Editor’s note: This article is the third in a four-part series exploring living wages in the total rewards context. This and other articles focus on how strategically providing employee benefits tied to the largest living expenses that workers face can help close the living wage gap.
When total rewards professionals take steps to ensure their organization is paying a living wage, they often start by increasing pay. If wage hikes aren’t in the budget or can’t fully address the issue, however, benefits designed to help employees with essential living expenses — such as housing costs — can be an effective alternative and strategic contributor to the employee value proposition.
Why is housing such a meaningful focus? According to the MIT Living Wage Calculator, it represents the top expense for single working adults, accounting for 30% of their income. It makes up a smaller amount — 17% — for households with two working parents and two children, but only because they have sky-high childcare costs to contend with.
Perhaps not surprisingly, then, the number of U.S. residents who worry about housing costs is significant — and growing. Last fall, a Pew Research Center pulse report on housing affordability noted that nearly 7 in 10 Americans (69%) were “very concerned” about the cost of housing, up from 61% in April 2023.
While the opportunity to help alleviate housing-related financial pressures is clear, devising an employee housing benefit designed to do just that requires careful consideration. It entails a realistic cost-benefit analysis in light of the strategy behind an organization’s total rewards package — and an evaluation that’s connected with employee population and location.
“It doesn’t come cheap,” David Wise, vice chairman of the Rewards practice at Korn Ferry, said of offering housing assistance. “The calculus employers have to figure is whether or not they can afford to provide a benefit that makes enough of a difference for employees in managing their own housing costs.”
Given the current strain between income and housing affordability — and its impact among all occupational levels — that calculation can be challenging to make, but the situation is not without solutions.
Access the series:
Housing is one of the largest costs for U.S. households across the income spectrum. A December 2024 study from the Joint Center for Housing Studies (JCHS) of Harvard University found that in 2023, an all-time high of 42.9 million households — including nearly a quarter (24%) of homeowners and half (50%) of renters — were “cost-burdened,” meaning they spent more than 30% of their income on housing costs. The study also found that 21.5 million households are severely cost burdened, devoting more than 50% of their income to housing, marking another all-time high.
“The top three things causing the housing crisis are supply, supply and supply,” said Brittany Webb, director of research at the National Housing Conference (NHC). The housing industry never fully recovered from the financial crisis and Great Recession of 2007-2009, she explained, and as a result, demand for housing today is far greater than the supply that’s available.
“Simple economics tells us that when that happens, the price of housing is going to go up,” Webb said. “We’re now in a situation where housing is extremely expensive — the most expensive that we have seen when compared to incomes.”
Webb noted NHC data shows that even higher-income workers, such as registered nurses, dentists and lawyers, often can’t afford to live in the metro areas where they work. “This is not a crisis that is only hitting service workers or hourly wage workers,” she said. “This is hitting everyone at every income level.”
For one thing, housing affordability challenges can affect companies’ ability to attract talent. “I hear more and more from employers that say they cannot hire people because people cannot afford to live anywhere near where the home office is,” Webb said.
Also, when employees are stressed about essential needs such as housing, it can affect the quality of their work, according to Wise, of Korn Ferry. “Housing needs must be satisfied before you can even start thinking about things like job performance,” he said.
For these reasons, and others, some employers are considering adding housing assistance to their benefits menu.
According to a 2024 survey by JW Surety Bonds of 710 employees and 310 employers, only 13% of employees currently receive help from their employer for renting or buying a home. However, one-quarter of employers said they were considering offering homebuying or renting assistance, or both, to their employees in 2024. Those that already do so planned to offer an average of $6,201 in assistance per employee. Reasons employers gave for offering these benefits included enhancing employee well-being, attracting new talent and retaining workers, among others.
When employees are stressed about essential needs such as housing, it can affect the quality of their work.
Improved retention is one of the biggest benefits employers report from providing housing assistance, NHC’s Webb said, given how expensive it can be to replace a worker who leaves. Enhanced employee trust and loyalty are additional payoffs, she added. “Happier, healthier employees can only benefit your whole workplace,” she said, “and housing is obviously a huge contributing factor of that.”
Indeed, employees in the JW Surety Bonds survey who received housing benefits from their employers reported higher levels of job satisfaction, mental wellness and productivity than those who did not. In addition, notable numbers of employees said they would be willing to forgo other benefits, such as a pay raise or extra paid time off, in exchange for housing benefits.
Although offering their employees housing benefits may be a new concept to smaller, private employers, a number of larger institutions — such as hospitals, schools and public organizations that employ sizable numbers of people — have offered these perks for decades. And a few tech giants, Google among them, are planning town-like, mixed-use developments as major employment centers with residential housing.
Typically, employer housing programs provide financial assistance — in the form of grants, loans or subsidies — to employees who buy or rent a home in a defined geographic area near their employer’s location. Because these arrangements can shorten commute times, such benefits can be particularly attractive to employees, potentially leading to higher retention rates. “Being able to live near where you work is a big factor for employees as far as if they’re going to stay at an employer,” Webb said.
Organizations that want to further reduce their turnover rates may choose to require their employees to stay employed with them for a certain amount of time for a housing loan to be forgiven in full or in part. “If you were offering, say, $20,000 to an employee, maybe you forgive $5,000 of that loan each year over the course of four years and, in return, they agree to stay with the company for those four years,” Webb explained. “You’ve got an immediate reduction in turnover.”
