Work doesn't always work out for homeless people, especially if the work is part-time and low-paid.
BITC's Business Action on Homelessness (BAOH) team commissioned the New Economics Foundation (NEF) to carry out research to find out the full range of factors preventing homeless clients from taking a job or staying in work, and what could encourage them to gain and sustain employment. NEF applied behavioural economics to work out if paying an incentive would make economic sense, factoring in the concept of ‘loss aversion’ - the theory that people value losses more than gains.
They considered the impact of the loss of security to homeless people of their regular benefit payments, which can be greater than that of recieving a less-secure salary that may be only marginally better than the amount they received from benefits. This adds to the financial and emotional strain of returning to the workplace. When coupled with the delays that often occur when people need to return to benefits after a period of temporary employment, this may increase an individual’s loss aversion and hence make them less likely to want to take-up work.