Why work has failed us: Having a job doesn’t mean you can afford a home

Across the U.S., from Silicon Valley to Detroit, incomes have not kept pace with housing costs. Now, it’s time for employers to do something about it.

Why work has failed us: Having a job doesn’t mean you can afford a home
[Source Photo: Al Fenn/Getty Images]

Every morning, Alex Day wakes up early in her home in Antioch, California, and readies herself for her two-hour commute to her job as a business analyst a downtown San Francisco-based startup that facilitates peer-to-peer lending. She’s worked there for just over two years. When she began as a payment solutions supervisor, she was making around $68,000 a year. She had been living in a five-bedroom home in Antioch with her husband, her two sons from a previous marriage, and two stepdaughters, but when she got divorced and moved out, she needed to find a place to live that she could afford on her own. It was a struggle. She eventually found a two-bedroom apartment for $1,700 a month, but her two sons (age 12 and 14) had to move in with their father in New Orleans, where there was more space and family support.


Though Day, 36 (who requested that her name be changed for privacy), is now making just under $90,000 after a promotion, she’s in a bind. Her lease is coming up, and her landlord wants her to renew at over $2,000 a month. “If I’m going to pay that much, I’d rather move in closer,” she says. An active volunteer with a number of nonprofits based in Oakland, she’d like to move there, which would put her closer to her network of friends and her job. But even with her recent promotion, rents in Oakland, which average $3,416 for a two-bedroom, are out of reach. So now, she’s in talks with her company about another possibility: Staying in her current role, but moving back to Las Vegas, where she’s from and where her family still lives. There, she could rent a two-bedroom, two-bath luxury apartment for around $1,300 (she checks the listings constantly). Perhaps then, with her family around, she could see her sons more, and live in a place where she doesn’t feel so disconnected from her life outside of her job.

Though she likes her work, it’s not affording her the opportunities and resources she needs to live comfortably or sustainably in the Bay Area, Day says. She stayed in her marriage longer than she wanted to, just to be able to afford a place to live, and right now, she’s feeling “between a rock and a hard place,” deciding whether to work remotely from Las Vegas, or remain. Her company has hinted that they want to promote her again, which would require her to stay, but she’s not sure even the career advancement and slight raise would make the life she wants possible, as everything around her grows more financially out of reach. “I’m just not winning here,” she says.

[Source Photo: Flickr user David Sawyer]

Housing and income: a disconnect

Day’s circumstances sum up a pernicious feature of employment in the U.S.: Having a job does not guarantee that you will be able to have a life, or a stable, affordable place to live. This is a departure from the era after World War II, when people (mostly men) returning from the war were entitled to housing loans and free college tuition that both alleviated the pressures of debt and helped them establish a vehicle for which to build wealth: owning an appreciating home.

This story is part of our series Why Work Has Failed Us, looking at why employment no longer provides the economic security it used to. You can read more here.

In a stark illustration of how things have changed, Curbed compared the salary and housing prospects of a teacher in San Francisco today to one in 1959. In 2018, a teacher in San Francisco earns an average of $72,340–just a little more than Day was earning when she started at LendingClub. But the average cost of a home in the city is $1.61 million, for which a typical 30-year mortgage would require monthly payments of around $7,900—more than double the median monthly rent for a one-bedroom. In 1959, a teacher in San Francisco earned around $5,200 a year, but the average home in California cost $12,788, and they’d be looking at a mortgage of $59 a month. Adjusted for today: They’d be paying off a $109,419 home–quite comfortably–on a salary of $44,493.

Changes have occurred over the past few decades that have broken apart what was once a given tenet of the American Dream. For one, both people and companies are moving back into cities from the suburbs, where they spread after the war, which is constraining land and housing in places like the Bay Area, which is not building anywhere near fast enough to keep up with the influx of jobs and population in the region (this graph illustrates the issue). But there’s also a more pernicious trend, says Ben Hecht, CEO of Living Cities, an organization that works with foundations and financial institutions to create more equitable cities. Most Americans have not had a meaningful increase in income or wages in 40 years. “It’s a pretty basic problem,” Hecht says, adding, though, that “it’s just one part of a multifaceted and complex issue.” As such, as people like Day are discovering, even if they do receive raises, they’re facing a housing market that has continued to grow at a steady rate of around 6% annually over that same time frame–and in cases like the Bay Area, as much as 14.5%. When Day was living in a small apartment in Oakland before moving out to Antioch, for instance, she was renting at around $1,500 a month; as soon as she left, she says, the cost of the place nearly doubled.


