It strikes me that all the distortions referred to in this article would be significantly mitigated if housing supply were even somewhat responsive to housing demand. Housing shortages are strangling everything. Literal rent seeking.
If there was enough housing supply growth such that housing costs could stay in the 25-33% of income sweet spot in basically all localities people would be moving to where opportunities were, young people would be forming new households, I bet TFR would be a few ticks higher, economic growth would be faster, people would almost certainly be more chill in politics and you wouldn't have such massive distortions on what the definition of poverty is based on whether you adjust for local CoL.
Yeah, this ultimately wound up being a big negative side effect of shifting from public housing to Section 8 -- just giving poor families a voucher for "market-rate" housing meant that there would never be any downward pressure on rents. (Even in non-housing-scarce markets, try finding a rental for less than the amount of a Section 8 voucher. If they exist, they're dreadful.)
The real progressive neoliberalism (using demand subsidies to enable the poorer to buy things on the market without socializing any aspects of supply) has never been tried!
Agree, it would be nice for there to be some way to punish local governments for high cost of living. Skimping on transfers to poor people doesn’t seem like a good method though. Perhaps just a name-and-shame approach to highlight the worst metros on some of the CoL metrics and to specifically blame local officials for the mess they have created would be the way to go?
I dunno, I feel like Seattle would get the shaft here despite it really being the best coastal city for YIMBY (is it YIMBYtopia, no, but we really have upzoned a lot and the market is still reacting to it)
We gotta figure out ways to lower the cost of construction, though.
I know little about construction, but I've wondered whether construction costs could be dropped by adopting uniform federal or state level construction standards.
For example, this year I learned that there is a National Electrical Code (it seems to be updated every three years), but electrical codes are usually adopted at the local level; my city of about 20,000 people is on the 2023 code while our neighboring city is on the 2017 code. Electricity works the same way everywhere in the US and most electricians work across several cities; this should be standardized at the state level if not federal.
I have to imagine that if electrical work (mostly hidden inside walls) vary, construction standards for visible things diverge wildly. It seems that just standardizing a lot of this so that building plans and parts can be reused and workers don't have to be retrained would help with construction costs.
I think that ideally the federal government would basically offer an alternative to local building regulations. For example, the federal government could publish hundreds of plans for different types of housing (everything from SFHs to triplexes to tall apartment buildings) and just decree that any plan is legal to build anywhere in the US that meets minimum standards like lot size and soil compaction.
Yes! When Seattle first passed its ADU law it pre-approved a few plans for expedited permitting, but then it stopped after like 10 plans, which is absurd. Why not keep going?
The ideas around punishing residents of areas with zoning restricted housing supplies in order to loosen zoning have a lot of "ban fracking" and "stop pipelines" energy. "We don't have the actual political support to do the thing we want to, so let’s do this bank shot annoying thing in order to try to do it sort of through the back door."
Bully pulpit pressure and direct federal funding pressure seem like the legitimate way to do this. And try to pay off some Hollywood types to start making movies where the pro-development people are the good guys.
Yes! Maybe not housing ALL the way down, because poor people face a ton of problems that don't relate to housing, but housing a VERY LARGE PART of the way down.
The problem, of course, is when deciding whether to build more housing, current residents (who may oppose more housing due to construction noise/their house values going down/the "wrong" people moving in) have much more say than potential future residents. This is why, as many others have pointed out, housing policy should be set more at the state level than the local level, to avoid these perverse incentives.
Anecdote time: Here in sunny Irvine, CA (part of Orange County), Larry Agran just won election for mayor. One of his selling points was that he opposed housing development. I voted for Tammy Kim, who was for more housing and was endorsed by the Democratic Party to boot. And she still lost! NIMBY is strong.
Isn't Irvine kind of the poster child for conceptually unobjectionable NIMBYism because it's literally run by the Irvine corporation and thus is entitled to control its own development in a way that even Matt thinks is legitimate?
I believe people still own their houses in Irvine; my understanding is that the Irvine Corporation basically functions as a gigantic HOA. My take is that there's not a meaningful difference between anti-housing covenants from a HOA and anti-housing zoning from a city; a HOA is a government by another name. Both should be prohibited.
Now, if instead the Irvine Corporation owned all of the houses in Irvine and leased them out to people and had in its corporate bylaws that they would only allow SFHs, that would be legitimate. The Irvine Corporation can sell the land it owns, the Irvine Corporation can become insolvent and be sold off, so on and so forth. In this hypothetical the Irvine Corporation isn't a government.
"Now, if instead the Irvine Corporation owned all of the houses in Irvine and leased them out to people and had in its corporate bylaws that they would only allow SFHs, that would be legitimate."
I believe they basically do this, just in the form of a sale with a restrictive covenant rather than a lease agreement, although I am not an expert in Irvine.
My understanding is also that Matt thinks HoAs are legitimate because people can use private contracts to restrict land development in ways he thinks would be illegitimate for the government as a corollary of his libertarian framing of YIMBYism.
Ed.: This is the source of my Cliff's Notes version understanding of how Irvine works.
I believe most HOAs use restrictive covenants in property deeds, and that's the problem I have with them. The problems I see with restrictive covenants in property deeds is that they can limit uses of a piece of property forever, they bind property rather than people, and there's not a counterparty to negotiate with.
I wouldn't have a problem with a situation in which all the property owners in an area signed private contracts with one another promising to not build apartments. Contracts expire. Contracts bind people rather than property; new property owners aren't automatically bound by the previous owner's contracts.* Contracts also have a counterparty who can be negotiated with if changes are desired.
*Even if a private contract restricting land development contains a clause to the effect of "you promise only to sell your property to people who have also signed this contract" the remedy for a breach of a private contract isn't forcing the new property owner to sign the contract; it's to sue the old property owner.
“the remedy for a breach of a private contract isn't forcing the new property owner to sign the contract; it's to sue the old property owner.“
The fact that this makes the prospect of enforcing the agreement utterly worthless is why contracts running with the land — creating privity of estate in lieu of of privity of contract — are useful in the first place. If you don’t countenance specific performance running with the land you’re essentially saying that people can’t actually privately agree with their neighbors on development issues because there’s no remedy.
While I share your concern about some of the mischiefs of restrictive covenants, it’s important to note that someone’s ox is going to get gored on the coordination and transactions costs one way or another. Either you get an HoA ab initio and put the burden of dissolution on the people in it (which, since they’re HoA members, is at least plausible and a thing that happens) or you put the burden on getting all your like-minded neighbors together and crossing your fingers there are no holdouts—which is practically speaking extremely difficult.
I don’t personally *like* HoAs, but in part that’s because I think the answer to “how do you coordinate on keeping environs pleasant while maintaining an otherwise permissive system od freehold land ownership” has the obvious answer of “implement restrictive zoning.”
In my HOA, at some point we had to vote to renew the covenants. I'm not so concerned about them one way or the other, but my neighbor at the time said if they weren't renewed, he would sell immediately.
We should tie the federal mortgage interest deduction to local housing costs as a percentage of income for local, low-income residents, phasing it out in relatively high-cost areas. Subsidizing high-cost-of-living regions disincentivizes growth in housing supply. This approach could be generalized to the SALT deduction, broadening support among affluent individuals who might otherwise oppose new construction but could instead advocate for it.
Maybe the Republicans will do this for us—as they did w/ capping SALT deduction—to “stick it to the libs” in funding tax cuts for the rich?
Why is that? I can see middle income people not taking it, because the standard deduction got high enough to be bigger than mortgage interest for ordinary sized homes, but I would think that richer people are more likely to be paying a lot of interest? Or is there a cap on how big a loan can be to qualify?
My understanding is that the mortgage interest deduction is capped at interest on the first $750K of the outstanding mortgage debt. When you factor in the $29,200 standard deduction for couples, that leaves a pretty small slice of the population where the mortgage interest deduction is meaningful.
in addition most mortgages are from 2022 or before so the interest rates are very low. If rates stay above 6% for 2-3 more years you will see a big increase in the number of itemizers.
I agree, except that I do not think the fundamental political motivation against more housing development is a coalition of homeowners seeking to maximize the equity of their homes/renters not wanting their rent to rise. I think it is more hyperlocal externalities (parking!), inertia (dual exit building codes, for example), and too much push for below-market rate housing.
