Inflation Is Hurting Homelessness Service Providers

Inflation has hit a 40-year high and is affecting the ability of homelessness service providers to provide basic needs like food and shelter.

Over the last 12 months, from May 2021 to May 2022, food prices have risen 10.1%, according to the U.S. Bureau of Labor Statistics. This means food budgets aren’t going as far as they used to and providers, like Union Station Homeless Services, are having to get more creative, even resorting to creating Amazon wish lists for donations.

Union Station Homeless Services’ Chef Marisa said she is doing an economic version of the show “Chopped” to work with the food they have and combat rising costs and meat shortages.

“Everything is getting so expensive that I have to find creative ways to create a dish where the people won't miss the meat,” Chef Marisa said. This approach led to her creating a new potato chicken cheesy taco dish. “They notice the difference but in a positive way.”

Chef Marisa now spends her Sundays going through grocery ads to see where sales are located. She’s had to cut back on some grocery items to stretch the money needed to feed roughly 60 people three times a day.

“Before I would spend $100, now the $100 has to last twice as long,” she said. “What I used to buy for $100 now it's gonna cost me $200.”

David Sensente, senior donation manager for Union Station Homeless Services, said they are just one of many agencies that are struggling with the new normal of ever rising food prices, comparing the uncertainty to how it felt during the 2008 recession.

“When things like this happen, people reach out to social service agencies like food banks and churches,” Sensente said. “Every time we go to get donations you can see there’s not a lot of stuff like there was before. We are preparing for impact.”

Gov. Newsom has plans to devote $18 billion in state funds to help alleviate the burden some households are feeling, mostly with gas prices and funding free public transit for three months, but advocates say it won’t do enough to target those needing the most help: people experiencing homelessness.

Daniel Flaming, president of the Economic Roundtable, a Los Angeles research group that focuses on economic, social and environmental issues, said “bureaucratic bottlenecks” in places like the Los Angeles Homeless Services Authority (LAHSA) have made it harder for nonprofit agencies that provide food for unhoused residents to change their contracts to adjust for inflation.

“LAHSA or the County have already committed all of their money so they can't increase the contract budgets,” Flaming said. “The second bottleneck is that contract amendments don't operate in real time — they lag real world changes by months and years. The result is likely to be empty stomachs, less nutritious meals or less frequent meals for people who are already facing hard times.”

Rising Construction Costs

Elda Mendez-Lemus, chief real estate officer for L.A. Family Housing, said inflation is affecting everything from real estate costs to construction materials to furnishing apartments.

LA Family Housing, a nonprofit that helps people transition out of homelessness by providing housing and wrap-around services, has 12 projects currently in its pipeline and, after sending out bids for three projects, construction material costs are “significantly” increasing, according to Mendez-Lemus.

“What we're hearing from our construction teams is that there's a 1% monthly increase that I should just be considering for inflation, which is a little bit insane,” Mendez-Lemus said. “I've had the same conversation with the Housing Department and our per unit cost, even for modular construction, which we were originally estimating would be down to $500,000 per unit, we're now $630,000 per unit.”

According to the Turner Building Cost index, which measures costs in the non-residential building construction market in the United States, there’s a shortage in materials due to supply chain issues and higher transportation costs. This represented a 2% quarterly increase from the fourth quarter of 2021 and a 7.08% yearly increase from the first quarter of 2021.

For LA Family Housing, Mendez-Lemus said this means an order of windows that used to take four months, now takes up to eight months. Having an attorney review a two-page lending document is now $20,000 when it used to be half that cost. New housing that would have been available in 18 months will now take 22 months, ultimately leaving people who are ready to move from interim housing or shelters stuck. In turn, there are fewer temporary options for people currently living on the street.

This spills into other areas as well, like transporting clients and residents to doctor’s appointments, and paying for utilities, groceries and everyday things such as shampoo and toilet paper.

“We are paying for all of these overages so that we can meet our residents where they are and provide the level of service that they need,” Mendez-Lemus said. “If they need to take an Uber driver because we couldn't take them, we're paying for that Uber driver. But that Uber driver is now twice as expensive. So it's just impacting everything that we do.”