Many homeless people turn towards informal ways of making money, from panhandling to prostitution to drug dealing. These methods are referred to as informal economy, street economy, or underground economy. Regarding homeless people, informal economy is especially prevalent with homeless youth. They are an especially vulnerable part of the homeless population, making potential recruits to pimps, drug dealers, and other criminals. Regarding informal economy, much more data has been collected about homeless youth than homeless adults.
In general, homeless youth choose to work informal jobs for diverse reasons, but the main reasons are willingly rejecting mainstream society, employment barriers, and coercion. Some homeless youth become too antisocial for the formal sector because of an abusive upbringing or simply end up rejecting the conformity they associated with formal jobs. Some homeless youth have many barriers separating them from formal jobs, such as not having enough education, the prejudices against homeless people, or a criminal record. Others would wish to work formal jobs but cannot because they have mental illnesses or are physically disabled. Still others are coerced or initiated into informal and illegal businesses by predatory adults who take advantage of their vulnerability. All of the above reasons are intimately connected to their poor and violent upbringing.
Most homeless youth grow up in a less than ideal environment, as the Journal of Adolescence shows. Of all homeless youth researched, 62.6% suffered physical abuse, 78.8% suffered emotional abuse, 66.8% suffered emotional neglect, 67.6% suffered physical neglect, and 38.8% suffered from sexual abuse. 83.5% of all homeless youth had a history of homelessness, 92.5% went to a shelter at least once. Only 51.3% have a high school or higher education. Female homeless youth were generally much more likely to suffer childhood trauma than their male counterparts, especially sexual abuse, and were more likely to run away. However, more females visited shelters and were more likely to have a high school or higher education. Males and females also tended to choose different informal jobs. Males were more likely to sell drugs while female were more likely to prostitute.
Such traumatic upbringing increases homeless youths’ chances of becoming antisocial and rejecting mainstream society. Once they become antisocial, they are more likely to earn money in unwholesome ways. The University of Nebraska has a Social Learning Model, connecting abusive families, antisocial behavior, and deviant subsistence strategies to victimization. Though it shows how victimization is the end of a chain of abuse and crime, it does illustrate how abusive families spur a youth to make money in informal and dangerous ways. Homeless youth that both had abusive backgrounds and antisocial behaviors were more likely to subside themselves in devious ways. An abusive past can easily socialize a homeless youth to become aggressive, expect aggression from others, and distrusting to authorities and other people. Not only does it make them reject and become less compatible with the formal sector but it also makes them more likely to be victimized on the streets.
Homeless youth were also chose informal jobs because they simply could not access formal jobs. Homeless youth have a high likelihood of coming from families with little education and of getting little education themselves. “Twenty-eight percent reported that their fathers had not completed high school, 31% had fathers who had completed high school, 25% said their fathers had some college or training after high school, and 16% of the fathers were college graduates.” As for their mothers, “Twenty- five percent… had not completed high school, 36% had finished high school, 20% had some college or training beyond high school, and 18% had graduated from college.” A lower education shuts homeless youth out of many formal job opportunities, especially well-paying ones. In light of this knowledge, it is understandable they would choose panhandling or drug dealing instead of working at McDonalds.
At times homeless youth go into informal work with hardly any choice at all. They are initiated or coerced in some way or another into criminal jobs. Homeless youth who are inevitably coerced into crime often have a history that alienates them from formal society, leaving them more vulnerable to predatory adults. Many homeless youth come from abusive and violent families and those same youth often become homeless by running away from their families. Their lack of education costs them a hefty toll on the job market, especially when they compete against “college kids” who have more education and better job skills. Their very status as being homeless is a detriment to them since employers are less likely to hire a homeless person. Incarceration, common among homeless youth, is yet another barrier to attaining formal jobs.
Adults or their peers actively recruited homeless youth who were younger and less familiar with street economy. Already familiar with the street economy, they purposefully chose homeless youth because they were young, vulnerable, and easier to persuade. Recruiters often appeared near community organization and shelters, knowing they would find potential recruits. Once they initiated the youth, they trained them in the arts of the illegal trade, often playing the role of a mentor. The relationship is not really beneficent, since the mentor reaps almost all the profits from their apprentice’s dangerous labor.
Recruiting homeless youth into informal economies even progresses in tiers. The older the homeless youth, the deeper they go into street economy, their jobs becoming more criminal and dangerous. Homeless youth run away at the mean age of 14 while they start stealing at the mean age of 13. At 14 they begin panhandling. At 15, they begin robbing by mugging people and breaking into houses. They also enter the illegal drug economy at this time. They start sex work at 16 and they start pimping at 17.
