From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
But almost no common law jurisdiction has escaped the zoning-law trap, save for Texas. So I don't see it getting better any time soon.
I think this is the nub of it. Whilst increasing rents might look good in the context of an economist's "perfect" model, the reality sucks ass for actual human beings trying to make a living and have a decent quality of life. And I cannot overstate the importance of the latter.
I don't pretend to know what the answer is here, particularly not in the context of a US economic and legal milieu (I'm from the UK), but it certainly seems like there's a strong disparity in power between landlords and tenants (possibly fostered by the legislative environment) that needs to be addressed.
In practice, regulations and zoning stifle the operation of the “perfect” economic model and you get what we see now.
I agree with you that our economic model for housing and land ownership needs to change though.
The structural problem is that nothing prevents landowners from charging whatever the market will tolerate and so sucking all plausible value out of the people paying the rents -- even to the degree that renters are forced to work so much they do nothing else and should expect a shorter life. Since there's no structural impediment to doing so, if you pay the renters more, the landowners will take the value...at least eventually.
1: Some people work two jobs but only occupy one housing unit
2: Put more workers into each housing unit
3: New transport infrastructure to allow people to live farther away
4: Reduce the number of jobs
5: Somehow convince cities to build more housing
You either:
1. Build more housing. But where? Ask about any specific project, and people are usually against it.
2. Redistribute existing housing. E.g. does everyone that lives in London really need to be in London? By definition, it will be a painful solution for some and require the use of force. Making existing neighborhoods nicer to make them more attractive for a particular demographic also fall into this category.
3. Spread people/jobs/businesses around more. This includes encouraging remote working practices where possible (but this will not help the kitchen staff). Perhaps turn currently depressed areas into some forms of free(r) economic zones, where taxes are lower and there is no requirement for planning permission?
4. Get better transport links. If trains were fast, went on time, were reliable and comfortable, more people would take the option of commuting and they would commute further out.
What I cannot tell is how much of this is me just being pessimistic. I know it would take a long time and a lot of capital to own enough to make a large dent in housing.
Landowners supply land, one of the key inputs to the economy. It is part of the capital behind almost all economic activity. Trying running a business - or even living - without using at least some real estate. This is a very fundamental economic misconception.
Landowners don’t support zoning restrictions on their own land. And while many support zoning restrictions generally so do non-landowners (see surveys on the issue). Plus landowners are a minority of voters in the areas with the most restrictive zoning like SF and NYC.
Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
IMHO the core problem is granting local politicians strong powers over zoning because they can gain both support and contributions (legal & illegal) by manipulation zoning. Their powers need to be limited by strong property rights (like in some parts of TX).
A secondary issue in economic and financial illiteracy. There are so many misconceptions about this issue that people often act against their own interests.
Unfortunately I have to agree it is unlikely to get better soon but there are some hopeful developments.
Landowners don't supply land. That land is there whether these owners exist or not, and regardless of what they do or don't do.
Now, there is a system built up around denying access to land to anyone who doesn't own it or has the owner's permission, but that's a far cry from actually supplying land.
Contrast this to a baker who bakes bread. Without him that bread would not exist, so he actually does provide a service of supplying bread. Not so with the landowner, who creates nothing and whose ownership is a legal fiction.
>Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
I think you will find the majority of people who vote in municipal elections are home owners. The policy would cause zoning restrictions to increase their tax bill. Very quickly, I think we would find zoning laws would change. The real reason this policy is naive is it would be very difficult to actually get an accurate estimate of the counterfactual price.
If by 'Texas' you mean 'Houston', then yes. AFAIK most if not all other major TX cities have more traditional zoning laws.
A) So what should these landowners be doing according to you besides jumping off of a bridge? Are you against private property. Or did just exactly the set of evil people happen to be also be exactly the set of people who wanted to buy property
B) So what should we do, a Mao style repossession from everyone who bought land totally fairly according to the legal system they bought it in?
C) You honestly believe they are mustache twirling villains don't you?
B) See this portion of my comment: From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
C) Not really. Just responding to incentives. Like all of us.
The landowners should be powerless to stop other landowners building high(er) density housing. This is how most of the economy works - all industrial activities face grumpy opposition from someone, so the legal system takes a fairly protective stance on behalf of industry.
Most economic activity happens to the annoyance of someone who is suffering minor negative externalities (very minor, eg, the view isn't as good because there is a factory in it now). The issue that is being gone to is that landlords band together to form a sort-of guild that restricts what other landlords can do.
GP was quite clear that zoning laws were the core issue. If one or two landlords were allowed to band together to build an ultra-dense block of units in a high demand suburb then housing would become plentiful. This sort of thing is the most effective way of solving a housing problem.
So basically, in answer to your (A), landlords could support laws that allow landlords to more easily (and, critically, unilaterally in the face of opposition from other landlords) build the sort of housing people want.
That isn't as true at the low end. When there are a bunch of people making $200k-$300k, and a bunch of people making $20k-$30k, increasing wages for the former isn't going to cause as much rent competition since the latter already dwarfs buying power in the market.
Reducing income disparity is effective in the longer term by just making everyone a bit more equal in their buying power.
https://en.wikipedia.org/wiki/Law_of_rent
At this point I fully support the "nuclear option" against NIMBYs: the state needs to step in and override local zoning. Local zoning boards have proven themselves to be self-interested obstructionists who are only interested in bleeding cities dry by restricting supply to profit off real estate inflation. My ears are pretty much closed to any appeal otherwise. NIMBYs can go to hell.
