Workforce or Middle-Income Housing: Analysis and Policy Considerations

Workforce housing is generally understood to be housing that is affordable and available for a population distinct from either low-income or upper-income households, though the term is not defined in federal statute or regulation. Proposed workforce housing definitions have generally considered at least one of three factors: household income, the occupation of a household member, and housing cost. Congress may consider a beneficiary household’s income in the definition and design of a workforce housing program. Several income eligibility thresholds are defined in federal statute for low-income, very low-income, and extremely low-income families. However, an income eligibility limit, or range, for middle-income or workforce-income families is not clearly defined in federal statute. Compared to low-income households, middle-income households tend to have lower rates of housing problems, such as high housing costs relative to income, but they may experience difficulties affording housing that meets their housing preferences, such as location, size, or tenure (owning versus renting). In addition to, or in place of, income-eligibility limits, policymakers may consider designing a workforce housing program with occupation-based eligibility. Several existing federal housing programs limit eligibility to households containing individuals employed as farmers, police, teachers, firefighters, and emergency medical technicians. Existing federal programs also provide housing benefits to federal employees in some cases. Occupation-based eligibility criteria and income-based eligibility criteria do not perfectly align due to substantial variation in wages. Congress may also consider the cost of housing in the definition and design of a workforce housing program. Existing federal housing programs generally base maximum housing costs on either individual household incomes, area median incomes, or area housing costs. To the extent Congress seeks to expand support for workforce or middle-income housing, policy options include supply-side subsidies (e.g., grants to subsidize construction), demand-side subsidies (e.g., down payment assistance to homebuyers), and incentivizing or supporting land use reforms, including facilitating missing middle housing. Other policy issues for Congress may include geographically targeting these policy interventions and facilitating filtering by increasing the supply of market-rate housing.