What Is Workforce Housing?

What is “workforce housing” and why do we need it?

“Workforce housing” means housing for people who would like to live closer to their jobs but have trouble finding housing they can afford. Providing affordable housing options closer to jobs means that workers don’t have to commute long distances simply to find housing they can afford. That helps employers avoid losing trained, experienced employees who decide to look for a job closer to home. For instance, local governments would like their employees to live in and be part of the communities they serve, but housing costs are often a barrier.

Less fuel consumption and pollution helps the environment. Lower spending to move people between homes and jobs helps balance state and local budgets, and holds down taxes for businesses and working families. Less money spent on commuting helps incomes go further. A recent study by the Center for Housing Policy showed that people who lived further from their jobs find more affordable housing paid more for transportation than they saved on housing. Combined housing and travel costs for working families with annual incomes between $20,000 and $50,000 average 57% of total income.

Federal, state and local government programs to produce affordable housing are targeted to households who make less than 80% of median income, and some programs are for people who make even less. But in many areas, working families with incomes at or above median have difficulty finding housing they can afford without long, costly commutes to work. For instance, in 2006, the median sale price of homes in Dane County was $214,600, and most new homes had higher prices. It took a household income of $76,000 to afford the median-price home, while 80% of the Dane County median income for a family of four was $58,550. Even though home prices have been increasing at a slower rate, most new homes and many existing homes are still out of reach for large parts of the workforce.

But we need housing affordable to the whole range of incomes in Wisconsin’s workforce, from people coming out of W-2 to people who have been in the workforce longer but still can’t afford housing close to their jobs. We need housing affordable to people who work for the minimum wage and people who may not be able to work full time. We need housing for older adults, many of whom are in the workforce, as well as for younger people. And we need housing for people who rent as well as for people who can buy homes.

Workforce housing and more cost-effective development policies can work together. Since government funds for affordable housing usually can’t help people above 80% of median income, the housing itself has to be produced at lower cost. It saves money and land to build homes smaller than 2,550 sq. ft.—the average size of new homes in 2005—and to build homes on lots smaller than a quarter-acre or more. A variety of building types, including “attached housing” such as townhouses and two-family homes, also helps keep costs affordable. Building as close as possible to existing utilities, to avoid costly extensions over long distances, also saves money.

Is there a market for affordable workforce housing?

A new survey by the Urban Land Institute (ULI) found that almost two of every five employers with 100 or more employees were concerned that a lack of affordable housing near jobs was hurting their efforts to retain qualified entry-level and mid-level employees. Over half of the employers reported a lack of affordable housing near their locations. Over two-thirds of those companies believed the lack of affordable housing was a barrier to employee retention. More than half said that longer commutes increased stress on employees and caused more absenteeism and turnover. One in three of the employers believed it was important to be actively involved in helping employees gain access to affordable housing.

Workers also want to live closer to their jobs. The ULI survey found that two-thirds of low and moderate-income workers (those making less than $50,000 annually) said they would consider moving closer to work if affordable housing were available, or would be likely to change jobs to cut their commuting time. The numbers were even higher for younger workers (between 18 and 34). Over three-quarters of younger workers said they would move or change jobs if they could have shorter commutes. The longer the commuting time, the higher the percentage of workers who reported a desire to either find more affordable housing near their jobs or find different jobs.