This type of unprecedented growth and volatility in the housing market is something that employers, largely, have failed to address or reckon with, and it’s led to a landscape where people like Day, who hold a good, steady job, are being priced out. Companies should work to address the wage stagnation that’s plagued ordinary workers for the past several decades, but there’s also more that employers can and should do to more actively address the housing needs of their workers.

[Source Photo: Flickr user David Sawyer]

Can employers help with housing?

The extremities of the U.S. housing affordability crisis manifest most clearly in places like San Francisco and Seattle, where booming industries–primarily tech–have pulled housing prices up as their well-paid employees price lower-earning residents out of the market. But these epicenters of unaffordability create spillover effects that are radiating to the rest of the country. Boise, Idaho, for instance, is now the fastest-growing city in the U.S., propelled in part by migration from those notoriously expensive West Coast cities. As jobs and people have moved into Boise–they have increased at rates around 3.58% and 3.08%, respectively–it’s put a strain on local housing markets. Currently, over half of Boise residents devote more than 30% of their income to housing. In places like Detroit, Pittsburgh, and Cleveland, where revival from decades of industry decline has been uneven and slow to take root, the scattered economic gains often leave lower-income workers struggling to afford a place to live.

In some of these markets, a tactic called employer-assisted housing has proven effective. In 2010, during the recession, Living Cities, along with the Hudson-Weber and Kresge foundations, helped three major employers in Detroit–Wayne State University, the Detroit Medical Center, and Henry Ford Health System–set up a fund to incentivize employees to move to the neighborhood, Midtown, in which all three institutions are located. The Live Midtown program, as it was called, spent around $1 million a year to help employees of the institutions “understand what their options were, and either give them down-payment assistance to buy a home, or rental assistance to live there,” Hecht says. The program reached a diverse group of people (40% black, 20% Asian, and 10% Latino) earning between $20,000 and $50,000 a year, brought around 1,000 new residents into the area, and has largely been considered a success.

A program like Live Midtown, though, cannot be applied universally. It worked in Detroit in 2010 because it was a struggling city: Vacancy rates hovered at around 19%, and even though home prices were relatively low, they were often still out of reach for people hard-hit by the recession. While Live Midtown succeeded in bringing the neighborhood up to speed–occupancy rates are now 99%, and home values have appreciated by at least 25%–it’s had some predictable consequences: People are now struggling to remain in place. So now a group of foundations has launched a subsequent program, Stay Midtown, to offer cash assistance to families at or below 80% of the area’s median income who are on the verge of being priced out of the neighborhood.

What’s happening in Detroit shows the pitfalls of a housing affordability cure that leans too heavily on addressing the symptoms, not the cause, of the issue. It seems simple enough: If people can’t afford to live where they work, give them enough money so that they will be able to do so. Companies in Silicon Valley have been experimenting with that approach for a while: Both Addepar, a startup that makes management software for investment firms, and the data company Palantir, offer their employees a monthly stipend to live close to their offices. While certainly, the subsidies help the individual employees who receive them, because they are not universal, they merely exacerbate the unaffordability problems for everyone else, which are caused by lack of supply and local mechanisms in place to ensure long-term affordability over time. For Day, even a stipend from her company to afford a place in Oakland would not be enough incentive to stay–for her, the whole region has grown too expensive for her to feel that she could live a sustainable life there.

[Source Photo: Flickr user David Sawyer]

A private sector responsibility

Fundamentally, just paying people to remain in place will continue to drive up housing prices to levels unmanageable for all but the super-wealthy unless cities and regions undertake a comprehensive reassessment of their current housing stock and plans, and readjust them to maximize affordability. “This will require a very different form of leadership–from both politicians and institutions and businesses that operate within cities–than we currently have,” Hecht says.


