When Amazon set out to look for a location for its second headquarters, HQ2, it released a detailed RFP that made clear the type of community it felt would be best for supporting the growth of its company. Amazon specifically asked communities competing for HQ2 to clearly describe their quality of life, including information about “diversity of housing options, availability of housing near potential sites for HQ2, and pricing.” In essence, Amazon was saying that housing availability and affordability is important in attracting new businesses.
Why Housing is Important to Economic Growth
Over the past decade, the housing affordability crisis has worsened in communities across the country. Young professionals and working families alike increasingly have a hard time finding housing they can afford, particularly in neighborhoods that are well-connected to employment options, transportation, and other services and amenities. Rising housing costs, insufficient new residential construction and stagnant or slow-growing wages have led to the situation where teachers, police officers and nurses—as well as retail and restaurant workers, workers in creative industries, and entry-level technology workers—are forced to either commute long distances to find housing they can afford or double or triple up in shared housing to reduce housing costs.
When the local workforce can’t find housing they can afford, the entire community suffers. It has been well-established in the research that having access to affordable and stable housing in good neighborhoods is associated with positive health, education and economic outcomes for individuals and families. But having a sufficient supply of housing affordable to households all along the income spectrum is also critical to supporting vibrant and sustainable local economies.
There are several ways to think about how housing availability and affordability relates to a community’s economic health and prosperity. Lower-wage workers in the community will be among the first to feel the pressures from higher rents and prices if there is an insufficient supply of affordable housing. This can include workers in the retail and restaurant sector, the travel and tourism industry, and in many critical community serving occupation such as child care workers, nursing assistants and home health aides. In James City County, Virginia, for example, we found that the median wages in seven out of ten of the county’s largest employment sectors are not sufficient to afford the typical rent in the County, not to mention the typical price of a for-sale home. This includes many workers that are vital to the county’s tourism-based economy, including retail and restaurant workers and hotel front desk staff and housekeepers.
When there is not enough housing affordable to lower-wage workers, these workers are often forced to look for housing further out which creates longer commutes for those workers and more traffic congestion for everyone. Furthermore, as workers have a harder time living in the community, businesses have a harder time finding workers to hire. For example, in Asheville, North Carolina, restauranteurs are having trouble like never before in staffing their restaurants.
Workers in higher-wage sectors have more housing choices; however, even these households will face affordability challenges if there is not a sufficient supply of housing, at the right prices/rents and in the right locations in the community. Young workers are increasingly looking tomove out of high-cost areas. But even places with more affordable housing options are beginning to see the risks of not having enough housing to support their growing workforce. In the Des Moines region, which was named the 2017 Best Affordable Place to Live by U.S. News and World Report, elected officials and business leaders alike are beginning to recognize that the competitive advantage that their lower cost of living provides is not guaranteed. If the Millennials who have flocked to Iowa in recent years cannot find appropriate and affordable homeownership options, they are apt to leave to find the next best place to settle. And businesses will likely follow.
Even if workers do not leave the community, there will still be implications for the local economy of a lack of housing that is affordable to workers at all income levels. As workers are forced to spend more on housing, they spend less on goods and services in the local community. As a result, the local economy is less able to support diverse retail, restaurant, recreation and other amenity options.
As the Amazon HQ2 process illuminates, businesses are increasingly saying that they are looking at quality of life, economic diversity and cultural tolerance as they seek to locate or expand. A key component of that quality of life is housing availability and affordability for workers from the CEO all the way to the line worker or entry level salesperson.
If we can help you think about how to integrate your economic development and housing strategies, please don’t hesitate to reach out!