Over the past decade, Seattle's income inequality has reached record levels, home prices in the city have doubled, and homelessness has surged.
Now Microsoft, a company with deep roots in the Seattle area, is investing $500 million to ease the city’s housing crisis and inequality.
“If we’re going to make progress, we’ll all need to work together as a community,” said Brad Smith, president of Microsoft, and Amy Hood, chief financial officer of Microsoft, in a joint blog post. “Ultimately, a healthy business needs to be part of a healthy community. And a healthy community must have housing within the economic reach of every part of the community, including the many dedicated people who provide the vital services on which we all rely.”
Microsoft will be lending $225 million to private and nonprofit developers at subsidized rates for the creation and preservation of middle-income housing throughout six cities near its headquarters in Redmond, which is 16 miles east of Seattle.
The company will also lend $250 million toward low-income housing, which has become especially scarce in the region. Finally, Microsoft will provide $25 million in grants to address homelessness in the region, and the investments will be disbursed over the next three years. As the money gets paid back, the company will disburse more loans.
Microsoft began taking a closer look at housing affordability in 2018, according to the blog post.
The company found that although jobs increased by 21% in the Puget Sound region, where Seattle and Microsoft are located, housing units only increased by 13%.
This disparity caused housing prices to skyrocket, driving middle- and low-income families away from previously affordable neighborhoods.
Similar to cities throughout California, the tech industry has often been blamed for this state of affairs, with high-paid employees from companies like Amazon and Microsoft creating upward pressure on the housing market, according to the New York Times.
Early last year, Amazon led an effort to crush a tax increase that would have funded affordable housing.
In a briefing on the issue this week, Microsoft acknowledged that many of its workers were directly affected by the housing crisis.
“Of course, we have lots of software engineers, but the reality is that a lot of people work for Microsoft. Cafeteria workers, shuttle drivers,” Microsoft CEO Satya Nadella said. “It is a supply problem, a market failure.”
In major cities throughout the US, housing and rent prices have outpaced wage gains, leaving many people unable to make ends meet. Families that struggle to afford rent have to cut back on food, education, health, and other expenses.
Microsoft’s investments will likely put a dent in the housing crisis problem as more units are put on the market, but a long-term solution to the problem begins with efforts at the government level, according to experts.
“Even more capital will be required,” Smith and Hood wrote in Microsoft’s blog post. “And more critical still is the need for public policy changes to make it easier and more attractive to build affordable housing.”