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Companies Pay Workers to Live Close to the Office

Subsidies help firms attract new hires to high-rent areas like New York City and Silicon Valley

By: Rachel Feintzeig

Updated Feb. 23, 2016 11:09 a.m. ET

On weekend mornings, James Conelly heads down the street to the nearest, cheapest provider of coffee—his office.

The 28-year old data analyst lives less than a half-mile from his work in Mountain View, Calif., thanks to a $300 monthly housing stipend from his employer, Addepar Inc. Companies such as Addepar and Facebook Inc. are offering rent subsidies, house-hunting services and down-payment help for employees willing to live close to the office.

The perk helps these companies attract workers who might balk at moving to high-rent areas such as Silicon Valley and New York City. And, managers say, employees who live in the neighborhood often work late and stay with the company longer.

“The less time you’re spending on commuting, the more time you can spend focusing on work or focusing on your friends and family,” said Lissa Minkin, who leads human resources at Addepar, a wealth-management software company.

In 2012, after executives noticed commutes were taking a toll on employees, the firm began offering workers $300 a month to live within one mile of the West Coast office or within 15 minutes to the firm’s Manhattan outpost. Those who live slightly further out are eligible for $150 a month. Employees can use the money, which is taxed, for paying rent or a mortgage.

More than 40% of the company’s 172 employees live near work, Ms. Minkin says, and retention has increased over the past few years.

Facebook is known for giving employees several thousand dollars to move within 10 miles of its Menlo Park. Calif., campus along with apartment-hunting help. The company is seeing more of its workers move nearby, said Lori Goler, Facebook’s head of human resources.

Rising rents have become a hot-button issue for Bay Area companies and employees. Last week, a Yelp employee wrote an open letter to the company’s CEO describing how 80% of her pay goes toward rent. She was fired Friday, sparking a wide-ranging debate on social media, which CEO Jeremy Stoppelman also joined, over how much companies should take living costs into account when setting pay. A spokeswoman from Yelp declined to comment.

Surveys by Gallup have found that stress and worry rise as commute time increases, and those with longer commutes are more likely to suffer chronic neck or back pain, obesity and high cholesterol. A 2013 analysis of millions of performance reviews by workforce data company Evolv Inc., acquired in 2014 by Cornerstone OnDemand Inc., found that workers with commutes below 5 miles remain at their jobs 20% longer on average.

Mr. Conelly of Addepar says his previous 45-minute commute via train and skateboard left little time for other interests, like music. These days he plays in two bands and teaches the guitar. “That helps me stay a lot less stressed,” he says.

Workers who spend their free time together exhibit more trust, productivity and creativity on the job, says Loren Becker, who helps Zappos.com Inc. employees find housing near the online retailer’s downtown Las Vegas headquarters.

“If you want to spend time with people, you’re more apt to work harder,” Mr. Becker says. “There’s a chance you’re going to stay late and put in extra hours.”

He estimates some 300 Zappos employees have moved within 4 miles of the office since 2013, many in dormlike buildings owned by Downtown Project, the Las Vegas urban-renewal project backed by chief executive Tony Hsieh.

Yet some workers may find such programs “stifling,” according to Nancy Rothbard, a management professor at the University of Pennsylvania’s Wharton School who studies work-life boundaries.

She has identified a subset of workers she calls “segmentors,” who prefer to separate their professional and personal lives. Company policies that blur those lines lead segmentors to feel less satisfied and committed to their jobs—even if they personally don’t have to participate, she says.

The perk may also lose its pull as workers’ lives change.

From 2012 to 2015, Gusto, the maker of payroll and benefits software, paid employees $750 a month to live within a 10-minute walk of the office.

“Our inspiration for the housing stipend was almost back to our college days,” says CEOJoshua Reeves.

The share of employees using the stipend fell late in 2014, and last year many employees became parents. Gusto eliminated the benefit in May, putting in its place a maternity and paternity benefits package that it says appeals to a wider group of workers.

A group of Detroit companies including tech firm Compuware Corp. and lender Quicken Loans Inc. pay workers willing to move downtown as part of that city’s urban makeover efforts. Now in its fifth year, the program has motivated workers like Samantha Harris to move from suburban Inkster, Mich.

Ms. Harris, a 25-year-old senior training consultant at Quicken, says her hourlong commute each way frayed her nerves, and rushing out to beat traffic meant she sometimes left before finishing her work. She recently bought a house roughly 4 miles from the office, encouraged by a $20,000 forgivable loan from her employer. Before that, she rented an apartment 2 miles from work, enjoying $3,500 in rent help over two years.

Not having to plan her workday around snarled commutes has given her extra time, she says. “I got those two hours of traffic jam back into my schedule.”

—Nikki Waller contributed to this article.

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