New Methods &
New Partnerships
by David C. Schwartz
This article details three basic findings of interest to the housing-conscious public. First, American employers are
beginning to offer housing benefits to their non-management workers because offering these benefits helps
employers to solve basic business problems (personnel, recruitment and retention, labor, productivity,
appreciation of corporate real estate values, etc.) in a manner which is highly cost-effective, risk-minimizing and
image enhancing for the employer. Second, American employers are experimenting with a wide variety of
housing benefits—seeking to customize the benefit offered to meet simultaneously, corporate, community and
worker objectives. Third, a growing number of governments, financial institutions and nonprofit housing
organizations are now exploring ways to expand employer-assisted housing. Taken together, these findings
indicate that there are substantially new motivations, new methods and new potential partnerships available to be
tapped, tried and tested in the effort to provide housing affordable to low- and moderate-income families.
A shortage of housing affordable to workers of low- and moderate-income is imposing substantial and harmful
costs upon employers in almost every regional economy across America. High housing costs are creating and/or
exacerbating: labor shortages; the loss of key personnel (to lower housing cost areas); diminished productivity
(due to lateness, absenteeism and other commutation-related problems), unacceptable recruitment, retention
and wage cost distortions; slowdowns in the growth of regional economies; diminished or stagnant corporate real
estate values (especially in urban areas) — and many other problems for employers.
Increasingly, economists and business leaders are blaming the lack of affordable housing, and resulting high
housing costs, for the slowdown in major regional economies across the United States. In New England, the Mid
Atlantic States, the Southeast, California and portions of the Pacific Northwest; high housing costs have been
shown to be causing or contributing to regional labor shortages by acting as a brake on the in-migration of new
employees while spurring out-migration of both workers and employers. Housing costs in these regions also tend
to correlate with (increased) employee absenteeism and lower employee productivity as employees’ long
commutes—to avoid high housing Costs near developed worksites— create havoc in the lives of both employers
and employees, while adding to traffic congestion, air pollution and infrastructure replacement costs. In addition,
rapid regional increases in housing costs have begotten accelerated wage demands which may disadvantage
American firms in international competition without significantly adding to employee buying power or savings
rates, because housing costs have been generally rising at a somewhat faster pace in the 1980s than wage
rates.
Some employers who must pay premiums to recruit and retain workers are, instead, choosing to relocate to an
area where the cost of housing is substantially lower. Companies who have recently relocated major operations
to lower-cost housing regions include: Exxon, Mobil Oil, International Paper, J.C. Penney, GTE, Grumman
Industries and Prudential. Other companies have quietly elected to forego expansion or to retract the scope and
size of their business in areas where affordable housing for their employees is in short supply. Institutional
employers, such as hospitals, nursing homes and colleges, who cannot run away from the high cost of housing,
are raising rates and/or cutting back on services due to housing-related labor shortages.
When, as a result of the high cost of housing, a company leaves town or forgoes expansion or cut back on
services or raises rates for those services, the community and regional economy suffers from the loss of jobs,
loss or costs of services, lost business opportunities and a loss of tax revenues.
But employers’ motivations to offer housing benefits to non-management workers extend well beyond
recruitment., retention, and productivity issues. Employers are finding that they can make money and save
money on housing benefits! Employers that purchase housing bonds (or mortgage-backed securities or
individual mortgages) which make it feasible for their workers to achieve homeownership via below market loans
are making money on their personnel benefits. Employers that offer mortgage guarantees (which lower or
eliminate down payment requirements) for those workers purchasing homes proximate to their worksites are not
only enhancing productivity, they are achieving appreciation in the value of their real estate holdings. Companies
that provide forgivable down payment loans to workers who voluntarily agree to stay with the company for a
specific term of years are saving money - cutting down on recruitment and retention costs. Employer-assisted
housing can be structured to be cost-effective and risk-minimizing for most employers.
Finally, employers are finding that offering housing benefits to non-management workers can be good labor
relations, good community relations and good government relations.
New Methods
American employers are experimenting with a wide variety of housing benefits— seeking, to meet,
simultaneously, corporate, community and worker objectives. Daniel Hoffman’s article, “A Blueprint for Employer
Assisted Housing”, explains and categorizes a number of these benefits. Accordingly, our discussion here can be
very brief.
The following table may serve as a useful introduction to this topic:
TYPES OF EMPLOYER-ASSISTED HOUSING PROGRAMS - TABLE 1
