L.A.’s Tight Housing Market Bad for Business

Oct 19, 2018

By Mary Leslie and Gary Painter

(Los Angeles Business Journal)— Los Angeles faces a reality marked by economic extremes: Our unemployment rate sits at record lows with wages steadily rising, yet the vast majority of residents do not make enough to afford a home in the region. The problem is so acute that we now face one of the most egregious house-to-income price ratio discrepancies in the nation – worse than San Francisco, Seattle and New York.

With hundreds of thousands of new affordable units needed to meet demand, the L.A. City Council, the state Legislature and Gov. Jerry Brown have taken major steps to address the crisis, passing a slate of bills and legislative reforms to try to fast-track new housing. However, the enormity and widespread nature of the housing shortfall makes it nearly impossible for the public sector to fix it alone.

If workers have steady employment yet still can’t afford to put a roof over their heads, Los Angeles’ housing problem poses a serious threat to our regional economy. Companies cannot attract and retain workers if the best we can offer employees is a choice among sky-high rents, substandard conditions or long commutes. There’s a real need to pursue a public-private partnership approach, where the business community works on a parallel track to government initiatives with employers taking the lead on programs that meet the unique needs of their employees.

A new study led by USC’s Sol Price Center for Social Innovation in partnership with the Los Angeles Business Council Institute found most employers in Los Angeles’ fastest-growing sectors – tourism, healthcare, food services and technology – believe the high cost of housing is having a profoundly negative impact on employee recruitment and retention. Yet the majority of companies surveyed didn’t have any programs in place to help reduce their employees’ housing burden. More than half were unaware housing-related assistance was a possible solution.

The Martin Expo Town Center in West Los Angeles, currently under development, will bring 516 new housing units within one block of the Expo line station by 2021. Prior to the project’s approval, there were no apartments and approximately 10,000 workers within a quarter mile of the development. Numerous businesses and employees working in the vicinity sent letters to the City Council and attended public hearings to express their support for the proposed development, resulting in its successful approval. Thanks to their participation, the developers are offering priority leasing to individuals who work within walking distance of the new center, alleviating housing and traffic burdens in tandem.

Aside from advocacy, there are numerous tangible options to offer employees, such as homebuyer education, relocation reimbursement, mortgage assistance and financial education. The cost of housing should also be factored into a company’s broader business strategy, influencing decisions on compensation, benefits packages and policies, such as telecommuting or flexible hours. The most affordable, easiest solution is for employers to educate their employees on public and private programs currently available.

From a broader public policy perspective, businesses should advocate for the construction and retention of affordable housing units, leading the rallying cry in support of affordable housing and transit-oriented developments.

Businesses can exercise real influence within the housing debate – they can demand more than the average voter, and they should. Not just because it’s the right thing to do but because they have the most to lose.

When we recognize and address the housing needs of employees, then we will find we can retain the diverse employee base that’s essential for a thriving economy. This is not only beneficial for our businesses’ bottom line – it’s also essential for the health of our regional economy.

Mary Leslie is president of the Los Angeles Business Council; Gary Painter is the director of the USC Sol Price Center for Social Innovation and the Homelessness Policy Research Institute.

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