Easier said than done. In general, I have decent amount of agreement. I mean of course I do; the "housing theory of everything" is probably the thing that unites as on these comments and why were draw to reading Matt in the first place.
But I think you're underestimating the fact even in a world where NYC and SF really did massive upzoning and passed a lot of other measures that would actually let a lot of housing be built, the cost of living in both places would probably still be meaningfully higher than in WV. Despite right wing propaganda to the contrary, SF And NYC are likely to be superstar cities in short to medium term and quite frankly likely long term (London and Paris have basically been "superstar" cities for hundreds of years now). Which means even in a world of housing abundance, while housing costs would likely come down (or at the very least housing cost inflation would come down), housing costs in NYC or SF are still likely to be quite a bit higher than WV or say eastern Kentucky.
Second, even in a world where we made mobility much easier, there are going to be lots of people who stay right where they are. I'm currently listening to "Say Nothing"; a book about "The Troubles" in Northern Ireland*. One thing the book notes is how much consternation there was from the Protestant population in Belfast that the Catholic population while half the size was going to overtake the Protestant population due to higher birth rates. And so much of the tension can be explained by this fear (sound familiar to something today**). But the reason this never came to pass is Catholics emigrated out in large numbers for obvious reasons; discrimination in hiring, lack of political representation, actual oppression from British government, just general desire to seek better economic prospects. But it's not like everyone just left. People stayed for a variety of understandable reasons; not just commitment to the cause by banal reasons like this is the only place they knew, family was close by, general fear of change etc. Point being, you're still going to have a decent amount of people who "stay behind" in an area, even in a situation where there are like 50 different reasons to leave.
The big upshot is, even in a world of housing abundance the questions brought up in this post are going to matter.
*Book is about way more than that, but just focusing on what's relevant here
I think we're starting from a presumption that regional inequality is an ill that must be cured, which isn't obvious at all to me. In fact, the spatial concentration of certain industries seems like an indication of efficiency. Coal mining is never going to be as productive as tech, but we certainly wouldn't want to reallocate 50% of tech to West Virginia and make 50% of Californians go look for some coal to mine out there. On this basis, it seems appropriate for WV to be poorer than CA. Ideally, we'd just want the smart kids from WV to be able to move to CA if they got interested in tech, so maybe measures related to education/mobility are most appropriate. (But keep in mind that human capital is heritable through several channels...)
Anyway, each program is trying to accomplish some specific thing, so it's probably appropriate to just ask "what are we trying to do?" for each program and come up with a corresponding measure to decide how to allocate the money. It's not really clear that in most cases, the marginal benefit of allocating money somewhere is going to be related to some sort of inequality measure. (At least we haven't seen the evidence here.)
This was the subject of disagreement at a conference I attended by the Economic Innovation Group. The organization is especially focused on place based economic policies and the theme of the conference was essentially how the Biden admin could use industrial policies to rebuild some economically distressed areas.
The economist Adam Posen was kind of the turd in the punchbowl during the lead panel when he basically said, "Industrial policy is inefficient in of itself and especially inefficient if it's purposefully placed in economically distressed areas."
Double like. It’s understandable that some programs should allocate more funds to high-cost living areas based on their specific aims (e.g., SNAP). Other programs, however, should recognize migration as a key part of addressing the issue—for example, addressing high unemployment among non-college workers.
Yes, many people hold a “pie in the sky” dream that no one should ever have to move for employment and that instead all communities can sustain vibrant economies tailored to their current demographics. But at best, that’s a distraction, and at worst, it misleads individuals in these communities into avoiding the short-term pain of moving by falsely promising future economic opportunities without sufficient justification.
Great idea. More radical still (and no, this ain't likely to happen any time soon, but a fella can dream): render the NIMBY housing production veto unconstitutional, in that it's become a de facto, constitutionally suspect bar to interstate freedom of movement (a fundamental right enjoyed by Americans under the Privileges and Immunities Clause of Article IV ). There are lots of *naturally* occurring phenomena that will impede the ability of Americans to settle where they will: land values, general cost of living, wage differentials, availability of jobs, climate, and a million other things. But states aren't allowed to add to these by hanging out a "DO NOT ENTER" sign. And yet that's exactly what they're doing.
Let's put it this way: if a state legislature really did want to come up with a way to impede freedom of movement they hoped would be sufficiently "under-the-radar" to dupe the guardians of our constitution, making new housing illegal would be exactly how they'd do it.
I have a similar feeling about income inequality, but my opinion with regard to regional inequality is even stronger: IMO, the relevant metric should be poverty, not inequality. We want to get rid of poverty and not be so concerned about inequality (IMO).
Agree! Related, I’ve never seen an argument for an optimal level of inequality. It certainly isn’t zero. So as you travel upwards from zero, when does inequality become “bad”? It seems to me people have been adopting the Potter Stewart standard of “I know it when I see it.” That standard has been rightly mocked for decades. But the people who talk about income inequality have tacitly adopted the standard. Unless there’s a good analysis/argument I haven’t yet seen.
Isn't a major thrust of this piece that poverty is itself relative to local cost of living? Taking into account geographic variation is important to understanding who is actually struggling with material deprivation.
I can't speak for the rest of the Slow Boring commentariat, but I'm trying to accomplish two things:
1. Help people who suffer, especially those who suffer through no fault of their own: children born to poor families, people with disabilities, people who drew the short straw in the intelligence/talent lottery and hence don't have a hope of getting a well-paying job;
2. Make sure that there isn't a pissed-off, hopeless, angry lumpenproletariat/underclass that sees The Elites (like me, a college professor) as The Enemy and that is eager to vote for a douchebag con artist like Agent Orange.
Yeah, from experience (grew up in TN), telling these people to move *even to the next county over* (never mind to a big metro area in a different state) is more likely to lead to "pissed-off, hopeless, angry lumpenproletariat/underclass" than it is to solve any real problems. This gets you at least 50% of the way to explaining why ancestrally Dem parts of TN have swung violently right since 2000.
Inequality has gone down in the past few years and yet resentments against "the elites" have increased. Obviously Fox, etc, is a big factor, but reading this post, I really wonder if geographic inequality is not playing a role that I have been unaware of.
"Ideally, we'd just want the smart kids from WV to be able to move to CA if they got interested in tech, so maybe measures related to education/mobility are most appropriate."
But this already happens! The reason regional inequality is a concern is, well, the kids who aren't particularly smart or interested in tech who are left behind in WV are doubly screwed because the kids who are interested in tech probably grew up in CA because their parents (also interested in tech) moved there a generation ago.
What the post sort of glosses over is that a big reason geographical mobility is down is that the big geographical sort already happened. Post-WW2 the movers and strivers got promoted and moved by Big Corporation they worked for, which led to an already-budding concentration of the most skilled workers in a few large cities (and this consolidated even further with mergers, etc.) Then a handful of edge cases moved subsequent to that, but basically, if your family was still in Appalachia after all this then, well, let's just say that you're *probably* not the sort who'd be in any sort of real demand for high-end jobs that you can only find in a large city. (The "landed" class in rural areas is a bit different, though functionally a lot of them have become a rentier class that's increasingly absentee from the land that's been in their family for a hundred years until it's time to retire.)
Californians are pretty clear that they think white kids from elsewhere in the US moving there for tech jobs is morally wrong and that public policy should pump the brakes on it as much as possible.
The point about college towns having poverty seems much more like an illusion of poverty. College students may not be working so technically they make less money than people with jobs, but their lifetime earnings outpace the 60% of those who never finish college. Similar to the Biden Administration cancelling billions in student loan debt, the government could probably help others in need instead of focusing on the population that is well off or will likely be in the future.
More important than lifetime earnings, a good number of college students with no income of their own are supported by upper middle class parents.
However, there are some students who really are experiencing significant economic hardship, including things like homelessness, during their college years, even if they end up having higher income later. It seems worth addressing that, though it’s hard to identify who is relevant by just looking at their own income.
College student neighborhoods tend to really throw off neighborhood poverty statistics that governments have to use for various purposes. It's just not credible that material deprivation is higher in student neighborhoods where "60% live below the poverty line" than in a 50s-era rundown suburban apartment complex where "25% live below the poverty line" is a more or less true, concerning, fact.
