s what the market can bear- the poorest of the poor cannot get enough capital together to move into a regular apartment, but they can scrounge together enough money to pay rent on an ongoing basis. So, the landlords milk this. The other is that people in these situations DO bring problems. And the hotel owner wants to be compensated for the extra work.

And I think it really boils down to that. If you have a piece of land, why wear yourself out trying to manage a dozen people who likely do have problems and have proven themselves financially unstable when you could rent that same space to a single financially stable family that likely will not bring you much trouble. The only way being a slumlord is worth it is if you are an absentee landlord. Managing a flophouse would be much more hands on and a lot more work.

In most cities, laws concerning short-term stays and long-term renting differ significantly. They require different services, amenities, acceptance policies, and building codes. You can’t simply transform one into the other.

Don’t know where you are, but I’m in New York , and there are lots of places some people can stay for less than $30/day. In fact, I believe most of them charge exactly what public assistance allows for rent for a single person . Some are called “sober houses” or “three-quarter houses” and others just rent rooms with a shared kitchen and bath. They don’t really take the place of shelters, though, because they aren’t set up to handle immediate needs.


first of all, if the landlords are concerned about problem people, why not discriminate based on credit report score? Note that there might be many people who are not in any sense “problem”, but who are basically thrifty. Especially in today’s ugly economy. Can you use credit scores for admission to a weekly or monthly rate rental?

Second, the “all that market will bear” suggests that it’s hard to expand the amount of goods/services offered. So basically this ties into what was said earlier about it being very difficult to open a new hostel, right? Or is the customer base for these services essentially unboundedly large so that no matter how many new hostels we may add, we would never run out of customers willing to pay a lot?

doreen, surely you realize that “less than $30/day” is not necessarily a small amount of money? Now, if they can use the poor to milk the government, good for them. That doesn’t mean that this is an efficient use of anybody’s money. It also means that many people who don’t qualify for government handouts will be effectively priced out of these services even though they might have afforded them out of pocket if priced reasonably.

Its not really that much less, its about the same honestly. In San Diego I can find a bedroom in an apartment with a roommate in a fairly decent part of town for $500/month, which is about $17 a day. So for $17/day I can get a private bedroom and only have to share a living space with 1 other person.

And that is in San Diego. In other towns like Indianapolis, you can get a private bedroom for $300/month which is $10/day.

And a hostel might cost $25/day in San Francisco, but if you go on roommates.com or craigslist you can find your own bedroom in a shared apartment for $750 or less. In some parts of San Francisco you can get a shared bedroom for $400 or so.

But you also have utilities on top of that (which will add $1-3/day). Hostels usually offer free utilities and some free meals.

Either way, given rent that only comes to $300/month + utilities is only going to cost someone $12/day or so for shelter and utilities, which isn’t much more than the cost of a flophouse.

There are hotels that charge by the week in San Francisco, but they are $175/wk ($25/day) and they are in the ghetto and supposedly infested with bedbugs. No thanks.

I’m not absolutely sure which argument you’re making here, because you keep going back and forth between temporary stay lodging and rental lodging, but the use of hostel indicates temporary stay, so that’s what I’ll talk about.

People pay for services rendered, not a mere roof over their heads. Prices go down as services are reduced but their is no indication that no-service lodging has a clientèle. How many people who go to hostels today would do without wi-fi service? The basic minimum expectations of people go up with every generation and so does income. If services and amenities become available for not much more than no-services, people will choose the former. People in the industry calculate tradeoffs between price and service every day and the current market exists because that is where the price points break out. Those who can afford to travel to another city can afford to stay comfortably when they get there. Running lodging is an extremely expensive proposition, because it is extremely labor intensive, and so amenities are the point of competition.

Now you also seem to talk about housing for the poor in your next comment, but you don’t seem to understand that the market for very low rent housing already exists. The poor live in it. Flophouses per se have been regulated out of existence in many places because of abuses by landlords and tenants, but cheap rooms, often with multiple roommates, are in the poor side of every town. You can easily find newspaper articles about immigrants, possibly illegal, possibly just poor, staying 10 to a room and using the beds in shifts. They are not getting government assistance for the rent; they have to earn it. The government pays for a tiny percentage of the housing for the poor.

The market you talk about already creates all the housing at all the pricing that appears to provide a profit. It’s conceivable that they’ve guessed wrong and have left open a niche that newcomers could exploit but lodging is an industry that currently has too many rooms chasing too few people so it seems doubtful that going downscale hasn’t been carefully examined and rejected for cause.

When I was in college one of the apartments I stayed at charged $495/month for a 2 bedroom that was fairly nice, in a decent part of town (the whole town was nice though) and about 900 sq ft. My brother and I lived there for 2 years.

If a person was able to get around the landlords (who probably have rules on how many people can stay) you could put bunk beds in the 2 bedrooms and a bed in the living room to get 5 people living there. That way rent barely comes to $3/day per person to live like that. Add in utilities too, but that is barely $1/day per person on top of it all.

So if people are willing to share bedrooms and not live in extremely expensive cities, a person can find clean, hygienic shelter plus utilities for $3-4/day, the cost of a value meal at McDonalds. The problem is finding a landlord willing to rent a 2 bedroom apartment to 5 people.

But even in expensive cities, people can still live fairly cheap. In Berkeley and SF there are several co-ops that have 10+ people living in a 2-3 bedroom house. Rent, utilities and bulk food purchases only come to about $350/person, so about $12/day. But for that $12/day you get shelter, utilities and a good deal of your food in one of the most expensive areas of the united states.