The business case is attractive. In addition
to aiding recruitment and retention (thus reducing training,
hiring and relocation costs), EAH can help reduce tardiness
and absenteeism, revitalize the surrounding neighborhood,
improve employee performance, strengthen families by addressing
their debt issues and enhance the company's reputation.
"It provides stability for the community
and the business," says Michelle King of Fannie Mae's
Community Lending Center. "When businesses get involved,
it enables employers to retain their workforce as well as
provide a very much needed asset: housing. It's a great exchange."
And one that is growing in popularity. According to the Society
for Human Resources Management, 12 percent of companies offered
EAH in 2003, up from 7 percent in 2002. Nine percent of employers
provided down-payment assistance in 2003, up from 4 percent
the previous year, and 15 percent offered rental assistance,
compared to 5 percent in 2002.
Fannie Mae started its own EAH program in 1991.
Employees must work 180 days to become eligible and remain
with the company for five years to receive full forgiveness
of the loan. So far, more than 2,500 employees have taken
Fannie Mae up on its offer.
Many employers choose to outsource the EAH program,
often to a lender or counseling agency better positioned to
offer home-buyer education and guidance. Some employers offer
time off to attend home-buyer classes or will pick up the
cost of such programs. Some offer both.
The cost of an EAH program to the employer is
more than offset by the savings accrued from reducing turnover,
recruitment, relocation and training. Fannie Mae estimates
that a 1-percent reduction in the turnover rate for a company
of 5,000 employees can save the cost of hiring and training
50 new employees.
Sweetening the deal
The Chicago-based Metropolitan Planning Council, a 70-year-old
nonprofit organization that focuses on land use and policy issues,
has helped establish more than 20 employer-assisted housing
programs since it took up the cause in 1999.
MPC helped convince the State of Illinois to
sweeten the incentives for employers by offering to return
50 percent of the costs of a company's EAH program in the
form of tax credits. Nonprofits such as public universities
and hospitals that do not need the tax credits are free to
sell them. At least two other states, Missouri and Connecticut,
also offer tax credits to companies that invest in employer-assisted
MPC housing associate Samantha DeKoven says
the tax credits make a good deal even better.
"Typical industry numbers will say that
replacing someone costs about the equivalent of their salary:
If someone makes $30,000, it will cost that to advertise,
recruit and train their replacement. If you invest say $6,000
in an employer-assisted housing initiative for that person,
the company gets $3,000 back through tax credits and saves
$27,000. It's a huge win."
MPC-initiated EAH programs run the gamut in
terms of benefits. Its largest program, the University of
Chicago, offers $7,500 forgiven over five years. Most offer
in the $2,500 range, but one employer located in a very expensive
housing market offers $15,000, some of it forgiven, to employees
who stay for five years.
There is a very real infrastructure component
to EAH in Chicago, where old high-rise public housing projects
such as Cabrini Green are being replaced with more mixed-income
housing. There are new initiatives on the drawing board that
would help working people purchase new housing in these new
developments, in the hope of avoiding the "projects"
stigma that afflicted Cabrini Green.
"This is sort of a one-shot deal to overhaul
and recreate public housing into good-quality, well-designed,
well-maintained housing that is integrated into the community,"
Employers would certainly prefer that their
employees live within walking distance to the office, but
in some locations that is unrealistic.
"There are two different views on this,"
says DeKoven. "In expensive housing markets, employers
recognize that their employees probably can't afford to own
a home there. But some, like the University of Chicago, have
a different angle. For them, it's more of a community development
initiative. They may be in a community that is in transition
and would like to see their community be stable places. If
our employees will live here and invest here, that will be
good for the employee and good for us."
DeKoven estimates that somewhere between 5 percent
to 10 percent of employees will take advantage of EAH programs,
making it impractical for very small employers. But for most
medium and large businesses, the benefits can greatly outweigh
"This isn't health care. This isn't something
that everybody needs. We think of it more like daycare, which
you may need at various stages of your working life. Fifteen
years ago, employers said daycare was the employee's problem.
Then they found out that if they offered it, their employee
base became more stable, and they had less issues with tardiness
and absenteeism. This is heading in the same direction."
Jay MacDonald is a contributing editor based