Maybe a part of it, but even college students who are being financially supported are expected to live very modestly (roommates, cheap food, no car, etc). It's just that that's appropriate for an adolescent who will grow into a middle-class standard of living later, and more problematic as a long-term steady state for an adult who should be having a family of their own.
This seems very tangential to the point I was making which was that poverty statistics in college towns are a function of the fact that the numbers only count the amount the college student makes from their part-time job, if they even have one.
Oh good lord. Not only do I love a good Kolko SlowBoring post, but a Kolko SlowBoring post about spatial inequality!? Straight to my veins. Loved this post, can't wait to dig through the links. Thanks for taking the time to write it.
Mobility - I've updated from believing mobility is in longterm decline to: I'm not sure whether mobility is declining or not. This is due to a recent presentation by some Census researchers who compared spatial mobility across the CPS, the ACS, and IRS data. Basically, CPS response rates, particularly about mobility, are declining. And it seems like that's driving a lot of the mobility decline trend in that dataset (which, unfortunately, is our best longrun data source).
(I've only updated to not sure because I don't think a single conference presentation is a sufficient plank to rewrite my understanding of the research).
This isn’t the point of the article, but I’ve always found the decline in mobility to be puzzling, and it definitely runs against many people’s intuitions. Is there good research on why this is happening?
Actually, I think the decline in mobility IS the point of the article.
Rather than trying to send tax dollars into McAllen or Toledo in an attempt to turn them into Raleigh or Seattle, we'd be better off pursuing policies that would increase people's mobility. Policies that encourage more housing to be built and subsidize relocation expenses.
This is a good economist brain argument and it makes sense. But politically, telling people to abandon their generational home is a hard argument. So you do end up with inefficient place based policymaking.
Part of this is that material conditions in, say, rural Appalachia in 2024 are bad compared to a superstar global city like New York, but they're way better than the material conditions that existed in rural Appalachia in 1950 which were legitimately comparable to those of a third-world country.
I also think WW2 and the Cold War military buildup caused a whole lot of "forced" relocations that stuck, plus companies moving employees to a different office or corporate HQ was waaaaaaaay more common then than it is now.
We should probably be more "NIMBY" about rural areas and small towns then, if we accept that any community once established has to be maintained by the taxpayer in perpetuity.
I've had similar thoughts after spending time in stagnating parts of Michigan and Maine. The jobs in copper mining or commercial fishing aren't coming back, the best thing we can do is make it easy for people to leave.
This is kind of the, "Well, some people are unemployed so unemployment must be terrible no matter what the rates are" argument.
Some people will be unwilling to relocate. Some people will always be unemployed. Some people won't have access to healthcare no matter what you do. Some people will always have large families and others won't have kids no matter what you do.
None of that means that you can't change rates on the margin.
There’s a big appeal to the wide open spaces of exurbia, man. It’s just different. Staying at my mom’s in Northern Mississippi, not only can you get a lot more house for your money, but it’s just nice having some land and seeing the birds and wildlife. But even though it’s in a development, it’s not really a place for pedestrians or cyclists - there’s literally no infrastructure to make it safe for them, speed limits are 40-60 mph, and there’s no transit access within miles.
Given that eventually I want a home library befitting an English nobleman’s country estate, we’ll end up having to move to cheaper country at some point, I reckon. The plan basically is to retire back home after building equity in our overpriced Seattle house and getting vested in a higher Washington state pension.
I loved my time living in GA, and partying in FL. But we ended up in Oregon. I hate being sticky as soon as I walk outside from the humidity. That and water moccasins
Couldn't agree more. I've never been able to perceive the national interest in trying to shape settlement patterns. So what if some places empty out? It's probably good for the environment, and future generations of Americans might well appreciate living in a country that is still home to some wild and largely unpeopled areas.
Community is a good thing. Moving means giving up friends and seeing family much less often. I find it unsurprising that, as America has grown richer, we move less.
The U.S. has long been a nation of immigrants, including internal migration by people with birthright citizenship. Yes, balancing this with the preservation of communities and personal ties, notably family relationships, is important. However, we should never strive to become like the complacent and unambitious Europeans—communities from which many of our ancestors fled in search of the opportunities offered by the American project.
Fine if individual people and families choose that given the costs/benefits of their different options. Ie, cool to forgo material standards of living and vocational opportunities to maintain community. But that certainly isn't something that government should be subsidizing and any employment programs targeting these communities should focus on relocation.
I absolutely agree we shouldn’t pay people extra because they live in depressed communities. That’s perverse. Might even be best to subsidize moving expenses in extreme cases. For an able bodied man to remain jobless to stay in a town where the factory closed is obscene. Still, I question why a reasonably well off person would torch their social network and extended family for a 20% raise.
Considering how much we talk about the loneliness epidemic and the problem of a long-term decline in fertility rates, maybe subsidizing people staying in their hometowns isn’t the end of the world (though if you subsidize them too much the COL will adjust to compensate, negating these areas’ “advantage” as it is).
For those who are reasonably employed in economically depressed areas, it’s pretty easy to get yourself situated in life with a decent house at a younger age, which is why most of my sister’s friends in the Memphis suburbs live in big houses and have 2-3 kids, whereas that’s pretty cost-prohibitive for a Seattle or DC striver until later in life, especially if you don’t have family close by to assist with babysitting. Most of my hs friends moved away to higher COL places and most of the ones with kids have just one.
This is true but also worth remembering that once a beach head was established most of those immigrants brought extended family and arrived to support networks. We'll never get to a billion Americans without grandmas to help out.
Right—I’m not at all sure this is a bad thing! But I think what you’re suggesting is that wealthier people should also be less mobile, which I don’t think is what is observed (though I could be misremembering that—I don’t have a citation for it).
College graduates are more mobile. Of course, money makes distance matter less. Being able to comfortably afford airfare home takes much of the sting out of moving
college graduates now realize a larger wage premium for moving as well.
My understanding is this didn't used to be the case, if you were a tenant farmer in 1925 you could experience a large increase in living standards by moving to the city to work in a factory (in fact it may have been the case that farming wasn't even viable anymore). But if you had a comparatively elite job like running the local bank, you would not be able to replicate this success in the big city.
Nowadays if you have a more modest job like working as a waitress or something, the cost of moving to a high wage city is not going to be worth it because the cost of living increase will probably be larger than your wage gains not to mention the upfront cost of moving and leaving all your friends and family.
Correct. Moving is an excellent strategy for escaping poverty or near poverty. And if you can move up a social class by moving, I understand. Moving for moderate increases in income seems fraught. It prioritizes money over human connection.
Yeah, I saw this a lot in law school -- law students who'd gun for positions in NYC and D.C. that paid $160k starting instead of "settling" for the closer-to-home option that started at like $120k.
It's a great fact to know because it comes up surprisingly often in conversation and pretty much every normie gets it wrong.
But it doesn't seem *that* counter intuitive. Historically people often moved because they were desperate for work to feed their family. That's not really a thing anymore in the US
Yeah, people moving off the farms to cities because farm work sucked and they were legitimately in poverty is considerably different than trading a comfortable middle-class lifestyle in Memphis for a slightly-better-off upper-middle-class lifestyle in NYC.
I think we need to be careful with this conclusion. Mobility has been falling since at least the mid-80s, and high housing costs in some places should be causing more mobility from high cost to low cost, not less. (That doesn’t mean building more housing is a bad idea, obviously.)
It may also have to do with the fact that moving is expensive and hard. People end up stuck in higher cost areas because they can’t afford the move or are able to deal with the logistical issues. Maybe programs to help people relocate would be money well spent. If we can migrate people to where there are jobs and/or housing then maybe we can make progress. Also need to spend money on social services to help people administer their transition. Lots of good programs go unused because the recipients cannot navigate the process on their own. This is what is happening with programs to relocate children and their families to better schools in the same metro area. If you can get families with early elementary school aged children transitioned to a positive employment, education, and housing situation you can make lasting change. But, the transition is difficult so you need social services to assist. Same principle should apply with moving across town or across the country.
Yeah, this even happens within your life. Switching dorm rooms in college was less of a pain than moving apartments when you're young and single, which is way less of a pain than moving an entire fucking house when you're 40.
It's why I simply cannot understand people in their 40s who move to a bigger house. It seems not at all worth it to ensure that you're definitely going to have to move in your 60s when you suddenly have way too big of a house for two people.
