5 ms·

Uncomfortable Truths Behind California’s Economic Surge

19 points by dwynings 10y ago

chetanahuja 10y ago
tl;dr Economy is booming but living here is expensive. Also, gas prices are cheap right now so... that helps.
sxcurry 10y ago
It's so crowded nobody goes there anymore. Typical WSJ FUD.
h4nkoslo 10y ago
The startup ecosystem & consumer property are driven by 0% interest rates; the investment property economy is driven by 0% interest rates & overseas money laundering. Agriculture relies on illegally imported labor & perpetual groundwater reserves. All of these things add up to a "thriving" economy, but none of these things are perpetuities, especially when the state government is determined to Venezuelify at all costs.
- digitaltrees 10y ago
  False. If that were true, that interest rates were the only driver of this real estate increase, we should expect similar increases in other areas. Texas, Florida, and countless other states have had more inward migration with no increase. The guest worker program for migrant farm labor is not illegal neither is NAFTAs integrated North American market. Finally California has depended on agriculture for a long time, well before the current drought.
obstinate 10y ago
Seems like you can write this article, but you could easily write the opposite. I'm always puzzled why conservatives are so sure that taxation suppresses growth. I get that there are models that show that this can happen at some level of taxation, but there are two issues. One, model parameters need to be discovered. Second, we just don't seem to see the effect very much in real life. So you have to write articles like this that are really . . . speculative . . . in observing whether policies are having an effect in one direction or the other.
- Spooky23 10y ago
  The people who financially back conservatives are mostly in extractive industries (i.e. Koch brothers), they see any government regulation or taxation as a skim. Higher taxes hurt only in comparison to other locales.
  - grzm 10y ago
    The people who financially back conservatives are mostly in extractive industries (i.e. Koch brothers), That's interesting. I haven't heard this before. Would you share data to back this up? they see any government regulation or taxation as a skim. It's not clear to me why this statement can't be true of non-extractive industries as well.
    - digitaltrees 10y ago
      Look up the financial backers of Cato institute or heritage foundation and review their published work and you should have a clear picture.
    - Spooky23 10y ago
      You're best bet at understanding is to read "Master of the Senate" by Robert Caro. The book is about LBJ, but goes into detail about how the civil rights legislation caused the "conservative democrats" (aka segregationists) to join up with Western conservatives, who are the extractive people tha I mentioned.
- velodrome 10y ago
  > I'm always puzzled why conservatives are so sure that taxation suppresses growth. https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve
  - digitaltrees 10y ago
    Do you think this is valid analysis? Or are you citing the reason for the belief? I agree, this is the primary argument used to justify lowering taxes.
uniformlyrandom 10y ago
The article fails to make any point. Weird.
- huangwei_chang 10y ago
  Totally agree.
- WalterSear 10y ago
  It doesn't, to appeal to prejudice. It just has to give people something to worked up about.
mturmon 10y ago
A lot of cherry picked single point numbers in this op-ed. Not very informative.
blazespin 10y ago
The truth is that California has great weather and a non compete clause law. What else do you need?
- velodrome 10y ago
  Low cost of living would be nice...
  - wernercd 10y ago
    Supply & Demand. Demand is high and supply doesn't meet it? Prices go up. Why is demand high? Nice year round weather, Hollywood, large military presence, etc. Why doesn't supply meet demand? Restrictive policies, companies taking options that have more profit, demand increases faster than supply, etc. Any which way you look at it... You have a nice area and tons of people want to live there? Things are going to cost more. On top of that, increasing wages won't really solve everything as costs will go up (Businesses have to increase costs to make up for increased paychecks. Example: http://townhall.com/tipsheet/erikahaas/2016/11/16/child-care-costs-spike-after-minimum-wage-goes-up-n2246718 http://townhall.com/tipsheet/erikahaas/2016/11/16/child-care... ) negating the extra money you make. You want a low cost of living? Move further inland. Move to Arizona or the mid-west. Much cheaper to live.
    - caryhartline 10y ago
      That is all painfully obvious. What Velodrome is saying is not out of reach in the slightest. State and local governments could take plenty of steps to lower the cost of living.
      - DannyBee 10y ago
        Which would just make more people want to live there, and ... make supply lower, and make the cost go up. California has a finite people carrying capacity. You can remove all the cars, build sky scrapers to the stratosphere, etc, etc. It's like arguing that all the people in the world who want to live in hawaii should be able to live in hawaii.
ec109685 10y ago
Comparing minimum wage and median housing prices doesn't make sense. The author claims a person making $15/hour couldn't afford to live one San Jose given its $1000 median rent. The right comparison would be take a look at what percentage of people make that much money and whether there is enough housing for them.
- smallnamespace 10y ago
  What % of journalists possess basic statistical literacy and are willing + able to use it in their line of work? EDIT: The more competitive journalism becomes, the more it's a game of only writing what readers want to see. If readers don't have the sophistication to discern good data + interpretation from bad, then news orgs have no incentive to go the extra mile to get to the actual truth.
  - deleted 10y ago
    [deleted]
- 11thEarlOfMar 10y ago
  Median, 2-bedroom rent in San Jose is $2,289. That is $27,468 annually. $15/hour wages is $31,200 annually. After paying income taxes, there's nothing left. Even 2 minimum wage earners sharing a median priced one bedroom apartment would be hard pressed to also own cars and feed and insure themselves. http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro
  - r00fus 10y ago
    And by "own cars" you mean "have freedom of movement" as Silicon Valley (like most of the US) has incredibly poor public transport. And CA doesn't have $15/hr wages (yet). $15/hr is above minimum wage of $10.50. That's $21,840 annual gross. I guess you can afford to live here with a lower income if a) you room (or even share a room), b) you live with parents or c) you got section-8 or something a lot less than market rate rents.
twblalock 10y ago
I'm always amused when people write that middle-class people cannot afford to live in California. It's just not true. Almost everyone I know is middle class. Only a few of my friends are in the tech industry -- most of my friends make incomes that are well below what a developer makes, and are fairly average for middle-class Americans. Yet, they all live in Silicon Valley and none of them are starving or at any risk of becoming homeless. They live about as well as their parents did, if not better. Even people on minimum wage can afford to live here. There is clearly no shortage of gas station workers, retail workers, warehouse workers, restaurant workers, etc. They certainly aren't commuting from Arizona. In fact, I know a number of people making close to minimum wage who live in the Bay Area, have very short commutes to work, and live in perfectly safe neighborhoods. They don't own their own homes, but they live here (not with their parents), so by definition they can afford to live here. If they wanted to make more money, this is one of the best places in the world for them to develop marketable skills and climb the income ladder. I think most of these articles assume that everyone lives in San Francisco, which is a small part of the Bay Area and far more expensive than the rest of it, or that everyone deserves a house on an acre of land in order to avoid suffering. Middle-class people live here. People on low incomes live here.
- mistermann 10y ago
  This seems extremely inconsistent with the numerous stories I've heard of crazy rent prices in Silicon Valley. Are a big chunk of some of these people commuting in on transit maybe?
  - twblalock 10y ago
    Most of the people I know drive their cars to work. I live in Santa Clara. I know there are people who commute from places like Tracy, but I don't know any -- I know plenty of people who live near me who don't make a lot of money and manage to live here just fine. Outside of San Francisco, rent prices are only crazy if you want your own place. Single people can easily rent with roommates, and couples usually have two incomes. Two people making an average wage can afford a place to live -- maybe not a luxury apartment, but a decent place in a safe area.
dmode 10y ago
Typical WSJ garbage - "It's so crowded no one goes there anymore"

