Consideration of workforce housing includes these four principal factors:
The term "workforce" is meant to connote those who are gainfully employed, a group of people who are not typically understood to be the target of affordable housing programs. Workforce housing, then, implies an altered or expanded understanding of affordable housing. Workforce housing is commonly targeted at "essential workers" in a community i.e. police officers, firemen, teachers, nurses, medical personnel. Some communities define "essential" more broadly to include service workers, as in the case of resort communities where one finds high real estate costs and a high number of low-paying service jobs essential to the local economy. Workforce housing may be targeted more generally at certain income levels regardless of type of employment, with definitions ranging from 50% to 120% of Area Median Income (AMI).
Mortgage lenders typically impose a limit of 28% to 36% of household income allowable for principal, interest, taxes and insurance (PITI). Pricing calculations aimed at renters, who represent approximately one third of US households, define a desirable workforce housing cost as at or below 30% of household income. Affordability is a function of the relationship between one's income and the housing costs of the area, which leads to variation in the percentage of AMI that may be used to describe people who might need workforce housing.
Most appropriately, "workforce housing" is located in or near employment centers. The expanding distance between gainful employment and housing made affordable by the income it provides has caused people to seek housing on the periphery of settled areas. This is cited as a contributor to urban sprawl, typified by traffic congestion, lengthy commutes, convenience stores and strip retail centers, and the rapid consumption of open space due to the building of new homes taking place at the outer edges of metropolitan areas where land is typically cheaper. While prevalent in US metropolitan areas, workforce housing issues may arise anywhere that land values or other restrictions on creation or availability of quality affordable housing units are constrained by zoning, market forces or physical boundaries.
Quality and Supply
In recent decades, federal programs have focused on providing housing subsidy or vouchers, or building and maintaining public housing projects for low income households. Housing affordability for all others has been supported mainly through programs for home buyers, especially through mortgage financing. Whether seeking to rent or to buy, in areas facing an identified shortage of workforce housing, such units as can be found in close proximity to workplaces are often of poor quality.
New housing built during the economic boom has included low numbers of affordable units, affordable units are often means-tested to exclude all but the poorest residents, and the less expensive housing tends to be built at a distance where land is cheaper. Proximity to work often means a tradeoff in quality of housing stock, school quality, and personal safety. In real terms, living in low quality housing or marginal neighborhoods is a tradeoff between access to income and access to resources such as rising home equity or quality education.