Might I suggest that many people would rather muddle through than do some tough adulting - moving, education, eating habits, etc. Listening to a recent review of focus groups of voters, I have come to agree that lots of people are unserious. Also just read an article this morning in Washington Post about NC disaster relief and the low uptake on FEMA help. Don't know how you fix people who are uninterested in even locally (personally) trying to maximize their prospects much less move.
That's some of it. Though housing is clearly driving the more limited mobility we manage to hold onto (that is, people moving to where housing is cheaper).
Much of it is reduced geographic specialization. These days, every state is home to plenty of healthcare, finance, education, business services, tourism, logistics, hospitality, and so forth. So not as many people need to move to find a job as was the case decades ago.
Sure, if you want to be in the *commanding heights* of software or IT you'll probably consider the Bay Area (or NYC for finance, of LA for entertainment, or Boston for pharma, or what have you). But comparatively few Americans are in the top echelon in their fields.
Using today's qualifications for transfer payments, Tombstone would be full of people unable to make a living instead of a former ghost town living on tourism.
The numbers I saw pre-Covid was the during the Obama-Trump years, the mobility rate among upper middle class educated Millennials was at record highs, while the mobility rate among working class Millennials was at a record low.
I'd rather just focus on helping individuals. At least at the federal level, somebody making $30k with two kids should get the same amount of help in Mississippi as they get in Los Angeles. Ideally, state and local governments should top up the assistance in high cost states.
Having said that, I'm also not opposed to Matt's idea of "move the Census Bureau to Cleveland." I have no problem trying to stimulate struggling economic areas, nor am I opposed to offering carrots and sticks to high cost states to induce them to build more housing, but I don't think the federal government should effectively subsidize the housing problems in places like California. That is all.
Yeah I'm open to some carrots and sticks for sure. But "California is expensive therefore the welfare state should give CA residents more money" just lets CA policymakers off the hook.
It seems that each program should allocate its interventions geographically according to marginal result.
And there was zero discussion of whether any of these interventions actually work to raise the education or employment or income of the less educated, unemployed, or poor people who are more concentrated in one place rather than another and at what cost. This is not to deny that some kinds of transfers can have positive local spillovers so by all means take that into account in doing the cost-benefit analysis of programs.
If it costs 50k to raise someone out of poverty in NYC and 10k in Newark but we give people only 10k everywhere, is it a *good* thing there's an incentive for them to move to (shudders) New Jersey?
I’d like to see a study on how much geography immobility is due not to economic factors, but entertainment and non-family social considerations. For example if you wanted entertainment decades ago you pretty much had to go to a larger city. Plenty of a small town and rural options too but nevertheless numerically fewer options and less diversity of them. Are Netflix and TikTok substitutes such that the lifestyle impact and motivation is washed out at the margin?
Relatedly, LGBTQ status or any sort of "non-traditional" life choice is probably less likely to be an incentive to move than it once was. (Cf. the decline of dedicated gay and lesbian bars and other LGBTQ cultural facilities in urban areas.)
If somehow our marriage stopped being recognized in Texas we'd probably move out but the federal recognition of the things I care about most has made that unnecessary.
Privation is bad. Stunting human potential is bad. Geographic inequality is only as bad as the suffering it produces. As long as there are social guarantees, a thousand flowers can bloom.
Maybe the approach is wrong. Child poverty dropped significantly with the 2020-2021(?) Child Tax Credit and it’s not a targeted program. This was low overhead/bureaucracy program. Maybe targeted programs should be relegated to a 5-10% infill of a broad non-targeted program.
As a New Yorker, I’d like to see New York dwarf Tokyo and Shanghai as an urban behemoth of monstrous size and power, but that would mostly be done by sharply exacerbating the brain drain from places without subways and leaving them in even deeper relative obscurity and poverty. It’s also very clear to me that any federal program to achieve that end would not fly in a senate that represents the other 47 states (Connecticut and New Jersey are part of my NY Megalopolis), which is why it’s so deeply frustrating that NY politicians from city council on up have zero interest in growth
No discussion on state or local fiscal capacity. Shame. Many times, poorer places have less fiscal capacity to address local poverty issues, whereas high cost of living cities have self-induced problems--that shouldn't be subsidized IMO--and have the fiscal capacity to address should they choose to. If anything, my prior is that federal money isn't sent enough to low cost of living areas, which tend to be poorer. Open to changing my mind, but I didn't find this very convincing.
Good background on the different metrics and mixed signals they can provide depending on how you weigh each one.
sure, but when deciding how to allocate scarce resources to poorer members of society, we should up-weight areas that are poorer and down-weight areas that are richer but who's policy decisions have increased the cost of living both because of moral hazard but also because the people are poorer and have less opportunity in those communities and because the local and state functions that could help them have less capacity to do so.
High cost of living is a symptom of over-investment relative to local appetites for growth. Injecting more money is going to make things worse, not better, no?
At most you can change the set of winners by subsidizing your favored cohort so much that they can outbid high-end market incomes. But that hardly seems like a stable equilibrium. Fundamentally there are only two ways to increase anyone’s housing security: disempower and disenfranchise the community, or un-house someone else.
High cost of living normally means that the local population is less interested in growth than people outside that city are in living there.
(Should point out of course that "high cost of living" often only affects newcomers when you're talking about housing. Somebody who bought in San Mateo County in the 1980s is not spending nearly as much on housing -- hell, it might be zero if their mortgage is paid off -- than somebody who just got hired by Google.)
It strikes me that all the distortions referred to in this article would be significantly mitigated if housing supply were even somewhat responsive to housing demand. Housing shortages are strangling everything. Literal rent seeking.
If there was enough housing supply growth such that housing costs could stay in the 25-33% of income sweet spot in basically all localities people would be moving to where opportunities were, young people would be forming new households, I bet TFR would be a few ticks higher, economic growth would be faster, people would almost certainly be more chill in politics and you wouldn't have such massive distortions on what the definition of poverty is based on whether you adjust for local CoL.
It's housing all the way down.
This is one of the more persuasive arguments for building more housing I've seen us publish on Slow Boring. And we publish a lot of them!
Fun story: once Matt asked me to do research for a specific pro-housing take of his and I pointed out he had already written the take!
The flip side of adjusting poverty for CoL is subsidizing municipalities with bad laws that drive the CoL to insane levels.
Subsidizing demand while keeping supply constricted. Surely this time it won't lead to higher prices.
Yeah, this ultimately wound up being a big negative side effect of shifting from public housing to Section 8 -- just giving poor families a voucher for "market-rate" housing meant that there would never be any downward pressure on rents. (Even in non-housing-scarce markets, try finding a rental for less than the amount of a Section 8 voucher. If they exist, they're dreadful.)
The real progressive neoliberalism (using demand subsidies to enable the poorer to buy things on the market without socializing any aspects of supply) has never been tried!
This time is absolutely different. We’re gonna get a whole bunch of people to clap their hands and yell that they believe in fairies.
Agree, it would be nice for there to be some way to punish local governments for high cost of living. Skimping on transfers to poor people doesn’t seem like a good method though. Perhaps just a name-and-shame approach to highlight the worst metros on some of the CoL metrics and to specifically blame local officials for the mess they have created would be the way to go?
I dunno, I feel like Seattle would get the shaft here despite it really being the best coastal city for YIMBY (is it YIMBYtopia, no, but we really have upzoned a lot and the market is still reacting to it)
We gotta figure out ways to lower the cost of construction, though.
I know little about construction, but I've wondered whether construction costs could be dropped by adopting uniform federal or state level construction standards.
For example, this year I learned that there is a National Electrical Code (it seems to be updated every three years), but electrical codes are usually adopted at the local level; my city of about 20,000 people is on the 2023 code while our neighboring city is on the 2017 code. Electricity works the same way everywhere in the US and most electricians work across several cities; this should be standardized at the state level if not federal.
I have to imagine that if electrical work (mostly hidden inside walls) vary, construction standards for visible things diverge wildly. It seems that just standardizing a lot of this so that building plans and parts can be reused and workers don't have to be retrained would help with construction costs.
I think that ideally the federal government would basically offer an alternative to local building regulations. For example, the federal government could publish hundreds of plans for different types of housing (everything from SFHs to triplexes to tall apartment buildings) and just decree that any plan is legal to build anywhere in the US that meets minimum standards like lot size and soil compaction.
