The House and Senate Armed Services Committees recently unveiled a $150 billion reconciliation package to bolster America’s defense posture.
While the bill includes much needed investments in industrial base and shipbuilding capacity upgrades, tucked away in the legislation is a less glamorous, but equally consequential and costly line item: $2.9 billion to supplement the basic allowance for housing (BAH) for service members. Consequently, nearly 2% of the bill’s topline goes directly toward addressing a single issue—housing.
The rapid rise in housing prices across the country is the result of a housing supply deficit in the U.S, recently estimated at over 4 million needed homes. This lack of housing supply is now a defense readiness issue. And this burden is increasingly a cost borne by the taxpayers.
The recent $2.9 billion BAH supplement, while laudable, is ultimately a reactive approach to the housing crisis. Instead of addressing root causes—insufficient housing supply in base-adjacent areas—Congress and the Pentagon continue to paper over the issue with demand-side spending on allowances. If we are serious about bolstering our defense industrial base, housing must be a part of the equation.
Housing crisis is having direct impact
Examples abound of the impact the housing crisis is having on our defense industrial base.
In Danville, Virginia, housing shortages have strained efforts to train shipyard workers through the Danville Accelerating Training in Defense Manufacturing, a new Navy-funded training facility that has already graduated over 700 students for placement across the defense industrial base.
The region is experiencing a shortage of over 600 homes; as a result, the program has needed to double up trainees in a single unit and place trainees in homes farther from campus. The cost of the housing is fully paid by the Navy.
Even more pronounced is the challenge facing Los Alamos National Laboratory in New Mexico. As the lab ramps up plutonium pit production—a cornerstone of the U.S. nuclear deterrent—it competes with a meager local housing supply in secluded Los Alamos, driving up costs for workers and the government alike.
In both cases, housing scarcity increases budgetary pressure on the military services and jeopardizes the training and retention of our defense workforce.
A way forward to fix the problem
In a time of growing military needs, a reactive housing policy from the Pentagon is no longer sufficient, particularly when continually rising housing costs eat into defense budgets. Base commanders and the Pentagon can take several steps to directly tackle the cost of housing that impacts budget spending and military families across the country.
First, the military can lease federal land directly to developers to build housing. The Navy’s redevelopment of federally owned land into mixed use housing in San Diego offers a powerful example of how the federal government can meet its own housing needs. Leasing federal land to developers to build housing for military personnel, which still requires environmental review through National Environmental Policy Act (NEPA), can allow the military to bypass restrictive local zoning and directly address workforce challenges and insulate the Department of Defense from high local housing costs.
Second, the Department of Defense should leverage its federal funding to incentivize base communities to zone and develop the needed housing stock for military personnel. The Pentagon has a $400 million annual defense community infrastructure program, which invests in infrastructure around base localities. The Pentagon should include the extent to which a locality has shown a willingness to allow the most important infrastructure in their control, i.e., housing supply, as a criterion for allocating this funding to different stakeholders.
Finally, base commanders can engage directly with local and state stakeholders. The Department of Defense has already intervened in state public utility dockets to advocate for the abundant and cheap base power, ensuring lower energy costs for bases.Base commanders should also directly engage with city councils and state legislators to ensure housing and zoning policies are adequately scoped to meet anticipated base personnel growth.
There’s no shortage of enthusiasm in Washington for capital expenditures for platform and production capacity—hypersonics, shipyards and factories. But none of it matters if the workforce building such systems can’t afford to live near the job site.
Traditionally, housing policy has been the domain of local governments. But as the U.S. enters an era of great power competition, the status quo cannot be held as sacrosanct. The growing mismatch between where defense investments are flowing and where workers can afford to live is turning housing into a national constraint.
If policymakers are serious about mobilizing the defense industrial base at scale, they must treat housing not as a peripheral concern, but as core infrastructure.
When local zoning and housing supply constraints begin to undercut federally funded shipbuilding, weapons production or plutonium pit production, the federal government has both the obligation and the imperative to act.
Charles Yang is the founder and executive director of the Center for Industrial Strategy, a bipartisan think tank developing policies to support U.S. industrial power.
