USC studies impact of housing prices on businesses
An ongoing study from the USC Sol Price School of Public Policy has found that a lack of affordable housing can be a burden for employees and the businesses looking to hire them in Los Angeles.
The study was commissioned by the Los Angeles Business Council and is led by Raphael Bostic, a professor at Price who focuses on urban issues and economic development, and his team of graduate students. The team is surveying 30 businesses spanning the private and public sectors in fields such as health care, education and banking in Los Angeles to determine how a high cost of living affects their ability to hire high-skilled workers.
Preliminary findings of the study, which have already been released, were presented last Friday at the Mayoral Housing, Transportation and Jobs Summit to show the issues ahead of the election, Bostic said. Housing affordability initiatives such as Measure JJJ, which would impose minimum affordable housing requirements and labor regulations on new developments, are on the ballot on Nov. 8.
“We wanted to give people a heads-up that the survey was taking place, and we wanted to give a flavor of some of the things that we have started to find as we talk to employers across the region,” Bostic said. “We wanted to get it out in the context of this election, because there are a number of things going on in the ballot that are relevant to this context.”
Research from organizations such as California Forward shows that L.A. residents face a high cost of living, as 44 percent of households use more than 30 percent of their income on housing. But while this does not strongly impact high-level managers and other higher-paid employees, for whom salaries are adjusted based on housing prices, lower-level, unionized employees are having to leave their jobs and move away to more affordable areas.
“We don’t see the same sorts of packages being offered to people at lower levels,” Bostic said.
The study found that some businesses are “feeling the pinch” of employee losses. Bostic hypothesized that housing prices could be the reason, but as companies aren’t required to ask employees why they leave, it is difficult to determine the exact reason.
On the other hand, some of the respondents in the Price’s survey said that they had no trouble enticing employees to work in expensive areas, according to Bostic. Despite concerns about housing, the L.A. metropolitan area added 93,000 jobs last year, on average with most major metropolitan areas in the United States.
“They don’t find it difficult to find employees, and that there is a very competitive market,” Bostic said. “On some levels, it’s a buyer’s market when it comes to finding employees.”
With this survey, Bostic hopes to get a better sense of the barriers that exist for employees so that businesses can find ways to lessen the burden of increased housing prices. Bostic said that employees are most burdened by long commutes to work to escape areas where housing affordability is an issue. Firms are aware of this issue, and in Bostic’s survey some businesses said 30 to 50 percent of the people they employ are in the car for more than 45 minutes on their way to work. And as home values are expected to increase by 4 percent per year until 2020, according to a report conducted by Beacon Economics, the issue will remain pressing in the near future.
Bostic and his team have interviewed 14 out of the 30 businesses they selected for the survey. He hopes to finish the study by December.
Funding for the project comes from JPMorgan Chase & Co., California Community Foundation, Enterprise Community Foundation, Federal Home Loan Bank of San Francisco and Habitat for Humanity, according to an LABC press release.