Yes! When Seattle first passed its ADU law it pre-approved a few plans for expedited permitting, but then it stopped after like 10 plans, which is absurd. Why not keep going?
Khruschchyovkas for America!
/s, but kinda - one could argue the modern 5 over 1 is just an American Khruschyovka minus all of the concrete
Sort of, although I would try to have dozens of different federal plans for each type of housing to prevent things from getting repetitive.
There would also be nothing stopping state/local government from offering their own pre-approved plans or approving plans from builders.
The ideas around punishing residents of areas with zoning restricted housing supplies in order to loosen zoning have a lot of "ban fracking" and "stop pipelines" energy. "We don't have the actual political support to do the thing we want to, so let’s do this bank shot annoying thing in order to try to do it sort of through the back door."
Bully pulpit pressure and direct federal funding pressure seem like the legitimate way to do this. And try to pay off some Hollywood types to start making movies where the pro-development people are the good guys.
Aren’t the richest areas of the country most able to do fiscal transfers locally ?
Yes, but the least able to do "housing transfers".
Yes! Maybe not housing ALL the way down, because poor people face a ton of problems that don't relate to housing, but housing a VERY LARGE PART of the way down.
The problem, of course, is when deciding whether to build more housing, current residents (who may oppose more housing due to construction noise/their house values going down/the "wrong" people moving in) have much more say than potential future residents. This is why, as many others have pointed out, housing policy should be set more at the state level than the local level, to avoid these perverse incentives.
Anecdote time: Here in sunny Irvine, CA (part of Orange County), Larry Agran just won election for mayor. One of his selling points was that he opposed housing development. I voted for Tammy Kim, who was for more housing and was endorsed by the Democratic Party to boot. And she still lost! NIMBY is strong.
Isn't Irvine kind of the poster child for conceptually unobjectionable NIMBYism because it's literally run by the Irvine corporation and thus is entitled to control its own development in a way that even Matt thinks is legitimate?
(I don't know MY's take on this)
I believe people still own their houses in Irvine; my understanding is that the Irvine Corporation basically functions as a gigantic HOA. My take is that there's not a meaningful difference between anti-housing covenants from a HOA and anti-housing zoning from a city; a HOA is a government by another name. Both should be prohibited.
Now, if instead the Irvine Corporation owned all of the houses in Irvine and leased them out to people and had in its corporate bylaws that they would only allow SFHs, that would be legitimate. The Irvine Corporation can sell the land it owns, the Irvine Corporation can become insolvent and be sold off, so on and so forth. In this hypothetical the Irvine Corporation isn't a government.
"Now, if instead the Irvine Corporation owned all of the houses in Irvine and leased them out to people and had in its corporate bylaws that they would only allow SFHs, that would be legitimate."
I believe they basically do this, just in the form of a sale with a restrictive covenant rather than a lease agreement, although I am not an expert in Irvine.
My understanding is also that Matt thinks HoAs are legitimate because people can use private contracts to restrict land development in ways he thinks would be illegitimate for the government as a corollary of his libertarian framing of YIMBYism.
Ed.: This is the source of my Cliff's Notes version understanding of how Irvine works.
https://slatestarcodex.com/2018/10/04/next-door-in-nodrumia/
I believe most HOAs use restrictive covenants in property deeds, and that's the problem I have with them. The problems I see with restrictive covenants in property deeds is that they can limit uses of a piece of property forever, they bind property rather than people, and there's not a counterparty to negotiate with.
I wouldn't have a problem with a situation in which all the property owners in an area signed private contracts with one another promising to not build apartments. Contracts expire. Contracts bind people rather than property; new property owners aren't automatically bound by the previous owner's contracts.* Contracts also have a counterparty who can be negotiated with if changes are desired.
*Even if a private contract restricting land development contains a clause to the effect of "you promise only to sell your property to people who have also signed this contract" the remedy for a breach of a private contract isn't forcing the new property owner to sign the contract; it's to sue the old property owner.
“the remedy for a breach of a private contract isn't forcing the new property owner to sign the contract; it's to sue the old property owner.“
The fact that this makes the prospect of enforcing the agreement utterly worthless is why contracts running with the land — creating privity of estate in lieu of of privity of contract — are useful in the first place. If you don’t countenance specific performance running with the land you’re essentially saying that people can’t actually privately agree with their neighbors on development issues because there’s no remedy.
While I share your concern about some of the mischiefs of restrictive covenants, it’s important to note that someone’s ox is going to get gored on the coordination and transactions costs one way or another. Either you get an HoA ab initio and put the burden of dissolution on the people in it (which, since they’re HoA members, is at least plausible and a thing that happens) or you put the burden on getting all your like-minded neighbors together and crossing your fingers there are no holdouts—which is practically speaking extremely difficult.
I don’t personally *like* HoAs, but in part that’s because I think the answer to “how do you coordinate on keeping environs pleasant while maintaining an otherwise permissive system od freehold land ownership” has the obvious answer of “implement restrictive zoning.”
In my HOA, at some point we had to vote to renew the covenants. I'm not so concerned about them one way or the other, but my neighbor at the time said if they weren't renewed, he would sell immediately.
We should tie the federal mortgage interest deduction to local housing costs as a percentage of income for local, low-income residents, phasing it out in relatively high-cost areas. Subsidizing high-cost-of-living regions disincentivizes growth in housing supply. This approach could be generalized to the SALT deduction, broadening support among affluent individuals who might otherwise oppose new construction but could instead advocate for it.
Maybe the Republicans will do this for us—as they did w/ capping SALT deduction—to “stick it to the libs” in funding tax cuts for the rich?
Very few people are taking the interest deduction anymore.
Why is that? I can see middle income people not taking it, because the standard deduction got high enough to be bigger than mortgage interest for ordinary sized homes, but I would think that richer people are more likely to be paying a lot of interest? Or is there a cap on how big a loan can be to qualify?
My understanding is that the mortgage interest deduction is capped at interest on the first $750K of the outstanding mortgage debt. When you factor in the $29,200 standard deduction for couples, that leaves a pretty small slice of the population where the mortgage interest deduction is meaningful.
in addition most mortgages are from 2022 or before so the interest rates are very low. If rates stay above 6% for 2-3 more years you will see a big increase in the number of itemizers.
I believe there is a cap
I agree, except that I do not think the fundamental political motivation against more housing development is a coalition of homeowners seeking to maximize the equity of their homes/renters not wanting their rent to rise. I think it is more hyperlocal externalities (parking!), inertia (dual exit building codes, for example), and too much push for below-market rate housing.
Easier said than done. In general, I have decent amount of agreement. I mean of course I do; the "housing theory of everything" is probably the thing that unites as on these comments and why were draw to reading Matt in the first place.
But I think you're underestimating the fact even in a world where NYC and SF really did massive upzoning and passed a lot of other measures that would actually let a lot of housing be built, the cost of living in both places would probably still be meaningfully higher than in WV. Despite right wing propaganda to the contrary, SF And NYC are likely to be superstar cities in short to medium term and quite frankly likely long term (London and Paris have basically been "superstar" cities for hundreds of years now). Which means even in a world of housing abundance, while housing costs would likely come down (or at the very least housing cost inflation would come down), housing costs in NYC or SF are still likely to be quite a bit higher than WV or say eastern Kentucky.
Second, even in a world where we made mobility much easier, there are going to be lots of people who stay right where they are. I'm currently listening to "Say Nothing"; a book about "The Troubles" in Northern Ireland*. One thing the book notes is how much consternation there was from the Protestant population in Belfast that the Catholic population while half the size was going to overtake the Protestant population due to higher birth rates. And so much of the tension can be explained by this fear (sound familiar to something today**). But the reason this never came to pass is Catholics emigrated out in large numbers for obvious reasons; discrimination in hiring, lack of political representation, actual oppression from British government, just general desire to seek better economic prospects. But it's not like everyone just left. People stayed for a variety of understandable reasons; not just commitment to the cause by banal reasons like this is the only place they knew, family was close by, general fear of change etc. Point being, you're still going to have a decent amount of people who "stay behind" in an area, even in a situation where there are like 50 different reasons to leave.
The big upshot is, even in a world of housing abundance the questions brought up in this post are going to matter.
