Friday, December 26, 2008

A Ripple Effect of the Mortgage Crises

This article appears in the Money Hacks Carnival at Cash Money Life. If you came from the carnival - welcome! I hope you will consider subscribing via RSS feed or e-mail.






I read an article recently about the huge rise in homeless children as a result of the mortgage crises and it has really stayed with me. Following the record numbers of layoffs and foreclosures the homeless rate amongst children is skyrocketing. Some school districts are seeing their numbers of homeless children go up fifty and even one hundred percent. These districts are being overwhelmed as they struggle to provide services to their homeless children.

First Focus, an advocacy organization that is committed to making children and families a priority in federal policy and budget decisions, puts the number of homeless children at two million. In Oakland, California, the number of homeless children has doubled. A survey of more than 1,700 school districts released by First Focus and The National Association for the Education of Homeless Children and Youth (NAEHCY), another Washington-based non-profit, found unprecedented jumps in homeless students in the first three months of the school year. Nevada's Clark County, with one of the worst foreclosure rates in the nation, reports 4,033 homeless students; double the number from a year ago.

This is collateral damage from the housing crises to which I had not given much thought but it scares me. School districts provide many services for homeless children including transportation to and from school and are having a lot trouble. The problems include rising transportation costs and logistical challenges, as well as a lack of staffing necessary to identify and support children and youth experiencing homelessness. Moreover, schools have reported that while the severity of the need increases, available shelter space and low-income housing is decreasing. There are also reductions in other community services and supplies. Due to the increase in homeless children, the districts' budgets, already strained, are being stretched to the breaking point, making it harder to provide all of the services for which they are responsible, both for homeless and homed children.

This week, First Focus released another report finding that the United States will suffer a future economic loss of over $1.7 trillion if the current recession drives an additional 3 million children into poverty, as has been predicted.

All over the Web, I have read a lot of opinions along the lines of letting the people who are being foreclosed upon sink or swim. It’s hard to feel sorry for someone who bought a giant house they couldn’t afford, charged up their credit cards like there was never going to be a reckoning, and as a result, are on the street. On the other hand, these children are the real innocent victims and they need some help. When we look at our disappearing retirement accounts and the shrinking job market and wonder how long this economic situation will last, we might want to remember that for some of these children, it may last forever.

Homeless children are more likely to drop out of school. We all know that dropouts are less likely to become productive members of society than children who complete their education. If we use the numbers that First Focus is predicting, we could end up with literally millions of children dropping out of school, getting low-paying jobs and spending the rest of their lives below the poverty line. In my mind, we can help them now or we can pay for them forever. Thinking about it this way makes the various bailouts just a bit more palatable.

2 comments:

Funny about Money said...

Terrible situation.

Y'know, in spite of all the attention given to folks who got in over their heads on McMansions, when you drive around and look at foreclosures, you see that most of them are in pretty ordinary neighborhoods... In our parts, they're either in newer middle-class developments in the suburban outskirts (which were cheaper than comparable closer-in houses and were brand-new) or in more central working-class neighborhoods. If that impression reflects reality, then it suggests that people were either trying to better their lives a little by moving "up" to newer but relatively better-priced homes or were buying their first homes in relatively low-rent districts.

And that would create a surge in homelessness. You're unlikely to go from a $1 million McMansion to a homeless shelter, but you sure could go from a $200,000 three-bedroom (which was actually worth about $80,000 or $100,000) to the back of your van.

Mary said...

That is an excellent point, which in my mind, makes the situation even sadder.