What Could Happen If Your Boss Is Your Landlord?
Within the past year, some employers have announced the development of employee rental housing to attract and maintain employees. While media coverage has been focused on larger companies, many other organizations, including school districts and vacation resorts, have also started investing in housing.
These initiatives may provide a new way to develop affordable housing supply and encourage housing access, but they also pose equity concerns that policymakers should be aware of and guard against.
Why do companies care about rental housing for employees?
Many employers have had trouble recruiting and retaining workers over the past few years. On top of this, local housing markets create additional challenges for companies. While this crisis is often thought of as a coastal issue, cities around the country are facing spikes in housing costs and limited supply, challenging companies nationwide.
With the increasing lack of housing supply, employees who earn lower or moderate incomes may not be able to afford to live within a reasonable commuting distance. Evidence shows lower-paid workers often live much further from their job, and a longer commute is one of the most reliable predictors of attrition.
Employers like local school districts in Colorado to Hawaii have noted the challenge of maintaining team members when housing costs rapidly outpace salaries. This is also true for other jobs, such as health care, seasonal and hospitality work, and resort towns.
Housing is also already indirectly factored into many salaries that are tied to the local cost of living. However, there has been a divergence in housing costs and wages, such that rental prices are rising much faster than incomes. Businesses within areas with skyrocketing housing costs are faced with difficult challenges about how to respond with their own wages.
Many organizations have long provided some form of housing assistance, such as short-term relocation assistance. Others, including some universities and municipalities, have offered an employer-assisted housing program, which can include rental or down payment assistance that encourages employees to live close to their workplace. However, when housing supply is tight, housing incentives may cause local problems, including reducing local housing supply, making the local market even less affordable, or pushing out other residents and potential buyers.
What are companies doing to increase access to rental housing?
Given the severity of the housing crisis around the country, some companies are trying out housing creation and management models to create a competitive advantage to hire and maintain employees. These models are not new; companies dating back to the 1800s, such as the Pullman and Lowell companies, provided rental housing for their employees.
Though the most high-profile of these companies are located in Silicon Valley, such as Meta’s Willow Village, which includes some affordable units, this has extended to many parts of the country. Resorts like VailResorts in Vermont and Grand Targhee in Wyoming are developing housing intended for employees. Some school districts have also started to invest in housing for teachers and staff. Asheville City schools in North Carolina constructed a 24-unit apartment complex for teachers, a San Francisco school district constructed a 122-unit apartment complex for teachers that teachers can stay in for five years, and in Welch, West Virginia, the American Federation of Teachers recently helped open a building with apartments and shops for teachers. In Florida, Universal Parks and Resorts announced 1,000 units of affordable and mixed-use housing and Disney announced more than 1,000 units of housing that would be used, in part, by theme park workers.
Though each company varies in its policies, many of these provide either mixed-income or affordable housing that will be intended for local employees. Some employers, such as Grand Targhee, indicate that rental payments will be deducted from paychecks, while others have not included details of how employees will qualify and pay for their housing.
How can policymakers encourage affordability and equity with employer-developed housing?
Building and operating rental housing may provide companies with one way to remain competitive while adding supply to the already-stretched housing market. In this way, they may help relieve some of the local strain and give people an opportunity to live close to work.
However, company-owned housing also poses several challenges for policymakers focused on tenant stability. Evidence points to some strategies they can consider to mitigate challenges and ensure equitable housing outcomes.
- Loss of affordability: Most companies have not announced affordability that is regulated or monitored, but are rather providing units at a price considered “affordable” to employees. History suggests that benefits like affordable housing may be easily cut or changed by companies with little notice, which could put tenants at risk. For example, when the Pullman company faced economic challenges, they cut employees’ wages by 25 percent but did not reduce rent, putting thousands of employees at risk. This suggests clear local tenant protections around rent increases and lease provisions are critical for ensuring all renters are safe from large rent increases.
- Landlord/employer intimidation: Landlords often hold tremendous power in a landlord-tenant relationship and are able to withhold repairs or maintenance, file an eviction against a tenant, or even make unreasonable demands. This power imbalance may be heightened when a landlord is also an employer and the power dynamic involves their home and their source of income. Policymakers should consider how they can modify local protections to address these blended roles.
- Lack of employment flexibility: Linking employment to housing may pose some challenges for employee decisionmaking and stability—and ultimately prevent them from being able to switch jobs. It could be similar to health insurance, in that many people’s health insurance is linked to their employment status. This means employees may need to make employment decisions based on access to health insurance. Similarly, in a tight housing market, an employee may also be unable to change jobs without losing their housing if it’s owned by their employer. Local protections, such as clear lease terms if they separate from their job, may help encourage stability.