*Book is about way more than that, but just focusing on what's relevant here
** By the way. Similar story today why certain predictions about what will or won't happen with Israel/Palestine don't come to pass. https://www.palquest.org/en/highlight/33689/palestinian-emigration-ii#:~:text=Estimates%20of%20net%20migration%20between,Arab%20Gulf%20(20.4%20percent).
Sounds like an interesting book!
It's excellent, and the narrator has a beautiful brogue that reminds me of my late grandparents...
Yes, I was always kind of pro. Growth pro housing, but after starting to read slow, boring.That has become much more important to me.
Getting rid of the red tape stopping home construction really could be a free win that would greatly increase economic growth
Linking this in case people haven't seen this article, which is a great longer form version of this comment with data:
https://worksinprogress.co/issue/the-housing-theory-of-everything/
I think we're starting from a presumption that regional inequality is an ill that must be cured, which isn't obvious at all to me. In fact, the spatial concentration of certain industries seems like an indication of efficiency. Coal mining is never going to be as productive as tech, but we certainly wouldn't want to reallocate 50% of tech to West Virginia and make 50% of Californians go look for some coal to mine out there. On this basis, it seems appropriate for WV to be poorer than CA. Ideally, we'd just want the smart kids from WV to be able to move to CA if they got interested in tech, so maybe measures related to education/mobility are most appropriate. (But keep in mind that human capital is heritable through several channels...)
Anyway, each program is trying to accomplish some specific thing, so it's probably appropriate to just ask "what are we trying to do?" for each program and come up with a corresponding measure to decide how to allocate the money. It's not really clear that in most cases, the marginal benefit of allocating money somewhere is going to be related to some sort of inequality measure. (At least we haven't seen the evidence here.)
This was the subject of disagreement at a conference I attended by the Economic Innovation Group. The organization is especially focused on place based economic policies and the theme of the conference was essentially how the Biden admin could use industrial policies to rebuild some economically distressed areas.
The economist Adam Posen was kind of the turd in the punchbowl during the lead panel when he basically said, "Industrial policy is inefficient in of itself and especially inefficient if it's purposefully placed in economically distressed areas."
Double like. It’s understandable that some programs should allocate more funds to high-cost living areas based on their specific aims (e.g., SNAP). Other programs, however, should recognize migration as a key part of addressing the issue—for example, addressing high unemployment among non-college workers.
Yes, many people hold a “pie in the sky” dream that no one should ever have to move for employment and that instead all communities can sustain vibrant economies tailored to their current demographics. But at best, that’s a distraction, and at worst, it misleads individuals in these communities into avoiding the short-term pain of moving by falsely promising future economic opportunities without sufficient justification.
Great idea. More radical still (and no, this ain't likely to happen any time soon, but a fella can dream): render the NIMBY housing production veto unconstitutional, in that it's become a de facto, constitutionally suspect bar to interstate freedom of movement (a fundamental right enjoyed by Americans under the Privileges and Immunities Clause of Article IV ). There are lots of *naturally* occurring phenomena that will impede the ability of Americans to settle where they will: land values, general cost of living, wage differentials, availability of jobs, climate, and a million other things. But states aren't allowed to add to these by hanging out a "DO NOT ENTER" sign. And yet that's exactly what they're doing.
Let's put it this way: if a state legislature really did want to come up with a way to impede freedom of movement they hoped would be sufficiently "under-the-radar" to dupe the guardians of our constitution, making new housing illegal would be exactly how they'd do it.
Law is more strictly enforced for interstate and intercommunity movement and eligibilities than for international and cross-border.
I have a similar feeling about income inequality, but my opinion with regard to regional inequality is even stronger: IMO, the relevant metric should be poverty, not inequality. We want to get rid of poverty and not be so concerned about inequality (IMO).
Agree! Related, I’ve never seen an argument for an optimal level of inequality. It certainly isn’t zero. So as you travel upwards from zero, when does inequality become “bad”? It seems to me people have been adopting the Potter Stewart standard of “I know it when I see it.” That standard has been rightly mocked for decades. But the people who talk about income inequality have tacitly adopted the standard. Unless there’s a good analysis/argument I haven’t yet seen.
The standard is “inequality is fine so long as no one has more than me”
Isn't a major thrust of this piece that poverty is itself relative to local cost of living? Taking into account geographic variation is important to understanding who is actually struggling with material deprivation.
"What are we trying to do?"
I can't speak for the rest of the Slow Boring commentariat, but I'm trying to accomplish two things:
1. Help people who suffer, especially those who suffer through no fault of their own: children born to poor families, people with disabilities, people who drew the short straw in the intelligence/talent lottery and hence don't have a hope of getting a well-paying job;
2. Make sure that there isn't a pissed-off, hopeless, angry lumpenproletariat/underclass that sees The Elites (like me, a college professor) as The Enemy and that is eager to vote for a douchebag con artist like Agent Orange.
Yeah, from experience (grew up in TN), telling these people to move *even to the next county over* (never mind to a big metro area in a different state) is more likely to lead to "pissed-off, hopeless, angry lumpenproletariat/underclass" than it is to solve any real problems. This gets you at least 50% of the way to explaining why ancestrally Dem parts of TN have swung violently right since 2000.
Inequality has gone down in the past few years and yet resentments against "the elites" have increased. Obviously Fox, etc, is a big factor, but reading this post, I really wonder if geographic inequality is not playing a role that I have been unaware of.
"Ideally, we'd just want the smart kids from WV to be able to move to CA if they got interested in tech, so maybe measures related to education/mobility are most appropriate."
But this already happens! The reason regional inequality is a concern is, well, the kids who aren't particularly smart or interested in tech who are left behind in WV are doubly screwed because the kids who are interested in tech probably grew up in CA because their parents (also interested in tech) moved there a generation ago.
What the post sort of glosses over is that a big reason geographical mobility is down is that the big geographical sort already happened. Post-WW2 the movers and strivers got promoted and moved by Big Corporation they worked for, which led to an already-budding concentration of the most skilled workers in a few large cities (and this consolidated even further with mergers, etc.) Then a handful of edge cases moved subsequent to that, but basically, if your family was still in Appalachia after all this then, well, let's just say that you're *probably* not the sort who'd be in any sort of real demand for high-end jobs that you can only find in a large city. (The "landed" class in rural areas is a bit different, though functionally a lot of them have become a rentier class that's increasingly absentee from the land that's been in their family for a hundred years until it's time to retire.)
Californians are pretty clear that they think white kids from elsewhere in the US moving there for tech jobs is morally wrong and that public policy should pump the brakes on it as much as possible.
I have never heard anything like this in California, even in Berkeley — not in writing, in discussions with neighbors, anywhere, anytime.
Though strangely they don't seem to mind kids from other countries moving there for tech jobs.
Just a loud minority.
But yeah, it would be better if we could accommodate rapid population growth in new greenfield cities than disrupt existing arrangements
The point about college towns having poverty seems much more like an illusion of poverty. College students may not be working so technically they make less money than people with jobs, but their lifetime earnings outpace the 60% of those who never finish college. Similar to the Biden Administration cancelling billions in student loan debt, the government could probably help others in need instead of focusing on the population that is well off or will likely be in the future.
More important than lifetime earnings, a good number of college students with no income of their own are supported by upper middle class parents.
However, there are some students who really are experiencing significant economic hardship, including things like homelessness, during their college years, even if they end up having higher income later. It seems worth addressing that, though it’s hard to identify who is relevant by just looking at their own income.
College student neighborhoods tend to really throw off neighborhood poverty statistics that governments have to use for various purposes. It's just not credible that material deprivation is higher in student neighborhoods where "60% live below the poverty line" than in a 50s-era rundown suburban apartment complex where "25% live below the poverty line" is a more or less true, concerning, fact.
"60% live below the poverty line" because we're explicitly not counting the financial support from Mom and Dad in these numbers.
Maybe a part of it, but even college students who are being financially supported are expected to live very modestly (roommates, cheap food, no car, etc). It's just that that's appropriate for an adolescent who will grow into a middle-class standard of living later, and more problematic as a long-term steady state for an adult who should be having a family of their own.
This seems very tangential to the point I was making which was that poverty statistics in college towns are a function of the fact that the numbers only count the amount the college student makes from their part-time job, if they even have one.
Oh good lord. Not only do I love a good Kolko SlowBoring post, but a Kolko SlowBoring post about spatial inequality!? Straight to my veins. Loved this post, can't wait to dig through the links. Thanks for taking the time to write it.