19 points by dwynings 10y ago

chetanahuja 10y ago

tl;dr Economy is booming but living here is expensive. Also, gas prices are cheap right now so... that helps.

sxcurry 10y ago

It's so crowded nobody goes there anymore. Typical WSJ FUD.

h4nkoslo 10y ago

The startup ecosystem & consumer property are driven by 0% interest rates; the investment property economy is driven by 0% interest rates & overseas money laundering. Agriculture relies on illegally imported labor & perpetual groundwater reserves. All of these things add up to a "thriving" economy, but none of these things are perpetuities, especially when the state government is determined to Venezuelify at all costs.

digitaltrees 10y ago
False. If that were true, that interest rates were the only driver of this real estate increase, we should expect similar increases in other areas. Texas, Florida, and countless other states have had more inward migration with no increase. The guest worker program for migrant farm labor is not illegal neither is NAFTAs integrated North American market. Finally California has depended on agriculture for a long time, well before the current drought.

obstinate 10y ago

Seems like you can write this article, but you could easily write the opposite. I'm always puzzled why conservatives are so sure that taxation suppresses growth. I get that there are models that show that this can happen at some level of taxation, but there are two issues. One, model parameters need to be discovered. Second, we just don't seem to see the effect very much in real life. So you have to write articles like this that are really . . . speculative . . . in observing whether policies are having an effect in one direction or the other.

Spooky23 10y ago
The people who financially back conservatives are mostly in extractive industries (i.e. Koch brothers), they see any government regulation or taxation as a skim. Higher taxes hurt only in comparison to other locales.
- grzm 10y ago
  The people who financially back conservatives are mostly in extractive industries (i.e. Koch brothers), That's interesting. I haven't heard this before. Would you share data to back this up? they see any government regulation or taxation as a skim. It's not clear to me why this statement can't be true of non-extractive industries as well.
  - digitaltrees 10y ago
    Look up the financial backers of Cato institute or heritage foundation and review their published work and you should have a clear picture.
  - Spooky23 10y ago
    You're best bet at understanding is to read "Master of the Senate" by Robert Caro. The book is about LBJ, but goes into detail about how the civil rights legislation caused the "conservative democrats" (aka segregationists) to join up with Western conservatives, who are the extractive people tha I mentioned.
velodrome 10y ago
> I'm always puzzled why conservatives are so sure that taxation suppresses growth. https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve
- digitaltrees 10y ago
  Do you think this is valid analysis? Or are you citing the reason for the belief? I agree, this is the primary argument used to justify lowering taxes.

