From: HR.BLR (Business and Legal Resources) 4/7/06

Rapidly rising home prices in some regional housing markets are making it more difficult to attract and retain labor. Reasons behind this trend include workers declining to relocate into expensive markets or seeking to move out of costly markets, workers changing jobs more frequently in order to reduce commutes on congested highways, and workers moving to obtain marginally higher wages in order to cope with housing costs.

Recognizing that high housing costs have “bottom-line” consequences, more employers are addressing this problem by offering employer-assisted housing benefit programs.

Housing benefits generally are offered as part of an explicit effort to reduce employee recruitment and turnover costs. They usually are provided in ways that enable employers to control year-to-year benefit costs and pay for the benefit through training and turnover savings and improved productivity.

Housing benefits also are being used as a tool to reconfigure the cost of other benefits while making overall benefits programs more responsive to worker needs and interests. Employer-assisted housing programs also can be used to improve community and/or employee relations and to increase corporate security and property values, all of which can have positive bottom-line effects.

Yet, despite increasing employer interest, it can be difficult to offer a housing benefit due to the lack of readily available benefit products. Employers generally offer benefits through third-party providers, so employers do not have to be doctors or actuaries in order to offer health or life insurance. With housing benefits, however, the lack of third-party providers and products has often forced employers to play the role of developer or mortgage lender. Obviously, relatively few employers want that responsibility or have the knowledge to perform these tasks, and this has slowed the growth of housing benefit programs.

It may come as a surprise to some employers that the public sector is increasingly interested in providing value, expertise, and administrative support to businesses for their housing benefit programs as a way of fostering economic development and housing opportunity.

Examples of public support for private sector housing benefit programs include:

State tax credit programs. Illinois and Connecticut are among the states that have created tax credit programs to share the cost of employer-provided housing benefit programs. Other states have similar pending legislation as does the US Congress (Senate Bill 1330).

State mortgage programs. A number of states through their state housing finance agencies offer special discount financing to those purchasing homes in response to an employer’s help in covering down payment or closing costs.

State down payment and closing cost assistance. Some state housing agencies will match employer contributions towards down payment and closing costs.

Matching closing costs grants. Local governments in Philadelphia, Baltimore and elsewhere are providing matching grants for closing costs and down payments to the employees of firms whose employers make similar contributions to their employers.

A facet of all of these approaches is that public aid to the employer reduces corporate taxes while public aid to the employee is, in effect, a tax-free benefit.

In addition to financial aid, public agencies are offering technical assistance to familiarize employers with employer-assisted housing programs and with employer support offering housing counseling programs to help employees become knowledgeable housing shoppers and homeowners.

As employers grapple with the often conflicting goals of controlling benefit costs, reducing recruitment and retention outlays, and making benefit programs more responsive to employee needs, housing benefits can provide an innovative way in which to address these challenges.


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