I suppose this article is on the front page because it bashes tech companies though.
Also, in many (but certainly not all) restaurants tips are shared with back of house staff.
To be fair, and this is certainly the case in the UK for all but the 0.1% of absolute best restaurants, this is not a terribly high bar for Google and Facebook to stagger over.
Restaurant pay is, by and large (and even in restaurants that serve good food), not good at all.
That the tech industry's pay levels are, ergo, no problem at all?
However, you can compare the average wage of a line cook by looking at job listings and compare that to what was listed in the article posting, $23 an hour.
You will never see a left-leaning activist group representing the working class in California support a "let the market work" sort of policy like more for-profit development permits. Those ideas - public housing, rent control, increased supply - are pretty much the policy levers, and none are going to happen at scale within this set of voter preferences.
That's like, literally, the entire platform of the YIMBY movement. These groups are by and large left-leaning, and activist groups. They generally support more market rate or affordable (or both!) housing. Basically any development.
Is that really true? Elsewhere I have seen left-leaning activists advocate for higher density for-profit development housing so long as it is zoned to force developers to target all income groups in some manner, not just the most short term profitable ones. Is it really so different in California? You don't have to have a completely free market to have market based solution, after all. Which is a good thing as you're unlikely to ever see a truly free market there.
It would definitely solve a lot of issues, including controlled and balanced housing cost for the employees, group/public transport, and above all a vibrant community.
Is it a permit issue? Or something else?
https://www.mercurynews.com/2019/02/08/facebook-unveils-new-...
https://www.citylab.com/equity/2019/06/google-affordable-hou...
I get what you're saying, and I want to agree, but it smacks of the old Company Town that I grew up in, and the current FIFO/DIDO living conditions of remote Australian mining towns.
It is bad enough that so many FAANG employees are in trouble with immigration if they lose their jobs. The fear of losing one's home would be a pretty powerful force in labor relations.
Yes, it would be a good to build more housing, and it would be convenient to reserve some of that housing for your workers, and it would be a perk to subsidize that housing for your workers, but we'd have to wrap some serious regulations around them that would likely make Company Housing devolve pretty quickly.
Where you see a "vibrant community" I see an inexistent work-life balance and gaited communities. It would be a real life echo chamber, SV is already enough of a bubble as it is I doubt they'd need a FacebookVille or a GoogleVille.
We've got better communications and networks than any time in history. Why do software companies, which consume no raw materials and produce no physical product (both good reasons for setting up in a port city), all need to cluster in half a dozen spots? Think how much more runway you could get out of your seed funding if you set up shop in Missoula or Albuquerque, where you can rent a whole house for $1500/mo, can hire from the local university, and have beautiful outdoor recreation within a 15 minute drive?
Thats an actual political solution.
But companies will definitely start opening more and more satelite offices everywhere. The same salary for the same company in SF or Seattle yields 2-3k a month more for a software employee, and housing costs 1/2. Eventually the table turns and then SF won't be able to do anything about it.
> "When a company is trying to pay you the same rate that they pay in other cities, we can’t accept that." [said a line cook]
If it works for other cities, the problem clearly isn't the rate of pay. The problem is probably local politics of housing. Demands like that are not completely reasonable.
Ok. So if they earned 5 dollars a day, it would be ok because it works for cities in third world countries? I think it's obvious that the local cost of living is always a relevant factor in pay.
It is obvious that the cost of living is a relevant factor. The question is why are the costs of living higher in California than elsewhere? It isn't because rich people exist. It is because California doesn't have enough houses for the marginal house-hunter.
Paying the marginal buyer more isn't going to create more houses. If there wasn't a place for them to rent before, there still won't be when you pay them more. If it were possible to create more houses, the current prices would already be making it happen.
We (the people that work for these companies and the voters within the city) need to take a stand, and start lobbying these companies to get out of the bay area. Or at the very least, we need to start asking for much higher salaries. 600k to 800k needs to be the norm to live in palo alto to afford an average house (2.5M - 3.5M).
Personally, I don't think people are going to be able to do it. There's such a vast oversupply of labor, that the employers have a much stronger bargaining position.
There's still many other cities with plenty of tech people to hire. i don't see why all tech companies have to be in the 1 place where local voters don't want any residential growth.
For inspiration, would you please share an example of what you are personally doing?
Why not stop working for them and work somewhere else where you can live comfortably?
But I agree, you could replace FB with almost any company down there.
Shit, I'd be willing to bet that line cook at FB pays quite a bit more than fast food, etc.
It's also popular to pick on FB these days.
What's so special about the bay area? Surely if FAANG move somewhere else their employees will follow.
If there is a point where the tech industry starts to grow less and be more stable, you'll probably see some companies trying to make the move. But right now it'd be too disruptive to potentially lose 1/3 of your HQ employees in a move and screw up any growth plans you had.
According to the MIT Living Wage Calculator, he would be able to support himself on that but it'd be difficult if he had any dependents. http://livingwage.mit.edu/metros/41860
http://www.ktvu.com/news/sf-city-leaders-push-to-ban-company...
This is not a blueprint for the rest of the US. I hope voters take notice.
