Four Reasons Why Employers Should Care about Housing
by Aaron Shroyer and Veronica Gaitán
Available, affordable housing that fits a range of household types and lifestyles is essential to attracting, retaining, and developing a diverse, productive workforce. But with 47 percent of renters and 23 percent of homeowners paying 30 percent or more of their income on housing, high housing costs can prevent workers from living near their jobs and can put a strain on the local economy by slowing employment growth.
Given the far-reaching effects of today’s housing shortages, the public sector needs private- and philanthropic-sector support to tackle this challenge. A new report by the Urban Institute shows how a lack of affordable housing can hold back a region’s economy. To get ahead of this issue, employers should not only be aware of how housing affects their employees but also advocate for and invest in affordable housing as a way to support their workforce and the local economy. Here are four reasons why employers should know about, care about, and bolster affordable housing.
Housing costs affect where employers can locate their companies
Housing availability and costs are two of the most important factors in determining quality of life that companies take into account when moving into a metropolitan region. Why do they matter so much? When employees cannot afford to live near jobs, employers must spend more money on wages or turnover costs.
This inability of working class and service class workers to afford housing in economically vibrant cities hurts workers and cities too. Workers are either shut out of living in cities where their skills could command a higher salary, or the higher salaries they do earn are negated by higher living costs. And when workers choose to live elsewhere, cities lose productivity because of unfilled jobs.
Available and affordable housing allows employers to attract and retain diverse employees at all levels
High housing costs limit who can afford to live in a region, leading to a shortage of workers for lower-wage roles. With the exception of people who earn very high wages, job seekers are discouraged from moving into the region, and the region’s existing workers get pushed to less costly markets. This creates problems for attracting and retaining workers at any level. For example, nearly 75 percent of employers in Greater Boston reported (PDF) finding it “extremely or somewhat difficult” to recruit or retain employees, and two-thirds cite the cost of housing as a major barrier. Cost pressures on low-wage workers are especially fierce, leading to displacement. A recent survey in the Washington, DC, region found that 29 percent of respondents knew someone who moved involuntarily within the past two years, with high housing costs being the primary reason for those moves. Unsustainably high rents can ultimately lead to forced moves and evictions, and survey data show that low-income workers are more likely lose their jobs after experiencing a forced move out of rental housing.
Access to affordable and stable housing can make workers more productive
A lack of affordable housing can impede employee productivity. A study of 34,000 workers in the United Kingdom found that those who commute fewer than 30 minutes per day gain seven days’ worth of productive time annually, compared with those who commute over an hour per day. Those with longer commutes are also more likely to experience depression, financial concern, and stress. Another study calculated that Boston-area drivers spend 164 hours in traffic per year and equated this time to a productivity cost of $4.1 billion.
Economic instability and housing instability are closely related. Access to stable, affordable housing is particularly important for low-wage workers, who typically have inflexible work schedules and leave options. If they face high housing and transportation costs, they are then more likely to experience economic instability if related emergencies, such as a sudden repair, an unpredictable and extreme commute, or a summons to court for an eviction hearing force them to miss work. In addition, their performance at work might suffer because of the extra stress of dealing with an eviction and finding a new place to live.
Affordable housing options improve job access
The lack of affordable housing close to metropolitan job centers often pushes job seekers to the suburbs and beyond. When faced with a long commute into the city, some households might seek employment opportunities closer to their new homes. In fact, 64 percent of people who earn less than $50,000 said they would consider (PDF) a lateral employment move if it would shorten their commute, while 60 percent of workers earning more than $50,000 said the same.
This spatial mismatch between regional employment clusters and potential worker populations limits access to jobs. Because these outer neighborhoods are not as accessible by public transit, this mismatch can add to congestion on roads and highways. Long commutes impede employee retention. Fifty-eight percent of larger companies that lack nearby affordable housing options report that employees cite long commute times as a reason why (PDF) they left the company.
Employers often only consider employees’ housing costs when the company is contemplating a move or an expansion. Instead, employers across the country should educate themselves about how a lack of affordable housing affects their workforce. Employers should learn about policies that can improve housing across the income spectrum as a way to better attract and retain workers. In higher-cost markets, employers should combine advocacy with direct investment in affordable housing, which, in turn, is an investment in the vitality of their workforce. This investment can benefit their own bottom line, as well as their employees and the local economy as a whole.
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