Mobility - I've updated from believing mobility is in longterm decline to: I'm not sure whether mobility is declining or not. This is due to a recent presentation by some Census researchers who compared spatial mobility across the CPS, the ACS, and IRS data. Basically, CPS response rates, particularly about mobility, are declining. And it seems like that's driving a lot of the mobility decline trend in that dataset (which, unfortunately, is our best longrun data source).
https://www.fcsm.gov/assets/files/docs/2023-conference-docs/F2.5_Foster.pdf
(I've only updated to not sure because I don't think a single conference presentation is a sufficient plank to rewrite my understanding of the research).
This isn’t the point of the article, but I’ve always found the decline in mobility to be puzzling, and it definitely runs against many people’s intuitions. Is there good research on why this is happening?
Actually, I think the decline in mobility IS the point of the article.
Rather than trying to send tax dollars into McAllen or Toledo in an attempt to turn them into Raleigh or Seattle, we'd be better off pursuing policies that would increase people's mobility. Policies that encourage more housing to be built and subsidize relocation expenses.
This is a good economist brain argument and it makes sense. But politically, telling people to abandon their generational home is a hard argument. So you do end up with inefficient place based policymaking.
But is it? Were people in 1950 less attached to their generational home than they are now?
I mean, maybe! Like, people might've been less attached to homes that say, predated modern plumbing or wiring. But I think it's worth interrogating.
That's pretty much it, yeah.
Part of this is that material conditions in, say, rural Appalachia in 2024 are bad compared to a superstar global city like New York, but they're way better than the material conditions that existed in rural Appalachia in 1950 which were legitimately comparable to those of a third-world country.
I also think WW2 and the Cold War military buildup caused a whole lot of "forced" relocations that stuck, plus companies moving employees to a different office or corporate HQ was waaaaaaaay more common then than it is now.
We should probably be more "NIMBY" about rural areas and small towns then, if we accept that any community once established has to be maintained by the taxpayer in perpetuity.
I've had similar thoughts after spending time in stagnating parts of Michigan and Maine. The jobs in copper mining or commercial fishing aren't coming back, the best thing we can do is make it easy for people to leave.
People might not move no matter how much relo assistance you offer.
I wouldn't move to a big city for basically anything
This is kind of the, "Well, some people are unemployed so unemployment must be terrible no matter what the rates are" argument.
Some people will be unwilling to relocate. Some people will always be unemployed. Some people won't have access to healthcare no matter what you do. Some people will always have large families and others won't have kids no matter what you do.
None of that means that you can't change rates on the margin.
fair enough
I would add a lot of this has probably gotten worse due to partisan sorting.
Conservative people aren't going to move to a liberal big city.
There’s a big appeal to the wide open spaces of exurbia, man. It’s just different. Staying at my mom’s in Northern Mississippi, not only can you get a lot more house for your money, but it’s just nice having some land and seeing the birds and wildlife. But even though it’s in a development, it’s not really a place for pedestrians or cyclists - there’s literally no infrastructure to make it safe for them, speed limits are 40-60 mph, and there’s no transit access within miles.
Given that eventually I want a home library befitting an English nobleman’s country estate, we’ll end up having to move to cheaper country at some point, I reckon. The plan basically is to retire back home after building equity in our overpriced Seattle house and getting vested in a higher Washington state pension.
We moved from southern CA to southwest Oregon. Traded our track house for a 20 acre ranch. Generally love it.
And since the area is very rural/red COVID restrictions were hardly a thing.
Agreed on the library. I'm trying to come up with the money to do a second story in our shop, a 800 SQ foot music room/office library.
There you go! Cheers to that.
Fortunately, there are options other than liberal big city. Plenty of conservative people relocate every day to Arizona, Texas, and Florida.
I loved my time living in GA, and partying in FL. But we ended up in Oregon. I hate being sticky as soon as I walk outside from the humidity. That and water moccasins
Couldn't agree more. I've never been able to perceive the national interest in trying to shape settlement patterns. So what if some places empty out? It's probably good for the environment, and future generations of Americans might well appreciate living in a country that is still home to some wild and largely unpeopled areas.
Community is a good thing. Moving means giving up friends and seeing family much less often. I find it unsurprising that, as America has grown richer, we move less.
The U.S. has long been a nation of immigrants, including internal migration by people with birthright citizenship. Yes, balancing this with the preservation of communities and personal ties, notably family relationships, is important. However, we should never strive to become like the complacent and unambitious Europeans—communities from which many of our ancestors fled in search of the opportunities offered by the American project.
What’s wrong with complacence if you like the community you live in?
Fine if individual people and families choose that given the costs/benefits of their different options. Ie, cool to forgo material standards of living and vocational opportunities to maintain community. But that certainly isn't something that government should be subsidizing and any employment programs targeting these communities should focus on relocation.
I absolutely agree we shouldn’t pay people extra because they live in depressed communities. That’s perverse. Might even be best to subsidize moving expenses in extreme cases. For an able bodied man to remain jobless to stay in a town where the factory closed is obscene. Still, I question why a reasonably well off person would torch their social network and extended family for a 20% raise.
Considering how much we talk about the loneliness epidemic and the problem of a long-term decline in fertility rates, maybe subsidizing people staying in their hometowns isn’t the end of the world (though if you subsidize them too much the COL will adjust to compensate, negating these areas’ “advantage” as it is).
For those who are reasonably employed in economically depressed areas, it’s pretty easy to get yourself situated in life with a decent house at a younger age, which is why most of my sister’s friends in the Memphis suburbs live in big houses and have 2-3 kids, whereas that’s pretty cost-prohibitive for a Seattle or DC striver until later in life, especially if you don’t have family close by to assist with babysitting. Most of my hs friends moved away to higher COL places and most of the ones with kids have just one.
This is true but also worth remembering that once a beach head was established most of those immigrants brought extended family and arrived to support networks. We'll never get to a billion Americans without grandmas to help out.
I don't think you and David are in disagreement. I liked both comments.
Right—I’m not at all sure this is a bad thing! But I think what you’re suggesting is that wealthier people should also be less mobile, which I don’t think is what is observed (though I could be misremembering that—I don’t have a citation for it).
College graduates are more mobile. Of course, money makes distance matter less. Being able to comfortably afford airfare home takes much of the sting out of moving
college graduates now realize a larger wage premium for moving as well.
My understanding is this didn't used to be the case, if you were a tenant farmer in 1925 you could experience a large increase in living standards by moving to the city to work in a factory (in fact it may have been the case that farming wasn't even viable anymore). But if you had a comparatively elite job like running the local bank, you would not be able to replicate this success in the big city.
Nowadays if you have a more modest job like working as a waitress or something, the cost of moving to a high wage city is not going to be worth it because the cost of living increase will probably be larger than your wage gains not to mention the upfront cost of moving and leaving all your friends and family.
Correct. Moving is an excellent strategy for escaping poverty or near poverty. And if you can move up a social class by moving, I understand. Moving for moderate increases in income seems fraught. It prioritizes money over human connection.
Yeah, I saw this a lot in law school -- law students who'd gun for positions in NYC and D.C. that paid $160k starting instead of "settling" for the closer-to-home option that started at like $120k.
College graduates more than likely moved just to go to college. If they didn't, well, it's fair to assume they didn't want to move somewhere else.
It's a great fact to know because it comes up surprisingly often in conversation and pretty much every normie gets it wrong.
But it doesn't seem *that* counter intuitive. Historically people often moved because they were desperate for work to feed their family. That's not really a thing anymore in the US
Yeah, people moving off the farms to cities because farm work sucked and they were legitimately in poverty is considerably different than trading a comfortable middle-class lifestyle in Memphis for a slightly-better-off upper-middle-class lifestyle in NYC.
What if you just want to be breaking down some reefa
Rolling up a sweeta
Riding through the streeta
Cheifing like heata
Feels like decline in mobility is related to housing costs. You can't move if you can't afford to live anywhere else. It's housing all the way down.
I think we need to be careful with this conclusion. Mobility has been falling since at least the mid-80s, and high housing costs in some places should be causing more mobility from high cost to low cost, not less. (That doesn’t mean building more housing is a bad idea, obviously.)
Funny coincidence that the mid-80s was exactly the same period of time most municipalities adopted their first zoning ordinances.
