In a latter-day twist on the “company town,” employers across America are helping workers buy homes and pay rent in an effort to retain them and recruit new employees.
In an era when jobs are plentiful but housing is expensive, some businesses — including Xerox, Harley-Davidson and Computer Associates — offer low-interest or forgivable loans to help workers pay for homes.
Other employers provide rental subsidies or grants to cover closing costs of purchases. Private colleges such as Howard University in Washington and Yale University in New Haven, Conn., have bought and restored housing in distressed neighborhoods and given their employees financial incentives to move in.
Some government agencies and hospitals also use housing assistance as a carrot to attract new employees.
In San Francisco, one of the nation’s most expensive housing markets, the school district planned to build a 43-unit apartment complex exclusively for teachers until controversy stalled the project.
In a recent survey of more than 600 work force administrators, the Society for Human Resource Management in Alexandria, Va., found that 6 percent of employers offered mortgage and rental assistance. Another 3 percent provided cash to help with a down payment. While those numbers are small, several factors suggest the practice — long a perk of top executives — could catch on.
A booming economy has driven unemployment to a 30-year low. The resulting labor shortage has emboldened workers to change jobs more frequently. At the same time, housing costs have shot up in suburban and urban areas, where most jobs are.
Employer housing assistance not only helps defray the cost of living close to work, but it also can build loyalty.
“I wouldn’t be surprised if more companies are starting to think about this as a way of attracting people,” said Renae Broderick, who teaches compensation and benefits management at Cornell University, in Ithaca, N.Y. “There’s a labor shortage in just about every occupational category right now, and employers are trying just about anything just to get people in the door.”
Sylvia Byrd is one of nearly 30 Howard University employees who took advantage of financial incentives and purchased a refurbished rowhouse in a struggling neighborhood near the campus. Her friends were shocked to learn that the school helped her buy the $106,000 home.
“They kept saying, `The university is helping you?’ They couldn’t believe it,” said Byrd, a university administrative officer. “And then of course with the package they offered, that was even more astounding.”
Howard bought the properties in the LaDroit neighborhood in hope of one day expanding the school’s hospital. When the properties fell into disrepair, neighborhood complaints led the school to restore the rowhouses.
The school offered employees a forgivable loan equal to 7 percent of the purchase price as an incentive to move in. That worked out to about $7,420 for Byrd, who was considering retiring and moving to Cincinnati. If she stays in the home for five years and continues to work for Howard, she won’t have to repay the loan.
While the neighborhood isn’t perfect, Byrd said, the five-minute walk to work is a big advantage over the 45-minute commute from her former home in Maryland.
“Some people say, `That’s nice, but what about the neighborhood?’ I prefer to look at the positive. I live on campus. It’s very convenient,” she said.
In Milwaukee, Harley-Davidson Co. offers interest-free $2,500 loans to help employees buy homes in the distressed central-city neighborhood where the company is located.
“We think it’s in our best interest and in the area’s best interest to encourage private homeownership,” said company spokeswoman Kathleen Lawler.
In San Francisco, school officials had hoped to build an apartment complex where teachers could pay below-market rents. But neighborhood support disappeared over concerns about funding assistance from the U.S. Department of Housing and Urban Development.
“As much as we tried to explain that this was for teachers and teachers only, the neighbors’ perception of this project was that it was going to be low-income housing,” said Larry Del Carlo, business development director for the San Francisco Unified School District.
The opposition forced the board to shelve the development. But it could be resurrected if housing costs keep forcing teachers to leave the area, Del Carlo said.
On average, 14.4 percent of U.S. workers left their jobs last year, according to the Bureau of National Affairs Inc. That’s the highest percentage since 1981. Figures for the first six months of 2000 suggest the figure could reach 16 percent this year.
“We’ve seen a clear upward trend in (employee turnover) over the last two to three years,” said Michael Reidy, survey director for the bureau. “Intuitively, in a strong economy there’s going to be higher turnover because there are more jobs to go to.”
Job jumping is even more popular in high-technology fields. A Chicago head-hunting firm, Roy Talman & Associates, found that the average technology professional stays on the job roughly 13 months.
A January report by JobTrak.com, an Internet job posting service, found that 78 percent of college students and alumni said they planned to stay with their first employers no longer than three years.
Computer Associates, the world’s third-largest software company, offers employees at corporate headquarters in Islandia, N.Y., who are buying homes for the first time, a $2,500 grant to help with closing costs. Several hundred people have taken advantage of the program since it was introduced three years ago.
The company moved to Long Island about eight years ago in part because housing was cheaper than in neighboring New York City. But with other high-tech companies in the area, competition for employees is keen, and the grant program is a big selling point.
“We want people to be able to put down roots on Long Island, so we think it’s an attractive tool to help attract and retain people,” said Deborah Coughlin, the company’s senior vice president for human resources.
“In a competitive marketplace, we’re certainly faring better than most other companies,” though she could offer no figures.
HIGH-COST HOMES AN EAST-WEST AFFAIR
Here is a list of the most expensive places in the 48 contiguous states to buy a house, based on the average cost of a 2,000-square-foot home:
1. Atherton, CA, $900,000
2. New York, NY, $820,000
3. Menlo Park, CA, $700,000
4. Palo Alto, CA, $700,000
5. Long Beach, NY, $680,000
6. Los Altos, CA, $680,000
7. Saratoga, CA, $680,000
8. Santa Barbara, CA, $650,000
9. Malibu, CA, $600,000
10. Burlingame, CA, $580,000
11. Los Gatos, CA, $570,000
12. Boston, MA, $560,000
13. San Francisco, CA, $550,000
14. Greenwich, CT, $540,000
15. Weston, MA, $40,000
16. Cupertino, CA, $540,000
17. Mountain View, CA, $530,000
18. Keystone, CO, $510,000
19. Brookline, MA, $504,000
20. Cambridge, MA, $500,000
21. San Rafael, CA, $500,000
22. Santa Monica, CA, $500,000
— Knight Ridder/Tribune