Under the leadership of executive director Derecka Mehrens, the nonprofit Working Partnerships USA founded Silicon Valley Rising, a campaign to engage regional companies in advancing that new type of leadership. SV Rising, Mehrens says, operates from a belief that powerful companies “should be engaging with the housing crisis at all levels.” Currently, companies like Google and Facebook are building housing in the region. As part of its campus expansion in Mountain View, Google is building nearly 10,000 units of housing that will be open to anyone; 20% of the units will be affordable. In Menlo Park, Facebook is adding 1,500 units (225 below market rate) as part of its new “Willow Village” development. Others like LinkedIn and Cisco are paying into a fund managed by another local nonprofit, Housing Trust Silicon Valley, that’s financing 10,000 new homes by funding local affordable housing developers who are building or preserving units for residents earning at or below 80% of the area median income. (Nearly half of the units created through the program will be for extremely low-income people earning 50% or below of the AMI.)

But current company strategies like these, Mehrens says, too often focus on housing production, when what’s needed is for companies with the means to consider the whole scope of their involvement in a community. Facebook has taken innovative steps in this regard. Before solidifying its plan to build a campus expansion in Menlo Park, the social media giant inked an unprecedented community benefits agreement (CBA) with local nonprofits and advocate groups to spell out how it will remain accountable to the people whose lives will be affected by the new development, which broke ground this year. In it, Facebook not only pledged to devote money to the new affordable housing development, but also established a tenant protection fund after hearing residents’ concerns about evictions, and set up a STEM training program for local residents to be connected with opportunities at tech companies like Facebook. This type of CBA “shows how companies can help address the systemic causes of the affordable housing crisis,” Mehrens says. “It should be policy that a municipality mandates a process through which community benefits are agreed to by a company.”

But the CBA, in some respects, is still too little, too late. Facebook agreed to the CBA after years of pressure from local advocacy dating back to around 2012, right after the social media company moved its headquarters to Menlo Park. The city, according to Public Advocates, a California-based nonprofit that works on policies to advance the rights of low-income communities, had a poor track record of meeting affordable housing standards, and granted a permit to Facebook without mandating it to meet any community engagement or benefits standards. Even with the CBA now in place, residents are concerned that it won’t be enough to mitigate the power that Facebook already has over local land-use decisions. (As a point of contrast, Palo Alto gave a permit to a school funded by the Chan Zuckerberg Initiative, the philanthropy founded by Facebook CEO Mark Zuckerberg and Priscilla Chan, on a lot adjacent to where a cluster of families living in RVs are being forced to evacuate their settlement.) What Mehrens would like to see is a set of community benefits standards drawn up in partnership with cities, residents, advocates, and companies before companies are even granted a permit to take root, to prevent the kind of overreach Facebook is exhibiting in Menlo Park.

That, however, will be an uphill battle. If Google is any proof, companies are still sometimes reluctant to engage with their surrounding communities to this extent. Google is planning a massive expansion in San Jose, which will likely bring 20,000 tech jobs, along with 8,000 to 10,000 service worker jobs. Vulnerable communities in San Jose, Mehrens says, are rightfully concerned that because Google has not agreed to sign a CBA like Facebook’s, the expansion will lead to further displacement.

[Source Photo: Flickr user David Sawyer]

Toward greater community accountability

What’s a cause for both concern and optimism to Mehrens is how much political clout large companies carry in today’s society. On the worrying side, they can, like Google, ink an expansion deal with no regard for community impact, or, like Amazon and Starbucks recently did in Seattle, force the repeal of a corporate tax that would’ve raised $48 million annually to address homelessness and housing shortages.

But on the other hand, companies wield the type of power that, should they decide to use it productively, could contribute to significant reforms at the state and local level that could ease living conditions for people across the economic spectrum.


“Companies need to get serious about supporting efforts at the state level to reform the tax system in a more equitable way,” Mehrens says. In California, for instance, the state is considering a revision to Proposition 13, which holds that all property is only reassessed for tax value once it’s sold. The potential change would require commercial properties to be continually reassessed and taxed at their full, current value–which would lead to employers having to pay a great deal more in taxes. It would, Mehrens says, “allow cities and states to capture dollars that could be used for affordable housing,” and she’s of the belief that companies need to fund campaigns and actively advocate for these types of measures. In November, California voters will decide whether to repeal a state law that limits cities’ abilities to pursue rent control laws, and San Francisco voters will also be able to decide on a ballot measure this year that would tax businesses with revenues over $50 million to build more affordable housing, which would affect as many as 1,000 companies including Uber, Dropbox, and Airbnb.

