The Compassion Racket

Sacramento, the city where I live, celebrated the grand opening of the Saint Clare at Capitol Park, a converted hotel now serving as permanent supportive housing for people experiencing homelessness. The building has history and charm, and each unit cost taxpayers nearly $567,000 to build.

That’s more than the median home price in much of the country.

The nonprofit behind it received media praise and public grants. The city held ribbon-cuttings. Everyone clapped. And yet, the tents, sidewalks, and crisis remain.

Everyone got paid. No one got better.

For years, California’s dominant narrative has been clear: homelessness is a housing problem. Solve the housing, solve the crisis. That logic has driven billions in public spending and launched programs like Project Homekey, which aims to convert hotels into low-cost housing.

But the numbers tell a different story. Unit costs have spiraled into the half-million range in Sacramento, San Francisco, and Los Angeles. A recent California State Auditor report showed new permanent supportive housing regularly exceeds $400,000 per unit, while some conversions top $600,000.

At these prices, we’re not solving the problem. We’re subsidizing it.

Homelessness has become a full-employment program, for everyone except the homeless.

The supply chain includes city planners, developers, social workers, nonprofit managers, case coordinators, harm-reduction consultants, trauma-informed facilitators, and more. Each link bills by the hour, applies for grants, hosts conferences, and issues reports.

But when the tent returns to the same corner two weeks later, no one’s job is on the line. Quite the opposite, it’s proof of continued need.

In Sacramento, the City Motel Program was intended as a transitional shelter. But a recent city audit found that only one in three residents actually exited into permanent housing. The rest fell through the cracks, or circled back. Yet the program remains fully funded. There is no sunset clause, only the steady hum of funding cycles and quarterly updates.

In theory, this is about compassion. In practice, it’s an industry. The metric is motion, not resolution. Activity, not outcome.

Everyone in this system wants to believe they are helping. But the system itself doesn’t reward help. It rewards the process.

We now have a homelessness economy, one where failure generates funding, where “wraparound services” mean multiplying job descriptions, and where $567,000 per unit is not an embarrassment but a benchmark.

It feels good to say we care. It pays even better.

The Right calls for crackdowns, the left calls for case managers, but nobody wants to admit the system is feeding itself.

Genuine compassion requires judgment, and real mercy demands results. No matter how well-intentioned a program is, it should not exist if it can’t house, heal, or reintegrate.

California doesn’t need more nonprofits. It needs outcomes. It doesn’t need more consultants. It needs clarity.

Until we can distinguish between compassion as sentiment and compassion as system, we’ll keep doing the one that pays, not the one that works.