Escalating home prices in Santa Clarita and across greater Los Angeles are making it tougher for major local employers to recruit and keep top talent, a new study found.
Indeed, high housing costs are deterring top talent from even entering the Los Angeles job market, and making executive recruitment more expensive, according to economist Raphael Bostic, a professor at the USC Sol Price School of Public Policy and newly appointed head of the Federal Reserve Bank of Atlanta.
Bostic and a team of USC researchers surveyed major L.A. employers that collectively employ 200,000 people in key sectors including utilities, healthcare, education, government, engineering and finance.
Their report, “The Affordable Housing Crisis in Los Angeles: An Employer Perspective,” released in partnership with the Los Angeles Business Council, focuses on how the high cost of housing in the region has affected employers and puts forth key recommendations.
“This study shows that high housing costs are burdening our leading employers, either by having to develop special hiring packages, or subsidizing transportation and relocation costs,” Bostic said. “Though we have yet to see a critical mass of businesses priced out of the region, this is an area of concern.”
Nearly 60 percent of employers surveyed cited the region’s high cost of living as impacting employee retention; 75 percent specifically cited housing costs as an area of concern.
The impact of high housing costs is most apparent when employers try to recruit top talent: 64 percent of employers report that they factor in high living costs when negotiating employment packages for high-level hires.
To address the strain on L.A.’s limited housing supply, the report recommends examining successful employer-sponsored housing projects, such as the Los Angeles Unified School District’s affordable housing apartments, completed last year. It also makes a strong case for investing in higher-density housing at various prices near key transit centers.
Other recommendations included: reducing parking requirements for new development, identifying single-story buildings that could be modified to support housing, exploring innovative transportation solutions, and encouraging employers to engage with community and government groups around residential construction projects that could benefit their workers.
“This report provides compelling evidence for the need of well-designed, affordable homes connected to quality transportation, education and jobs,” said Jacqueline Waggoner, vice president and Southern California market leader of Enterprise Community Partners, Inc. “The burden of high housing costs not only impacts our quality of life, it threatens our economic foundation.”
The problem is not unique to Los Angeles — nearly every metropolitan area is burdened by high housing costs. Nationwide, more than 10 million households pay more than half their income in housing costs.
Besides impacting employers’ bottom lines, housing costs negatively affect employee satisfaction and productivity. Pushed out of housing markets closer to jobs, workers have to undergo long and taxing commutes.
Nearly every employer surveyed reported that more than 25 percent of their employees spent more than 90 minutes getting to and from work.
Marty Kovacs is the 2017 Chairman of the Santa Clarita Valley Division of the 9,600-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.