But how, when Amazon and Starbucks just pushed back on legislation that taxed them further–and when Apple earlier this year tried to appeal to property tax assessors to lower the amount it would have to pay on its Cupertino properties–could we expect large employers to not only accept such regulation, but actually advocate for it? Because not doing so, Mehrens says, will actually come to undermine them. When people like Day are considering leaving the region, and maybe their jobs, because they cannot afford to live, and when teachers, shopkeepers, janitors, and service workers–and even the business analysts–are forced out, what’s left, ultimately, is a shell of a community. “It’s a situation where the billionaires are forcing out the millionaires,” Day says. If a region does not have the depth of housing affordability to support a whole spectrum of jobs and people at various socioeconomic levels, it ultimately will not be able to sustain the companies that have granted them that wealth in the first place. Mehrens cites a troubling fact: Factoring in the skyrocketing costs of housing, service and blue-collar workers in Silicon Valley have seen their earnings drop by 19.9% and 24%, respectively. Many have had to relocate to the Central Valley and commute hours into work, or have to live in their cars. No truly livable community would accept that as a widespread circumstance.

There’s an irony at work in America’s affordable housing crisis, and that is that the most notoriously unlivable communities in the country–Silicon Valley, Seattle–are also the most aspirational. “Everyone always says that they want to be the next Silicon Valley, but really, they should look at Silicon Valley to understand what went wrong, and do their best not to replicate its mistakes,” says Alison Arieff, editorial director for SPUR, a Bay Area-based urban planning nonprofit. People tend to gravitate toward stories of corporate profit and growth, and only afterward pause to consider the fallouts. What if, instead of companies seeking growth at all costs–and cities selling out to attract that growth, as the Amazon HQ2 search demonstrated–they began from a place focusing on community benefits, human livelihoods, and housing affordability first?

That might look like a company and city inking a permit deal that actually anticipates potential displacement or housing affordability impacts for residents, and mandates actions–like setting aside funding for housing affordability preservation, or financing new affordable developments–to head them off. Or it might look like a private company funding a community land trust (CLT), a nonprofit that acquires land and oversees all development on that land to ensure that housing within the CLT remains affordable in perpetuity. Citi Community Development–the social impact arm of Citi–established an accelerator program to fund CLTs across the country, and recently became the first corporate investor in a land trust in Miami-Dade County, Florida, where many residents struggle with housing costs due, in part, to foreign investment in real estate driving up costs. CLTs are also taking root in markets like Denver, Buffalo, and potentially Houston, and companies operating within similar cities should take action now to preserve affordability before the Silicon Valley effect–as is happening in Boise–takes hold.

A failure on the part of profitable companies to contend with the negative externalities of their success will continue to eat away not only at the bottom rung of the ladder, but at anyone who’s not firmly on top. In Detroit, for instance, the focus on revival and growth precipitated a spike in the housing market that ended up leaving some of the original beneficiaries behind, because the original plan lacked the foresight to preserve long-term affordability. For Day, the unaffordability of her region separated her from her family, and is forcing her to potentially pass up a career opportunity because she can’t see a future for herself in a region that’s become an island of the uber-wealthy.

Companies and employers that participate in today’s economy–and the cities that play host to them–need to wholly reconsider the concept of growth, and begin looking not just at their bottom line and the value of their stocks, but at the health of the communities around them. Just as companies need to implement strategies to reverse the 40-year wage stagnation that Hecht cited as a contributing factor to the crisis, so do employers, regional politicians and planners, and residents alike need to begin speaking with each other to understand needs across incomes and sectors. These entities need to develop a way to support each other within an ecosystem, not as isolated entities fending for themselves. And that has to begin with recognizing the importance of housing for all, not just the select few who can fend for themselves in the market.


About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.


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