Such arrangements, researchers at Harvard’s JCHS point out, may carry some risk of complicating the employer/employee relationship, if housing-related disputes arise or for workers whose employment ends. Housing benefits involve a capital item. If an employee leaves a company, other benefits cease, but a housing benefit is likely to result in the need to recoup a portion of the benefit’s value, based on the terms of the assistance.
Since employer-assisted housing programs historically have been designed to incentivize employees to buy or rent homes near where their employer operates to shorten commute times, does that mean there’s no place for these programs amid work arrangements like remote and hybrid work? Not necessarily.
Christopher Stanton and Pratyush Tiwari, professors at Harvard Business School, published a paper in 2021 that found remote employees spend more of their income on housing than their in-office counterparts, due in part to the need for larger homes to accommodate workspaces. They suggested that companies consider offering housing premiums for remote staff to offset these increased expenses.
Something else to consider: For employers looking to curtail or phase out remote work, housing assistance could play a role in bringing remote workers back into the office. Nearly half of remote workers (47%) said they’d be willing to return to the office if housing benefits were part of the deal, according to JW Surety Bonds’ recent survey report on employer-based housing benefits.
Helping with down payments is another option for employers.
“The down payment is often the single biggest obstacle facing first-time home buyers,” according to Rocket Companies Inc. A recent National Association of Realtors (NAR) report found that the first-time homebuyer market share decreased to a historic low of 24% (down from 32% the previous year) between July 2023 and June 2024, and the age of first-time homebuyers hit an all-time high of 38 (down from 35 the previous year).
In light of this, Rocket provides up to $10,000 in down payment assistance to eligible team members working at one of its U.S.-based companies. The amount is determined based on the employee’s location and length of tenure with the company, and the funds can also be used to cover closing costs. The grant is available to first-time home buyers with at least one year of full-time tenure as a direct hire in good standing at an eligible company at the time of closing, and the home being purchased must be a primary residence in the U.S. Employees aren’t required to pay back the money unless they’re terminated for certain reasons or voluntarily leave within a year of receiving the grant.
Cleveland Clinic also provides its employees with home-buying assistance. It offers employees who work on its main campus forgivable loans of $20,000 that can be used either for a down payment on a house, closing costs or mortgage points associated with buying a home within a designated geographic area. The loan, which is secured with a 0% interest rate, is forgiven if the employee continues to work for Cleveland Clinic and occupies the residence for 60 months. The health system also offers an additional $10,000 loan to working families whose household income is less than $150,000.
Another option when it comes to offering housing loans is to use a revolving fund, Webb said. “In that case, you’re getting a loan out to an employee who is eventually going to pay it back,” she said. “Then that repayment is cycled back into this fund and given out to another employee.”
University of Southern California (USC) has two different programs that provide employees with housing subsidies: the Neighborhood Homeownership Program (NHP) and the Faculty & Staff Housing Program (FSHP).
Through the NHP, which is available to all full-time, benefits-eligible employees, workers receive monthly payments totaling a maximum of $50,000 or 20% of a home’s purchase price (whichever is less) over a seven-year period. The home purchased must be a single-family dwelling in an area around USC campus facilities and must be used as the employee’s primary residence.
The FSHP is reserved for tenured, tenure-track and clinical-track faculty as well as executive-level staff. Among the types of assistance employees can receive through this program are monthly mortgage or rental subsidies. (FSHP recipients can also receive a one-time grant toward a down payment or a non-forgivable loan.)
“As a result of offering housing benefits, USC benefits from an enhanced ability to attract and retain the highest-caliber faculty and staff in a highly competitive talent niche,” said Matthew Drag, faculty and staff housing administrator, who administers the programs. “Also, the university benefits from the NHP incentivizing employees to live close to the USC campuses.”
About 400 employees have received NHP benefits to date, according to Drag, and 2,600 have taken advantage of the FSHP.
While many housing assistance benefits focus on homeownership, Webb urged employers not to overlook renters when developing these programs. “If you are thinking that you are not going to be considering renting, that is just immediately eliminating a huge chunk of the workforce,” she said.
Providing monthly subsidies is one way employers can make sure renters are included in housing assistance programs. Through its Live Local program, for example, Audible provides all employees living in Newark, N.J. with a subsidy of $500 per month toward housing expenses.
Employers don’t necessarily have to go it alone when it comes to designing housing benefits programs for employees. In some locations, it’s possible to partner with a nonprofit, industry or community organization.
For example, the Cleveland Clinic works with Greater Circle Living, a housing incentive program for nonprofits in the Cleveland area. The partnership program has been around since 2008 and was relaunched in 2012. Use of the program jumped 585% between 2012 and 2019. Similar partner organizations can be found throughout the country, including in Baltimore, Chicago, Philadelphia and Silicon Valley.
Organizations that can afford to offer housing assistance to employees not only benefit from being able to promote a living wage for their workers, they also earn the loyalty of employees who see that their employers care about them. Such loyalty can extend to workers who choose not to participate in housing benefits, but see their employer helping their colleagues — promoting retention rates for all workers.
“By impacting something as fundamental to our lives as housing,” Korn Ferry’s Wise said, “companies are telling people they care about how they’re living beyond their time in the office.”