See this graph (https://x.com/cremieuxrecueil/status/1861495791187284144) from this paper (https://www.nber.org/papers/w33188). Less than 10% of California cities had land use (zoning) laws in 1965 to >70% of cities having land use regulation by the 1990s. I suspect most of the US followed a similar trajectory.
It may also have to do with the fact that moving is expensive and hard. People end up stuck in higher cost areas because they can’t afford the move or are able to deal with the logistical issues. Maybe programs to help people relocate would be money well spent. If we can migrate people to where there are jobs and/or housing then maybe we can make progress. Also need to spend money on social services to help people administer their transition. Lots of good programs go unused because the recipients cannot navigate the process on their own. This is what is happening with programs to relocate children and their families to better schools in the same metro area. If you can get families with early elementary school aged children transitioned to a positive employment, education, and housing situation you can make lasting change. But, the transition is difficult so you need social services to assist. Same principle should apply with moving across town or across the country.
It stands to reason that moving gets shittier as we get wealthier and accumulate more stuff.
I wouldn't be able to fit my household's entire earthly possessions on a single jalopy and drive out to California with it.
Yeah, this even happens within your life. Switching dorm rooms in college was less of a pain than moving apartments when you're young and single, which is way less of a pain than moving an entire fucking house when you're 40.
I'm never moving again. I'm going to die in place and they can burn the place down when I'm gone.
It's why I simply cannot understand people in their 40s who move to a bigger house. It seems not at all worth it to ensure that you're definitely going to have to move in your 60s when you suddenly have way too big of a house for two people.
Might I suggest that many people would rather muddle through than do some tough adulting - moving, education, eating habits, etc. Listening to a recent review of focus groups of voters, I have come to agree that lots of people are unserious. Also just read an article this morning in Washington Post about NC disaster relief and the low uptake on FEMA help. Don't know how you fix people who are uninterested in even locally (personally) trying to maximize their prospects much less move.
That's some of it. Though housing is clearly driving the more limited mobility we manage to hold onto (that is, people moving to where housing is cheaper).
Much of it is reduced geographic specialization. These days, every state is home to plenty of healthcare, finance, education, business services, tourism, logistics, hospitality, and so forth. So not as many people need to move to find a job as was the case decades ago.
Sure, if you want to be in the *commanding heights* of software or IT you'll probably consider the Bay Area (or NYC for finance, of LA for entertainment, or Boston for pharma, or what have you). But comparatively few Americans are in the top echelon in their fields.
Using today's qualifications for transfer payments, Tombstone would be full of people unable to make a living instead of a former ghost town living on tourism.
1: Rising housing costs in “star” metro areas
2: Increasing adverse selection of who remains in underperforming counties
3: Electoral College
2032 is looking, gulp, a bit scary.
I'm surprised nobody else talked about this, but dual-income households (and feminism broadly) make moving a lot harder.
You *both* need to be able to find good jobs in the new area, and you *both* need to actually want to move to the place.
Husband can't find a new job somewhere and let the wife and kids know they're moving next summer.
The numbers I saw pre-Covid was the during the Obama-Trump years, the mobility rate among upper middle class educated Millennials was at record highs, while the mobility rate among working class Millennials was at a record low.
I'd rather just focus on helping individuals. At least at the federal level, somebody making $30k with two kids should get the same amount of help in Mississippi as they get in Los Angeles. Ideally, state and local governments should top up the assistance in high cost states.
Having said that, I'm also not opposed to Matt's idea of "move the Census Bureau to Cleveland." I have no problem trying to stimulate struggling economic areas, nor am I opposed to offering carrots and sticks to high cost states to induce them to build more housing, but I don't think the federal government should effectively subsidize the housing problems in places like California. That is all.
> I don't think the federal government should effectively subsidize the housing problems in places like California.
Not without some supply-side reforms, that’s for sure
Yeah I'm open to some carrots and sticks for sure. But "California is expensive therefore the welfare state should give CA residents more money" just lets CA policymakers off the hook.
???
It seems that each program should allocate its interventions geographically according to marginal result.
And there was zero discussion of whether any of these interventions actually work to raise the education or employment or income of the less educated, unemployed, or poor people who are more concentrated in one place rather than another and at what cost. This is not to deny that some kinds of transfers can have positive local spillovers so by all means take that into account in doing the cost-benefit analysis of programs.
If it costs 50k to raise someone out of poverty in NYC and 10k in Newark but we give people only 10k everywhere, is it a *good* thing there's an incentive for them to move to (shudders) New Jersey?
Depending on the reason for the difference in cost, probably yes.
I’d like to see a study on how much geography immobility is due not to economic factors, but entertainment and non-family social considerations. For example if you wanted entertainment decades ago you pretty much had to go to a larger city. Plenty of a small town and rural options too but nevertheless numerically fewer options and less diversity of them. Are Netflix and TikTok substitutes such that the lifestyle impact and motivation is washed out at the margin?
Relatedly, LGBTQ status or any sort of "non-traditional" life choice is probably less likely to be an incentive to move than it once was. (Cf. the decline of dedicated gay and lesbian bars and other LGBTQ cultural facilities in urban areas.)
If somehow our marriage stopped being recognized in Texas we'd probably move out but the federal recognition of the things I care about most has made that unnecessary.
Grindr also hasn't helped there.
I don't think that's an "also," it's a substantial part of what makes LGBTQ status "less likely to be an incentive to move than it once was. "
Sorry I wasn't clear. I meant specifically the decline of gay bars.
Do we even know that mobility is declining? Tax based data sharply disagrees with the census data on this
https://www.fcsm.gov/assets/files/docs/2023-conference-docs/F2.5_Foster.pdf
Privation is bad. Stunting human potential is bad. Geographic inequality is only as bad as the suffering it produces. As long as there are social guarantees, a thousand flowers can bloom.
Maybe the approach is wrong. Child poverty dropped significantly with the 2020-2021(?) Child Tax Credit and it’s not a targeted program. This was low overhead/bureaucracy program. Maybe targeted programs should be relegated to a 5-10% infill of a broad non-targeted program.
As a New Yorker, I’d like to see New York dwarf Tokyo and Shanghai as an urban behemoth of monstrous size and power, but that would mostly be done by sharply exacerbating the brain drain from places without subways and leaving them in even deeper relative obscurity and poverty. It’s also very clear to me that any federal program to achieve that end would not fly in a senate that represents the other 47 states (Connecticut and New Jersey are part of my NY Megalopolis), which is why it’s so deeply frustrating that NY politicians from city council on up have zero interest in growth
No discussion on state or local fiscal capacity. Shame. Many times, poorer places have less fiscal capacity to address local poverty issues, whereas high cost of living cities have self-induced problems--that shouldn't be subsidized IMO--and have the fiscal capacity to address should they choose to. If anything, my prior is that federal money isn't sent enough to low cost of living areas, which tend to be poorer. Open to changing my mind, but I didn't find this very convincing.
Good background on the different metrics and mixed signals they can provide depending on how you weigh each one.
We are all responsible for poverty wherever it exists regardless of whether someone decides that the problems of a local community are self-induced.
sure, but when deciding how to allocate scarce resources to poorer members of society, we should up-weight areas that are poorer and down-weight areas that are richer but who's policy decisions have increased the cost of living both because of moral hazard but also because the people are poorer and have less opportunity in those communities and because the local and state functions that could help them have less capacity to do so.
Thanks, Jed! This was very informative and added some important depth to how we think about geographical inequality.
High cost of living is a symptom of over-investment relative to local appetites for growth. Injecting more money is going to make things worse, not better, no?
At most you can change the set of winners by subsidizing your favored cohort so much that they can outbid high-end market incomes. But that hardly seems like a stable equilibrium. Fundamentally there are only two ways to increase anyone’s housing security: disempower and disenfranchise the community, or un-house someone else.
High cost of living normally means that the local population is less interested in growth than people outside that city are in living there.
(Should point out of course that "high cost of living" often only affects newcomers when you're talking about housing. Somebody who bought in San Mateo County in the 1980s is not spending nearly as much on housing -- hell, it might be zero if their mortgage is paid off -- than somebody who just got hired by Google.)
This is the most validated measure of socioeconomic deprivation. And it is measured at a much finer geographic level. The results are surprising.
https://www.neighborhoodatlas.medicine.wisc.edu/