The homeless at Penn Station don't bother me much, but I understand that the attendant issues do bother a lot of other people, and I empathize with them.

My girlfriend for example will not travel through Penn Station unaccompanied, and I know her concerns are not way out of the norm. Yes, the fear of crime is generally disproportionate to the risk of victimization. The chances of victimization to her at the station are likely quite low. But the appearance of disorder and norm violation has a psychic cost, making people uneasy and motivating them to avoid the place.

Any location in which a large number of street people congregate will likely become known for pungent body odor, the smell of human refuse and psychotic episodes. I don't blame the homeless for these issues, but I also don't blame the large segment of the population who will do what they can to avoid such unpleasantness. Norms are important to people everywhere, and norm violations are, in every society treated with some measure of avoidance and shunning.

My understanding is that the LA Metro, currently undergoing a multi-billion dollar expansion, has low ridership due in part to its common use as a place to live and do drugs. Once a location or system becomes well-known for norm violations, the people interested in those things will flock there, and those people not interested or disgusted by those things will stay away.

Newark Penn Station is of course not at that extreme level. Its the seventh busiest train station in the US, as I understand. But I think the OP's concerns are valid. The state of things is a deterrent to people traveling through the station, visiting Newark, and living here. And if the police had a completely live-and-let-live attitude about Penn Station, then I think it would go the way of the LA Metro, or worse.

There have been times I have come back late through Penn Station and found certain parts of the station essentially taken over by station residents. By taken over I mean that they blocked egress and diverted passengers elsewhere.

I think it's far from unreasonable to suggest that the police contain the issue to a greater extent, though that would require more coercion on their part.