Where will your employees live?
by Kate BavelockCape business owners have worked for years to manage the problems of a seasonal economy. Now that the average Cape Cod home costs $350,000 and the average rental goes for $1,000 a month, employers are faced with the dire problem of a workforce being driven away. To buy a house at the median rate, you would have to have a salary of $121,608. For the apartment, a $42,000 salary is necessary.
The commonwealth as a whole has been losing workforce population, particularly 20- and 30-year-olds who can’t afford to live here after college.
The problem hits lower-paying jobs such as landscaping, retail, teaching and town services. But it surprisingly has also hurt recruiting for top jobs such as doctors, school superintendents and town administrators. While these positions often pay more than $100,000 a year, professionals are lured away by the prospect of more house for less money elsewhere.
If solutions aren’t found immediately, the Cape’s entire economy will spiral into deep trouble. Already there are shortages of workers in key industries that affect people’s quality of life. Home health care workers, nurses, town services staff, retail and restaurant workers are all positions that are going unfilled.
Dorothy Savarese, CEO of Cape Cod Five Savings Bank, noted that maybe you don’t care that workers who make under $75,000 can’t find anywhere to live. But when your home is on fire and the fire station is understaffed and takes a long time to come, you will care.
“If you’re choking and there’s no one to come get you, you’ll care,” said Savarese.
What can business owners do to hire and retain staff in light of unaffordable housing? Cape Business captured these recommendations from our readers:
Advocate for multifamily housing
“Fear, mindset and communication” were the buzzwords Patrick Butler, a land-use attorney at Nutter McClennan and Fish, used to describe the unreasonable opposition to densely populated housing developments. Only communication can bring clarity to how these projects benefit rather than detract from a town.
Provide education and help finding programs that make mortgages more accessible
“We want to get somebody into a mortgage that they can afford today and will be able be to in the future with no unexpected fees and no fluctuations. There are an array of programs, like a municipal employees program, with longer terms, lower rates and little money down,” said Savarese.
Provide temporary or permanent housing
Cape Cod Healthcare provides some temporary housing for new hires to give them time to house hunt and save while they are doing it. Other employers have gone into the business of providing dorms and apartments for employees (see case studies below).
Provide monetary help with down payments
Grants and loans are an option. However, these are usually taxable to employee as part of their compensation package.
Several businesses collaborate to provide workforce housing
This is a good idea for small businesses that couldn’t buy a house on their own.
Freddie Mac Workforce Home Benefit Program
A toolkit backed by consultants that help employers offer homebuyer education, repayable, deferred and forgivable loans, matched savings accounts and grants.
Finding solutions: Two case studies
Bill Zammer, CEO, Cape Cod Restaurants
“Six years ago I purchased a large old hotel in Falmouth to house 50 seasonal workers. Now I house year-round workers, 110 of them,” said Bill Zammer, describing how he got into the landlord business to retain staff. Zammer’s restaurant group includes the Coonamesset Inn, the Flying Bridge Restaurant, Tugboats in Hyannis and the food service contract at the Pinehills Golf Club in Plymouth.
“I would not be in business if I didn’t do this,” said Zammer. “I would not be able to do staffing.” The year-round staff of 100 swells in the summer with 350 workers brought in, many from foreign countries. “The college students go back too early to get me through the season,” said Zammer.
Despite the necessity, it’s not always an easy relationship. The leases are dependent on employment, and Zammer considers himself very lucky to have never had a serious issue with eviction proceedings that favor the tenant. “You have to be careful as to whom you put in these houses,” said Zammer. There have been minor issues with neighbors over noise complaints, primarily because restaurant workers come home in a large group late at night. One of his managers has the responsibility of overseeing the employee houses.
He owns several and is looking to purchase more.
“It is very evident that you have to house people if you want to be in business on the Cape. Especially now with gas prices, you won’t easily find people willing to come from across the bridge.
Apartments above the shops are like in the old days. In Mashpee the new Marshall’s went in without housing above because of septic issues. That is very short-sighted,” said Zammer.
Smaller businesses will have to work together to achieve what he has done. Several can join to buy a group house for staff. “It amounts to survival,” said Zammer. “Businesses need to help themselves. The government is not going to help, the resources are not there.”
“Businesses will have to find a way to make it work.”
Sean Summers, owner, Cape Labor Solutions:
When Summers had trouble finding and keeping employees for his cleaning business, he created a new business, Cape Labor Solutions, to solve the problem. In the last three years, he has been buying property and housing workers for other companies.
“Eight years ago, I listened to my brother, an excavator, who was complaining that he had to buy a new earth moving machine for over $100,000. At the time I was struggling to find labor for my cleaning business. I realized that in order to find and keep good help, I was going to have to look at housing employees much as my brother looked at buying machinery: Just a necessary cost of doing business,” said Summers.
The first year he housed three employees in a small apartment. Now, 90 percent of his staff is housed in real estate he bought for that purpose. While Summers acknowledges it is a significant investment with debt and management costs, the rent employees pay and the tax advantages of real estate investment offset that.
“The advantage is obviously a stable and consistent labor force. I think many people would love to be able to offer their employees housing. With Cape Labor Solutions, I can both find the employees and house the employees for businesses that need labor during the busy summer and shoulder seasons,” said Summers, who also helps bring over H2B visa workers.
“The government can’t solve this problem; it must be done by the private sector. The housing slow down will allow for more reasonable purchases, but it will be offset by higher interest rates and higher carrying costs. I don’t think the Cape is going to return to an area where it is affordable for kids to come down and rent a place for the summer. Those days are gone,” said Summers.
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