Jeremy Wiesen
Aug 22, 2017 · 3 min read

Companies Should Help Employee Housing — Creating Millions of Jobs and 3+% GDP Growth

There is a silver bullet for the U.S. economy that has never been considered:

Companies could voluntarily help employees with their housing needs through home loans and rental guarantees.

It would drive Gross Domestic Product (“GDP”) to 3% growth, create millions of jobs and enhance employee effectiveness and happiness.

Jamie Diamond, JP Morgan Chase’s CEO, recently said that many people who deserve to buy a home cannot under the present restrictive loan standards; but, he did not call for banks to lower their lending standards, nor did he suggest who could finance this extra home building.

Diamond cites a Treasury White Paper estimating that a trillion dollars of additional home buying would produce 1.5% in additional GDP growth.

This home loan program would not be appropriate for every employer or every employee, but would make sense for:

(1) those publicly traded companies that have a combined five trillion dollars of cash on their balance sheets, and

(2) employees who meet those companies’ chosen criteria.

The company programs would convert “lazy capital” on corporate balance sheets into a driver of GDP and jobs.

In the last ten years corporations bought back five trillion dollars of their own stock, 66% of all corporate earnings last year. One purpose was to increase the value of stock options held by the very corporate executives authorizing the stock purchases.

In order to drive the economy to 3% growth and beyond, we need companies to spend even a small amount of their profits on interest bearing home loans to their employees, rather than a majority of their earnings on making executive stock options more valuable.

This silver bullet will be a win-win-win for employees, the economy and the companies, too.

Companies would receive a market return for their home loans and guarantees, plus reap big gains in:

(1) soliciting and retaining employees, and

(2) achieving enhanced employee performance, for example because the employee could have a home closer to work.

Google is finally starting a large home building project for their employees. Google headquarters in Mountain View, California, offers every conceivable activity and amenity to keep employees happy at work; but at some point they have to go home, and the closer and more comfortable the better.

Middle income apartment housing is lagging, but with company guarantees, building projects would move forward. Think of all that school debt on millennials’ balance sheets that make real estate developers nervous that the rent will not be paid.

Whether guaranteeing a bank loan or a rental, involving the employer makes great sense because it is they who can best assess the employee’s economic future.

This silver bullet needs no legislative or executive branch action to put it in motion but it could use Washington’s help in organizing the business community.

This week the President had to shut down his advisory councils on which the CEO’s who served are those very people who could implement employee housing initiatives.

HUD Secretary Carson and the White House’s Gary Cohn could start an “Employee Home Ownership Program” along the lines suggested herein and bring in the U.S. Chamber of Commerce, local Chambers, the National Small Business Association and The Business Roundtable.

June was “National Homeowners Month.” Carson had some creative ideas to make home ownership easier but they still will not make much of a difference in achieving the President goal that, “hard-working Americans [should] enjoy a fair chance at becoming homeowners” which “also benefits communities, states and America.”

This will be a tough slog unless corporations become part of the solution.

The Trump Administration could use this tapping of corporate capital for the housing market to supplement its argument to Congress that 3-plus percent GDP growth will result from tax reductions.

Finding new sources of capital is a common part of running a company and needs to be applied to driving the economy.

Bottom line: This never before considered silver bullet for the economy and jobs is a free market solution devoid of government spending and tax reductions, and politics of any kind.

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*Jeremy Wiesen is Professor of Entrepreneurship (Ret), Stern School of Business/NYU. He was Chairman and Co-CEO of the Financial News Network acquired by CNBC in 1991. Contact Jeremy@Bizstart.com

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