Yet homeless youth also actively chose informal jobs for reasons beyond being coerced or having no other alternatives. One of the strongest positive factors is having strong social bonds with peers. A homeless youth such as Keith finds his family very protective, even though drug dealing is the family business. Such youth held a strong bond for their unconventional society, with an intimate knowledge of street economy going as far back as childhood. Surprisingly, not all homeless youth show distain from conventional values. Quite a number of them actually embrace conventional values such as hard work, education, and self-improvement, and want to one day become financially independent. Sadly, those youth encounter the same barriers to the formal sector and the same stigmas their peers face.
The decision to work informally rather than formally does not only lie with homeless youth but also homeless adults. However, unlike homeless youth, homeless adults do informal jobs for simpler reasons, which revolve more around having barriers to formal jobs or perceiving themselves to have barriers to formal jobs. Homeless people who do panhandle, for example, see it as the better alternative to stealing or doing something illegal. Sometimes, homeless people panhandle simply to feed their addiction to illegal drugs. Those who do illegal work, such as drug dealing, are either slaves to their addiction or otherwise are willing to risk their lives for reasons such as money or already being in crime for a long time.
The average panhandler has a 48% chance of being black, 83% chance of being male, and 70% chance of being 40 to 59 years old. He has limited education, with only 39% chance of having a high school deploma and 21% chance of having some college education. He is also frequently disabled, with the chances at 62%. 94% of the time he will spend his money to buy food just to survive while 44% of the time he will buy drugs or alcohol. He has a small but significant chance of being an alcoholic at 25% and addicted to drugs at 32%. 60% of the time he panhandles he makes at most $25 a day. He will live in a central city 82% of the time. Citizens are more likely to see him in large cities and suburbs than in areas further away. “Being asked for money is most common for residents of large cities and their suburbs (76.5%), with declining proportions affected in small cities (60.6%), towns (50.9%), and rural areas (41.4%).”
The stereotype of a panhandler as a lazy moocher has some truth to it but not by much. Still, citizens feel accosted and resentful at panhandlers and governments try to rid of them in ways that are not too obviously dehumanizing. Citizens perceive panhandling as a violation of work ethic, thinking of them as just trying to get cheap money for beer. In reality, panhandling is a difficult and dangerous line of work. Among homeless people, panhandlers are more likely to sleep outdoors, stay hungry, and be victimized on the streets. Since panhandling is such a dangerous job with hardly any benefits, one wonders why people bother doing it.
Frequently, panhandlers are men who lost their jobs not too long ago or are affected with a serious illness. Their recent loss of employment may mean they lack experience with informal economy and turn to panhandling as the first way to deal with their new situation. With serious illness they cannot or perceive they cannot take formal jobs anymore. The research letter by MD-PhD student Bose and Assistant Professor Medicine Hwang, supports this idea. In their study, 70% of panhandlers stated they would prefer a minimum-wage job to gain a steady income and get off the streets. However, the same panhandlers felt they could not handle conventional jobs because of mental illnesses, physical disabilities, and the lack of necessary skills.
Other homeless people turn to drug dealing to sustain themselves. Their motives are usually to feed their addictions. As with other drug users, their life is consumed by the addiction to the point where getting the next high becomes all that matters. Jude, a former crack addict, describes the menial ways she supported her addiction and how she eventually left it. Originally, she dealt crack to feed her addiction. When she charged for illegally using drugs, she violated her bail conditions. Evading police, she robbed a heroin dealer and used the cash to take an Amtrack train to L.A. In L.A., she sold plasma from her blood for $35 and was so desperate she was willing to sell a kidney. In other instances, she would collect aluminum and plastic cans for nine hours and even stole her sisters money at one point to avoid getting dope sick.
Eventually, she hit a point where her desperation to survive trumped her desperation for crack. In her case it was the only other motivation that could tear her away from her first one: her drug addiction. She returned to her family and began the rocky road to recovery, which involved detox and psychotherapy. She slipped back into her addiction for a brief time but later went to rehab. It may seem simplistic, but drug addiction is so powerful and destructive that it can become the sole reason a homeless person works informal jobs. Drug addictions can easily lead to work in the drug trade, or the reverse, the homeless person was already involved in drugs and got high off their own supply. In the latter case, their motivations devolve into feeding their own addiction. Having a drug addiction makes it even harder for a homeless person to access a formal job, perpetuating their addiction further like a vicious cycle.
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