L.A. Affordability Crisis Begins to Stunt Economic Growth

The affordability crisis in Los Angeles is beginning to stunt economic activity. The high cost of housing in Los Angeles is impacting employee recruitment and retention, especially in healthcare, hospitality and professional and technical services industries. Those three industries happen to three of the fastest growing sectors in Los Angeles, and affordability is impacting further growth. The Affordable Housing Crisis in Los Angeles: Impacts to L.A.’s Fastest Growing Companies is a repot released in by USC Price Center for Social Innovation in partnership with the Los Angeles Business Council Institute to analyze the impacts of housing costs on businesses. Despite the challenge of high housing costs, few companies have implemented strategies or programs to help employees with the housing burden.

“Employers all acknowledge that the high cost of housing is having a profoundly negative impact on employee recruitment, retention and quality of life,” Mary Leslie, President of the Los Angeles Business Council. “That’s why we found it surprising that the majority of employers we interviewed didn’t have any programs in place to help reduce their employees’ housing burden. We fear there will be a breaking point for those employees forced to choose between high rents, substandard living conditions or long commutes, and they are likely to pick getting out of L.A.”

With difficulty recruiting talent, some employers are opting to leave the market in search of markets that offer both talent and affordability. “Boeing moved a manufacturing facility from Long Beach to Seattle to escape Southern California housing costs. Toyota moved its North American headquarters to Texas in large part due to the high housing costs in the L.A. area,” explains Leslie. “A silver lining is the passage of Measure R and Measure M over the last 10 years, a transit investment building out a regional transportation system to connect more affordable housing to jobs centers. LABC’s immediate past chair from engineering firm Psomas relocated their headquarters from the Westside to downtown to access the transit hubs to shorten the majority of their workers’ commute.”

While affordability is an issue, there is also an extreme housing shortage in Los Angeles, both in the for-sale and for-rent markets. Employees of higher paying industries, like tech, media and entertainment workers, are affording these housing costs. “Only highly paid and skilled professional workers have salaries that are competitive to find housing, but are prone to longer commutes because they are having to buy further out from job centers,” explains Leslie.

To combat the high housing costs, Leslie says that it is imperative that companies in Los Angeles have a plan to help employees deal with the burden. “There are numerous resources that companies can offer employees, such as homebuyer education, relocation reimbursement, mortgage assistance and financial education,” she says. “The cost of housing should also be factored into a company’s broader business strategy, influencing decisions on compensation, benefits packages and policies, such as telecommuting or flexible hours.” Some solutions come at a nominal cost to employers, like education on public and private programs.

There are also public-policy solutions that could help to alleviate this problem. “From a broader public policy perspective, businesses should advocate for the construction and retention of affordable housing units and transit-oriented developments. The business community needs to acknowledge that housing is not a siloed issue,” adds Leslie. “It has a domino effect far beyond the housing market.”