UW Prof argues for quality, affordable workforce housing

Inadequate workforce housing in Wisconsin contributes to homelessness, high living costs, long commute times and health risks, according to UW-Madison Prof. Kurt Paulsen.

Workforce housing, loosely defined as housing that is affordable to people in lower- and middle- income levels, is meant to allow people to work and live in the same area for a reasonable price.

Paulsen, an associate professor of housing, land use and municipal finance, explained that while most workforce housing is meant to house people within the workforce, it is also meant to house people who aren’t in the workforce and need affordable housing. 

As millennials reach an age when many will want to buy their first homes, baby boomers are looking to reduce their living costs because their income has decreased in retirement. These two largest age groups in the U.S. are driving a strong demand for workforce housing in Wisconsin.

“This will be one of the biggest challenges we face as a state: making sure that we’re providing adequate housing and homeownership opportunities for the millennials while also addressing the needs of a continuously aging population,” Paulsen said during a recent Legislative Council 2020 Symposia Series on Workforce Housing.

Housing prices in Wisconsin have been increasing over the past few years, but not as quickly as the rest of the U.S. housing market. Still, Paulsen said statewide deficiencies in workforce housing have affected Black Wisconsinites more than other races.

Between 2017 and 2019, Black Wisconsinites had lower homeownership across all income levels than any other race, Paulsen said. 

Lack of affordable housing in an area results in employers being unable to find workers to fill vacant job positions, Paulsen said. Workforce housing would allow workers to move to these areas and fill these jobs, reducing unemployment and growing businesses around the state. 

Paulsen also said increasing workforce housing would provide jobs for trade workers, increase skilled labor positions across the state and improve home ownership numbers.

Building smaller condos and townhouses for older people looking to downsize while limiting their housing expenses will open up larger, usually more affordable homes for younger generations that want to buy homes to start families in. 

Rehab projects could also provide quality affordable housing quickly by renovating older homes or rental properties to make them more energy efficient and safer. Removing mold, improving ventilation and getting rid of lead paint can all improve the health of residents while decreasing future health care costs. 

For example, cities can use tax incremental financing or TIF extensions to help homeowners afford housing improvements in a market where lenders are unlikely to lend money to renovate homes from the 1940s, Paulsen said. 

He noted that home prices are high right now because homeowners’ equity is relatively secure, but high unemployment numbers and evictions will likely lead to a drop in demand in the housing market, causing lower home values. 

Because of CARES Act funds and regulations, homeowners are largely financially safe, but renters are facing at least tens of thousands of evictions across the state, which will affect landlords and their income source as well. 

“The longer unemployment spells in the service sector, the more difficult it’s going to be for renters to stay in their homes and to move to other forms of housing,” Paulsen said.

-By Adam Kelnhofer