Originally published in Crain's Chicago Business on July 16, 2007, MacArthur Vice President Julia Stasch discusses worrisome trends in Chicago's affordable rental housing stock.
Reasonably priced rental housing in Cook County is disappearing. For every unit of affordable rental housing being built, the county is losing two. Based on projections by DePaul University's Real Estate Center, if trends continue, our region, which had 352,794 units of such housing in 2005, will lose more than 75,000 units by 2020, a period in which demand is expected to grow.
In an era of expanding homeownership, some might be tempted to say, "Who cares?"
Even with homeownership at an all-time high, nearly everyone rents at some time in their lives. Currently, 40% of all Cook County households are renters — including recent college graduates on entry-level salaries, newlyweds saving for their first home, temporarily displaced workers, seniors on fixed incomes and families employed in the growing service sector.
Though some people rent by choice, most rent out of necessity. As a whole, renters earn less than half the income of homeowners, with approximately half of Chicago-area renters earning less than $30,000.
Several factors are combining to put these families in jeopardy. Condominium conversions, deferred maintenance, rising operating costs and expiration of long-term federal subsidies all contribute to housing losses.
To counter these trends, civic leaders from the real estate, finance, philanthropic, non-profit and government fields formed the Preservation Compact, with a goal of saving the 75,000 units of affordable rental housing that would otherwise be lost between now and 2020. The Compact, led by the Urban Land Institute and supported by the MacArthur Foundation, reflects a trend among city and state leaders to view affordable rental homes — most of which receive no government subsidy — as assets that enhance local economies.
It is in businesses' interest to adopt this view as well. According to the Northeastern Illinois Planning Commission, the majority of the region's jobs will still be located in Cook County in 2030. And, if the county follows national trends, the majority of its new workers will be employed in the service industry, which nationally represents 18.7 million out of 18.9 million new wage and salary jobs generated between 2004 and 2014 — jobs often held by renters.
Reducing employee turnover and its related costs and enhancing productivity are critical to any business's bottom line, and are especially critical issues in the service sector. But productivity declines and turnover costs increase when an employee faces a long commute, higher day-care costs for an extended workday or limited funds for health care, education, food and other expenses because of high housing costs.
With unnecessary costs and worker productivity at stake, this issue should be an urgent concern for Chicago-area businesses.