The New Employee Benefit
Employers are increasingly dangling the carrot of housing assistance in front of employee recruits to lure them into high-cost housing areas.
The idea of employers assisting in affordable housing is spreading like a summer fire in Yellowstone, stoked by such enthusiasts as David Schwartz, guru of the American Affordable Housing Institute (AAHI) at Rutgers University, New Brunswick, New Jersey. This growing practice is being fueled by spiraling housing costs, labor shortages and employee recruitment and retention difficulties.
As employers find they cannot fill jobs, or must pay salaries far above the norm; as employees are lured away by enticing offers to places where housing is affordable, or refuse to move because of high housing costs; and as long-distance commutes cut into employee productivity; companies are recognizing the need for action.
Some companies are relocating, some are developing across-the-board housing programs for all employees, and some are launching into the housing business themselves. Meanwhile, local governments are casting around for private partners to compensate for the disappearance of federal housing support.
The need is acute enough to spawn companies such as MPC & Associates, Inc., a Washington, D.C.-based real estate marketing, finance and development firm devoted solely to the relocation problem. MPC & Associates has developed several employer-assisted relocation programs for companies and non-profit institutions, and works closely with lenders in the primary and secondary market. In the most expensive housing markets, such as Boston, San Francisco and New York, companies are either moving out or trying to cope by raising salaries and increasing benefits. Even with higher salaries that often surpass the national average, companies and institutions cannot attract and retain personnel.
R. Robert Linowes, chairman of the District Council of Metropolitan Washington, D.C., says, "[Employer-assisted housing (EAH)] is a growth area. Employers have no place to go to get needed assistance. When forced to import staff, they are faced with the problem of providing housing and have to take steps to make it available."
In other regions, acute labor shortages are not limited to executive personnel. In Boston, Bruce Marks, the housing director for the Hotel Employees and Restaurant Employees International Union Local 26 reports that 98 percent of its 5,000 members cannot afford to purchase a median priced home and 75 percent cannot even afford to rent one. The union recently proposed an amendment to the Taft-Hartley Act that would include the topic of employee's housing within permissive bargaining, along with health and child-care benefits. This bill has recently passed both the House and the Senate and is waiting for President Bush's signature.
Other industries see similar trends. Nurses and hospital personnel say they want to live closer to their jobs in northern Virginia. Teachers report that cannot afford decent housing in Hartford, Connecticut. Resorts have become desperate. Developers in Little Waterville Valley in southern New Hampshire say they had to build 33 three-bedroom condominiums to house its resort personnel while Snowmass, Colorado is developing 150 units of affordable rental housing to ease its problems.
The severity of the current crisis is largely due to housing price increases that have far outpaced salaries. For example, metropolitan New York's housing costs doubled in the five years from 1982 to 1987, while wages rose only 27 percent. The result: an outflow of substantial companies from the New York area including International Paper, J.C. Penney, The Grumman Corporation's 2,300 engineering and research staff, Mobil Oil and Lillian Vernon.
Meanwhile, relocated companies incur considerable physical and psychological costs, to say nothing of lost time and momentum. …