Daily Archives: November 6, 2015

Don’t Give Up

Lately, I’ve been reading a lot of Granola Shotgun, which has me thinking about a theme that frequently pops up in land use discussions, which I think should be called the “Give Up” Solution to housing costs. There are variations, but the core premise is that the high expense of living in coastal cities is an immutable fact, so many people – especially young people who enjoy urban or streetcar suburban neighborhoods – should give up and move to another city somewhere else. This other city is frequently a smaller former industrial city in the Midwest – Granola Shotgun calls them “an archipelago of West Berlins”. This may be a good option for some people, but for many others it is a bad option or not an option at all, and it is not a solution for our housing issues in coastal cities. To see why, let’s look at who this option works for and what opportunities are provided by smaller cities.

More than anything, the Give Up Solution is predicated on having several good options available. There is a particular group of people who have good options for high-paying employment in many parts of the country, yet are nominally poor enough to be inconvenienced by high housing costs: upper class and middle class professionals with skills that are in broad demand, and individuals with specialized skills whose work can be performed remotely from anywhere. The New York Times Real Estate section specializes in dramatizing the housing struggles of this class, again and again running variations on “Upper Class Professional Moves to Place that is Not Quite Brooklyn, Discovers It to Still Be Reasonably Livable”, almost to the point you’d think they’re being placed by the folks at realtor dot com..

Here’s an example from Granola Shotgun about the Over-the-Rhine neighborhood in Cincinnati. Instead of taking a job in San Francisco and paying a lot of money in rent, the subject took a job in Cincinnati, and bought and renovated an old building for far less money. That’s great! We shouldn’t begrudge someone for having multiple opportunities. We should be happy that there is new investment in cities that have seen decades of disinvestment. We should want every city and every region to succeed and improve quality of life for its residents.

While this option is available and viable for many people, it’s clearly not a solution for everyone. Some fields are very specialized and exist only in a few places, while some professional jobs, such as teachers, necessarily exist everywhere, though as mentioned, high housing costs are not as much of an issue for many professionals.

Every city, though, has many low-income jobs in service industries that cannot be relocated. Higher minimum wages are set to take effect in many California cities, but they are still well short of what would be needed to make these cities affordable. For low-income workers, it is not at all clear they could improve their lot by moving to a place where their wages might be even lower. Many may struggle to even pull together the resources needed to relocate. And in any event, it is pure fantasy to think that enough low wage workers could leave a region the size of LA to drive wages up and housing costs down to the point of affordability. The history of low-wage work would seem to suggest that unionization or government regulation, not labor scarcity, is what secures living wages in the long run. Urban economies depend on thousands of low-wage workers, and housing policy ought to work for those folks too.

The problems caused by high housing costs have economic consequences too. The logic is simple: to suggest that there are no negative outcomes from artificially inflated housing costs is to deny that agglomeration effects are real. (By “agglomeration effects”, we really just mean that when you get a bunch of people together, they can accomplish more together than they could individually.) Now, this certainly doesn’t mean that innovation doesn’t happen outside large cities. There are people with all sorts of different talents, from all walks of life, all across the world. But to say there are no negative effects from preventing people from congregating in cities is to deny the entire reason cities exist. This makes intuitive sense, and it is also backed up by a growing body of economic research by the likes of Hsieh and Moretti.

Beyond that, cities offer other benefits that are harder to quantify but no less real. For example, groups of immigrants often congregate in a particular neighborhood in their new homeland. The social networks developed among first generation immigrants are often crucial to finding employment, adjusting to new cultural surroundings, and establishing a new life. Another example is the anonymity afforded by large cities. For socially marginalized groups, the anonymity of the city is liberating; likewise, individuals who need a new start in life can reinvent themselves in a city in a way that is not possible in towns, whose intimacy is suffocating, no matter how walkable they are.

But even beyond that, you shouldn’t have to justify your desire to live in a city to anyone. Not to me, not to some NIMBY, not to some person in charge of a housing lottery. Scarcity is the basis of exclusion, and while it is terrible to use prices to exclude people, other methods of exclusion are hardly better. If you want to live in LA, that’s good enough for me. I can’t wait to see what you’ll do.