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Nationwide, housing costs are rising at a faster rate than incomes and squeezing the household budgets of working families. In 2006, half of renters and more than one third of mortgage holders (37 percent, up from 35 percent in 2005) are housing burdened, meaning that they spent at least 30 percent of their gross income on housing. In addition, the typical development patterns within regions have reinforced the “spatial mismatch” between jobs and workforce housing. Exclusionary zoning and land use policies often prohibit the construction of new workforce housing in communities near suburban employment centers, and the bulk of lower-cost housing tends to be located in distressed, urban neighborhoods—that lack good schools, local retail and services, and other essentials for health, productivity, and upward mobility—or at the furthest edges of metropolitan regions. These trends leave low- and moderate-income workers (teachers, firefighters, retail salespeople, healthcare workers, etc.) facing a tradeoff between paying a greater share of their income for housing or enduring long, complicated, and expensive daily commutes to distant job sites.
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EAH at the University of Pennsylvania Since 1998, Penn’s EAH program—a part of its West Philadelphia Initiatives—has enabled more than 400 families to purchase homes in the neighborhood and approximately 150 families to undertake home improvements. Toyin Adegbite-Moore, University of Pennsylvania |
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These housing challenges not only burden working families—they threaten the broader economic health of the region. Housing is an important component of a competitive business environment. The lack of affordable housing near the workplace can result in high employee turnover, creating major expenses for employee recruitment, retention, and training. On average, it costs a firm 25 percent of the position's annual salary plus 25 percent of the cost of benefits to replace an employee.
EAH is a flexible tool that can work in both “weak” and “hot” housing markets.to help alleviate the housing challenges faced by working families and their consequences for employers, while building healthier communities
and regions.
Revitalize Distressed Communities
In weak markets where housing demand is low—usually disinvested neighborhoods located in urban centers and older suburbs—EAH can be used to attract residents. This type of strategy is often undertaken by employers such as universities, medical centers, and other “anchor institutions” that are highly rooted to place and can see their self-interest in ensuring that the neighborhood in which they are located is prosperous and safe. When used in this way, EAH can be an important part of a strategy to reinvigorate neighborhoods that have experienced disinvestment, population loss, and declining housing stocks. By ensuring that housing is available or affordable for low- and moderate-income working families as neighborhoods improve, EAH can also help maintain a mix of incomes and housing prices.
Expand Affordability in Strong Neighborhoods
At the other end of the spectrum, EAH can be used to support home purchase or the development of affordable housing in communities with strong housing markets and tight labor markets—places where job opportunities are abundant for low- and moderate-income workers but there is a shortage of housing options for them. This was the situation faced by the employer who catalyzed the spread of EAH in Illinois: System Sensor, a fire-alarm systems manufacturing company that employs 900 people at its facility in St. Charles, a wealthy residential suburb in Kane County outside of Chicago. To reduce its training and recruitment costs related to high employee turnover, in 2000 the company began an EAH program that provided housing counseling and a $5,000 no-interest forgivable loan to apply toward down payment and closing costs on homes located within 15 miles of the plant. As of June 2007, the program had helped 67 employees purchase homes and resulted in savings to the company amounting to $100,000 per year.
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Serving Their Neighborhoods By providing housing assistance to public servants and other crucial service workers, cities can ensure that workers such as police, teachers, and child care workers have a connection to the communities they are serving. |
Promote Balanced Regional Growth
At the regional, state, and even federal level, EAH is a key part of efforts to promote more compact, sustainable, and equitable growth patterns that provide housing options for all types of workers and foster competitive regional economies. As a part of a sensible growth strategy, EAH promotes the clustering of jobs, housing, and transportation in ways that improve the environment, build healthy and livable neighborhoods, and improve the ability of employers to compete in the global marketplace.
Generate Benefits for Multiple Constituencies
Along with the systemic benefits above, EAH also presents a number of direct benefits for employees, employers, and communities:
Homeownership and asset-building opportunities. Lack of savings and inadequate wages both form barriers to homeownership for many working families. By providing homebuying education and financial assistance with the initial costs of homeownership, EAH makes homeownership more accessible for lower-income people and provides a pathway for building assets and wealth through participating in the housing market.
Lower housing and transportation burdens. Housing and transportation costs combined eat up 57 percent of working families’ household budgets. EAH programs that enable workers to live near the workplace can reduce both costs, freeing up income that can be saved or spent on other needs and freeing up time that would have been spent commuting.
Employer cost savings. By helping employees overcome housing barriers to living near the workplace, employers can reduce employee turnover and lower costs related to recruitment and retention. The cost of the program for employers can be partially offset by savings from employee retention. Bank of America’s EAH program, begun in 1999, has reduced turnover rates among participating employees by 10 percent. EAH boosts employee morale and reduces transportation time and costs for workers, resulting in less tardiness and absenteeism and higher productivity. Given current predatory lending and foreclosure trends, employers particularly stand to gain when contracting with nonprofit counseling agencies who can help prevent the instability caused by such trends from affecting employees.
Improved community services. Public servants—first responders such as police, fire, and emergency service workers as well as teachers and healthcare providers—are increasingly unable to afford homes in the communities they serve. By allowing people in these jobs to live where they work, EAH programs increase the safety, preparedness, and general quality of life of entire communities. EAH programs can also enhance local community policing strategies and other similar community initiatives, increasing public sector accountability and community oversight.
Improved community relations. EAH programs have such clear benefits for employees and the community that they can foster improved employer-community relations.
Build a Business Constituency for Housing and Equitable Development
Employers are a largely untapped resource for affordable housing. EAH offers a way for employers, communities, and local government to work together to address workforce housing challenges. It provides an entrée to engaging employers in conversations about regional issues of housing, jobs, and transportation in a way that speaks to their bottom line issues of turnover reduction, employee retention, and recruitment, as well as their interest in community relations and community revitalization.
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