Free stuff creates demand – and dependency.
by Tom Evslin
The New York Times wrote about the partial end of Vermont’s Emergency Hotel Program:
“In the first year of the expanded hotel program, the number of Vermonters counted as homeless more than doubled, to 2,590 in 2021 from 1,110 in 2020. In the most recent tally, completed in January, the total jumped again, to 3,295, in part because the hotel program made people easier to count but also because of the continuing housing crisis, with higher rents and fewer vacant apartments.
“The rural state, with a population smaller than any but Wyoming, had risen to the top of two national rankings by last year: It had the second highest rate of homelessness per capita in the nation, after California — but also the lowest rate of homeless people living outdoors.”
The Times did not consider the possibility that Vermont has such a high rate of homelessness at least in part because it provides such good accommodations for the homeless as evidenced by the low rate of people living unsheltered. The emergency program was a constructive answer to the immediate fear at the beginning of the pandemic that congregate housing for the homeless would be deadly. The program also helped hotels and motels which had no customers during lockdown. But, as the Times notes, the program continued to expand after the immediate emergency had passed. Free apartments are attractive. The hotels also liked the State’s policy of always paying the asking price for rooms.
WCAX tells about the increased demand for free food at social service organizations in Chittenden County. The story attributes the increase in demand to the end of the hotel program but the stats quoted show free food demand increasing rapidly long before the partial end of the hotel program. Recipients tell of a line which stretches around the block. Food has gotten more expensive with inflation; but it is not in short supply like housing. Jobs are available to all who want them and can show up. SNAP (AKA food stamps) helps supplement low incomes. Why does the demand for free food keep going up? At least in part, because it’s available – and free.
It’s an iron law of economics that, given enough time, there is no limit to the demand for free stuff.
Emergency programs are needed. We were right to use the empty motel rooms. It is right to make free food available in an emergency. However, when programs are extended beyond the emergency which gave rise to them, people do become dependent. The anguish reported by many who have lost or might lose their free motel rooms is real – but many of them wouldn’t have become dependent if the program had ended after the immediate emergency was over. It was right to suspend payments on student loans during the first few lockdown months. Now, because the suspension of payments went on for many years past the immediate need, people have taken on other debt and will struggle to fit payments back in their lives. Free food, with no means testing to qualify, has also become a staple.
In a constructive compromise after Gov. Scott vetoed the Vermont budget (and after the federal funds which supported it have ended), the hotel program is finally being phased out albeit slowly. As described by VT Digger “The motel deal signed Thursday only applies to those who meet certain eligibility criteria — including families with children, the elderly, domestic abuse survivors, and those on federal disability.” No one new can join the program at. Recipients will have to pay 30% of their income for the housing which was previously free and must take substitute housing as the state finds it. Very important for meeting housing needs in the longer term, the compromise includes advancing the date when duplexes will be allowed everywhere in the state. The phase out would have been easier on the beneficiaries and on the state’s taxpayers if it had come much earlier, but at least it is happening.
We will have less emergency programs, less help for those in acute need, if each “emergency program” becomes permanent. This is a particularly good time to wean people from the dependencies which should never have been allowed to develop since there are jobs available for all skill levels.
The Times story opens with an unnoticed irony. They quote the distress of a 43 old homeless person about to lose his hotel room and panhandling outside McDonald’s. He only made $3. If he’d been working inside McDonald’s instead, he would have earned much more than minimum wage.
The author, an author, entrepreneur, former Vermont state cabinet officer, lives in Stowe. He founded NG Advantage, a natural gas truck delivery company. This commentary is republished with permission from his blog, Fractals of Change.