Sizing Up America’s Workforce Renter Households
- Across all housing types, 28% of the nation's 111.3 million households fall under the ‘workforce housing’ designation.
- Forty percent of workforce households, or around 12.4 million, are renters, with single-family rentals (SFRs) and small multifamily making up the bulk of this subset.
- Workforce renter households constitute 31% of all small multifamily rentals compared to 24% in large multifamily.
Size of the Workforce Household Segment
Acknowledging the link between a strong labor force and economic growth, federal, state and local agencies have recognized the need to the strengthen ‘workforce housing’ options.
Workforce households, assumed to rent at prevailing market rates, are typically defined as those earning between 60% and 120% of the local area median income (AMI). This is specific to metropolitan areas due to wage differences across the U.S.
These renters often earn too much to qualify for affordable housing programs but not enough to easily access housing alternatives. As a result, they struggle to find attainable housing options. Market rents have risen faster than incomes for much of the past decade. Thankfully, the importance of this renter population and the affordability issues they face are gaining the attention and urgency they deserve.
According to the latest American Community Survey, an estimated 31.2 million households, or 28% of total U.S. households, fell within the workforce segment by year-end 2018.
Source: Chandan Economics; American Community Survey, 2018
Roughly 40% of the overall urban workforce, accounting for 12.4 million households, are renters. This 40% breaks down to 14% in SFRs, 13% in small multifamily (5-49 units), 7% in duplex-quadruplex (2-4 units), and 4% in large multifamily (50+ units).
Source: Chandan Economics; American Community Survey, 2018
Small Multifamily Plays a Critical Role
Looking within the rental market, the share of the workforce segment varies by property type. Small multifamily and SFRs lead the way. An estimated 4.1 million households, or 31% of the 13.2 million small multifamily households in the U.S., fall under the workforce AMI classification.
This share is similar for SFRs, with about 32% meeting the criteria. In contrast, about 24%, or 1.4 million households, living in large multifamily fall under the workforce category.
For property owners and operators, the above numbers show the critical role of small apartment buildings in catering to the workforce segment. This market is expected to see continued growth over the medium term.
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Note: All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error. Small multifamily, based on the ACS data, is defined as structures with 5 to 49 units.