Governors are increasingly confronting both workforce and housing shortages in a whole of government, complementary manner to not only ensure economic mobility but also to make sure businesses reach their economic potential.
The interconnectedness of the shortage of affordable and available housing with the shortage of workers is being felt in communities and regions throughout the United States. While the number of job openings has seemingly peaked, there are still more openings than unemployed workers, and the overall workforce shortage persists. Similarly, there continues to be a housing shortage as household formations have outpaced the number of homes being built over the last decade. In addition, new home affordability continues to drop with just 10% of new homes selling for less than $300,000 in the last quarter of 2022, down from 41% in the fourth quarter of 2019. With the understanding that these two realities are impacting one another, Governors are implementing solutions to address these shortages and ensure their states have the workforce and housing needed for a productive and stable economy.
“Lack of access to affordable housing will hold our families, our workforce, and our economy back, and there is important work ahead of us to ensure that local communities have the resources and infrastructure necessary to support a strong workforce and safe neighborhoods.”
Wisconsin Governor Tony Evers
“Workforce housing” is often considered to be middle-income housing, which is generally defined as an affordable housing option for individuals and families with wages between 80% – 120% of area median income. Those whose annual earnings lie within this range are often ineligible for subsidized housing yet lack the resources to afford housing close to where they work. When housing needs and workforce demands do not align, employers and jobseekers alike are left unable to reach their potential.
How Housing is Impacting Access to Good Jobs and Skilled Talent
The NGA Center for Best Practices regularly convenes state workforce leaders to discuss the most pressing issues faced by the employers and jobseekers they serve. Over the past year, housing access has repeatedly emerged as a major, widespread barrier to workforce participation and to employers’ ability to hire the talent they need. During the NGA Winter 2023 Workforce Symposium, several states with both urban and rural populations identified affordable housing options for the workforce as one of their state’s top challenges. In April, NGA’s Workforce Development Technical Assistance Program hosted a call with Dr. Jenny Schuetz, an expert in urban economics and housing policy for The Brookings Institution, and Samantha Spergel, who oversees the Anchor Employer Workforce Housing Demonstration Project for the Indiana Housing and Community Development Authority. During the call, both speakers highlighted the interconnected nature of housing, workforce development and the economy — and the opportunity at hand for Governors and states to address all three in a holistic, mutually beneficial manner.
How Governors are Addressing Housing Challenges to Improve Workforce Outcomes
Governors across the country are advocating for and implementing solutions to mend the gap created by workforce and housing shortages. Below are a few examples that illustrate the widespread action and leadership of Governors on these issues.
California – Governor Gavin Newsom, through the passage of a wide-ranging suite of legislation, has addressed barriers to middle-income and affordable housing by streamlining the building of new homes and ensuring local zoning laws do not prohibit denser development. To support these efforts, Governor Newsom launched the Housing Accountability Unit (HAU) in 2021, which is tasked with providing technical assistance to municipalities to aid their efforts to comply with state legislation mandating housing creation, including zoning and permitting.
Connecticut – In his proposed 2024-2025 budget, Governor Ned Lamont advocated for $100 million annually for workforce development housing to create 2,000 units for households with an income of 60% ‐ 120% area median income (AMI). In addition, Governor Lamont proposed $50 million annually for the Time-To-Own program, which provides forgivable down‐payment assistance targeted at households making less than 80% AMI. This funding is expected to assist the purchase of 1,250 homes annually.
Georgia – Governor Brian Kemp, in his FY2024 budget proposal, reallocates $35.7 million within OneGeorgia Authority to establish the Rural Workforce Housing Fund. This fund would allow local development and housing authorities to prepare land for housing development to support upcoming economic development projects and ensure Georgia’s rural workforce has access to quality work and affordable housing opportunities.
Montana – Taking a regulatory approach to the housing shortage in Montana, Governor Greg Gianforte has proposed and urged the legislature to pass several housing regulation reforms including SB323 to allow for duplex, triplex, and fourplex housing in city zoning and SB528, which would revise zoning laws to allow for accessory dwelling units. Governor Gianforte has also invested in the construction workforce, which requires continued development and upskilling to ensure staffing is not a barrier to housing development, especially as supply chain issues from 2021 and 2022 are expected to ease through 2023.
“Faced with a shortage of housing supply, hardworking Montanans struggle to own or rent a home, and to increase housing supply, we need highly-skilled workers.”
Montana Governor Greg Gianforte
Wisconsin – While visiting communities across the state, Governor Tony Evers highlighted several of the housing initiatives in his 2023-25 biennial budget proposal. These initiatives include a $150 million investment to continue the Neighborhood Investment Fund Grant Program, which provides grants to local and Tribal governments to invest in solutions to bolster the workforce for the future, including building affordable housing. Governor Evers also promoted his proposal to allocate $150 million for an Affordable Workforce Housing Grant program and $100 million to support a more robust Workforce Housing Rehabilitation Loan Program.
Constructing a Stronger Future
Expanding access to affordable and safe housing for all individuals and families will take time and requires a concerted, harmonized effort across all levels of government and with the private sector. Workforce and economic development leaders are becoming increasingly coordinated and involved in fostering housing solutions, providing insight on the interaction of workforce and housing and coordinating efforts to address shortages in both. As Governors lead the integration of workforce and economic development efforts, states have the opportunity to amplify the benefits to employers and the workforce by also harmonizing housing policies and programs. Federal departments and agencies are also recognizing the need to align housing, economic development and workforce efforts. For example, the federal CHIPS Commercial Fabrication Facilities Initiative’s Community Investment requirement gives applicants the option of satisfying the requirement through “financing or building affordable housing or providing housing vouchers, especially where housing access is a barrier to workforce participation and retention.” Tying workforce participation and housing availability together through funding or programming requirements, whether at the federal, state or local level, addresses the reality of their linkage and gives program administrators the ability to contend with both simultaneously.
Governors are increasingly confronting both workforce and housing shortages in a whole of government, complementary manner to not only ensure economic mobility but also to make sure businesses reach their economic potential. As the labor market continues to be stretched, several other issues, in addition to housing, have become even more linked with workforce development planning. To help individuals find and succeed in family-sustaining careers, Governors are also addressing other barriers to employment including child care, reentry for justice-involved individuals, and mental health.
This article was developed by Jordan Morang, Policy Analyst, NGA Center for Best Practices. For more information on Governors’ workforce development efforts please contact Rachael Stephens Parker.