uniformlyrandom 10y ago

The article fails to make any point. Weird.

huangwei_chang 10y ago
Totally agree.
WalterSear 10y ago
It doesn't, to appeal to prejudice. It just has to give people something to worked up about.

mturmon 10y ago

A lot of cherry picked single point numbers in this op-ed. Not very informative.

blazespin 10y ago

The truth is that California has great weather and a non compete clause law. What else do you need?

velodrome 10y ago
Low cost of living would be nice...
- wernercd 10y ago
  Supply & Demand. Demand is high and supply doesn't meet it? Prices go up. Why is demand high? Nice year round weather, Hollywood, large military presence, etc. Why doesn't supply meet demand? Restrictive policies, companies taking options that have more profit, demand increases faster than supply, etc. Any which way you look at it... You have a nice area and tons of people want to live there? Things are going to cost more. On top of that, increasing wages won't really solve everything as costs will go up (Businesses have to increase costs to make up for increased paychecks. Example: http://townhall.com/tipsheet/erikahaas/2016/11/16/child-care-costs-spike-after-minimum-wage-goes-up-n2246718 http://townhall.com/tipsheet/erikahaas/2016/11/16/child-care... ) negating the extra money you make. You want a low cost of living? Move further inland. Move to Arizona or the mid-west. Much cheaper to live.
  - caryhartline 10y ago
    That is all painfully obvious. What Velodrome is saying is not out of reach in the slightest. State and local governments could take plenty of steps to lower the cost of living.
    - DannyBee 10y ago
      Which would just make more people want to live there, and ... make supply lower, and make the cost go up. California has a finite people carrying capacity. You can remove all the cars, build sky scrapers to the stratosphere, etc, etc. It's like arguing that all the people in the world who want to live in hawaii should be able to live in hawaii.

ec109685 10y ago

Comparing minimum wage and median housing prices doesn't make sense. The author claims a person making $15/hour couldn't afford to live one San Jose given its $1000 median rent. The right comparison would be take a look at what percentage of people make that much money and whether there is enough housing for them.

smallnamespace 10y ago
What % of journalists possess basic statistical literacy and are willing + able to use it in their line of work? EDIT: The more competitive journalism becomes, the more it's a game of only writing what readers want to see. If readers don't have the sophistication to discern good data + interpretation from bad, then news orgs have no incentive to go the extra mile to get to the actual truth.
- deleted 10y ago
  [deleted]
11thEarlOfMar 10y ago
Median, 2-bedroom rent in San Jose is $2,289. That is $27,468 annually. $15/hour wages is $31,200 annually. After paying income taxes, there's nothing left. Even 2 minimum wage earners sharing a median priced one bedroom apartment would be hard pressed to also own cars and feed and insure themselves. http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro
- r00fus 10y ago
  And by "own cars" you mean "have freedom of movement" as Silicon Valley (like most of the US) has incredibly poor public transport. And CA doesn't have $15/hr wages (yet). $15/hr is above minimum wage of $10.50. That's $21,840 annual gross. I guess you can afford to live here with a lower income if a) you room (or even share a room), b) you live with parents or c) you got section-8 or something a lot less than market rate rents.

twblalock 10y ago

I'm always amused when people write that middle-class people cannot afford to live in California. It's just not true. Almost everyone I know is middle class. Only a few of my friends are in the tech industry -- most of my friends make incomes that are well below what a developer makes, and are fairly average for middle-class Americans. Yet, they all live in Silicon Valley and none of them are starving or at any risk of becoming homeless. They live about as well as their parents did, if not better. Even people on minimum wage can afford to live here. There is clearly no shortage of gas station workers, retail workers, warehouse workers, restaurant workers, etc. They certainly aren't commuting from Arizona. In fact, I know a number of people making close to minimum wage who live in the Bay Area, have very short commutes to work, and live in perfectly safe neighborhoods. They don't own their own homes, but they live here (not with their parents), so by definition they can afford to live here. If they wanted to make more money, this is one of the best places in the world for them to develop marketable skills and climb the income ladder. I think most of these articles assume that everyone lives in San Francisco, which is a small part of the Bay Area and far more expensive than the rest of it, or that everyone deserves a house on an acre of land in order to avoid suffering. Middle-class people live here. People on low incomes live here.

mistermann 10y ago
This seems extremely inconsistent with the numerous stories I've heard of crazy rent prices in Silicon Valley. Are a big chunk of some of these people commuting in on transit maybe?
- twblalock 10y ago
  Most of the people I know drive their cars to work. I live in Santa Clara. I know there are people who commute from places like Tracy, but I don't know any -- I know plenty of people who live near me who don't make a lot of money and manage to live here just fine. Outside of San Francisco, rent prices are only crazy if you want your own place. Single people can easily rent with roommates, and couples usually have two incomes. Two people making an average wage can afford a place to live -- maybe not a luxury apartment, but a decent place in a safe area.

dmode 10y ago

Typical WSJ garbage - "It's so crowded no one goes there anymore"