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Your office and your employees' homes are more expensive to rent because regulations make it expensive to build in California. The food you eat is more expensiv

by natrius 16y ago

Your office and your employees' homes are more expensive to rent because regulations make it expensive to build in California. The food you eat is more expensive in California because there is a high floor on the compensation required for the people who produce it. Your coworkers require higher salaries because it's more expensive to live in California. According to Salary.com's cost of living calculator[1], for every four $100,000 engineers in San Francisco, you can get five $80,000 engineers in Austin at the same salary percentile. Those five engineers would have a higher standard of living since it supposedly costs ~$60,000 in Austin to live like someone making $100,000 in SF. (I think that's probably a little low.) If no one is complaining about the impact of California's regulations on your business, then no one is thinking hard enough (or they've just resigned to the fact that things are unlikely to change). The benefits of being in Silicon Valley may outweigh the costs, but the costs of being in Silicon Valley could be far lower. [1] http://swz.salary.com/costoflivingwizard/layoutscripts/coll_start.asp http://swz.salary.com/costoflivingwizard/layoutscripts/coll_...

_delirium 16y ago
I'd suspect a larger portion of the cost-of-living difference is due to desirability of the areas, i.e. relative amounts of demand for each, more than it is due to state regulation impacting supply. People are willing to pay lots more to live in SF than they are willing to pay to live in Austin. It's a pretty easy trend to notice on the most/least affordable lists that seem to come out periodically. If you look at this list of top 5 and bottom 5 affordable cities to buy a house, the trend is that the most affordable cities are ones nobody wants to live in (Indianapolis, Dayton, etc.), while the least affordable cities are ones lots of people want to live in (NYC, SF, Honolulu, etc.): http://realestate.yahoo.com/promo/most-and-least-affordable-cities-to-buy-a-house-2010 http://realestate.yahoo.com/promo/most-and-least-affordable-.... Even true within CA: it's not particularly expensive to live somewhere like Bakersfield, despite all the same minimum-wage/environmental/etc. laws applying there too.
- natrius 16y ago
  The Bay Area could have enough housing to accommodate far more people at lower prices without sacrificing desirability. It doesn't because of regulation. (Finding the water for those people is another story.) New York is similar.
  - _delirium 16y ago
    I suppose that's a possible hypothesis, but I'm skeptical. New York accommodates more people per square mile than anywhere else in the country, and your reason for why it's expensive is that it's not doing a good job accommodating even more? California hasn't exactly been anti-growth overall. Los Angeles is a worldwide poster-child for unrestrained sprawl. The state not only allowed it to grow, but built a ton of freeways, making LA the world's first real car city. The Bay Area has not only interstates and state freeways, but county freeways, and stretches 75 miles across, with sprawl from Walnut Creek to Gilroy. And yet it's still expensive. Meanwhile, Portland has a strictly enforced Urban Growth Boundary, and it's cheap. I suppose it's possible that in the 21st century, someone will show that there's an alternative possibility: a giant metropolis that, through less regulation, has cheap housing. Maybe Austin will become the utopia with 20 million people and $600 rents? We'll see...
    - natrius 16y ago
      > New York accommodates more people per square mile than anywhere else in the country, and your reason for why it's expensive is that it's not doing a good job accommodating even more? Yes. Zoning restricts what can be built in the city, so less housing is built than the market demands. Skyscrapers everywhere probably wouldn't be too pleasant, so there's a place for regulation, but if you want prices to go down, loosening regulations will help. > Meanwhile, Portland has a strictly enforced Urban Growth Boundary, and it's cheap. Portland is only cheap relative to California and a few other cities. The growth boundary is part of the cause. That doesn't mean it shouldn't be done, but there are costs. http://www.kiplinger.com/tools/bestcities_sort/index.php?sortby=cost&sortorder=DESC http://www.kiplinger.com/tools/bestcities_sort/index.php?sor... > California hasn't exactly been anti-growth overall. ... And yet it's still expensive. California and most of the rest of America don't really control growth; they just force cities to grow horizontally rather than vertically. This is generally more expensive, and results in cities that are less walkable.

by natrius 16y ago

_delirium 16y ago

I'd suspect a larger portion of the cost-of-living difference is due to desirability of the areas, i.e. relative amounts of demand for each, more than it is due to state regulation impacting supply. People are willing to pay lots more to live in SF than they are willing to pay to live in Austin. It's a pretty easy trend to notice on the most/least affordable lists that seem to come out periodically. If you look at this list of top 5 and bottom 5 affordable cities to buy a house, the trend is that the most affordable cities are ones nobody wants to live in (Indianapolis, Dayton, etc.), while the least affordable cities are ones lots of people want to live in (NYC, SF, Honolulu, etc.): http://realestate.yahoo.com/promo/most-and-least-affordable-cities-to-buy-a-house-2010 http://realestate.yahoo.com/promo/most-and-least-affordable-.... Even true within CA: it's not particularly expensive to live somewhere like Bakersfield, despite all the same minimum-wage/environmental/etc. laws applying there too.

natrius 16y ago
The Bay Area could have enough housing to accommodate far more people at lower prices without sacrificing desirability. It doesn't because of regulation. (Finding the water for those people is another story.) New York is similar.
- _delirium 16y ago
  I suppose that's a possible hypothesis, but I'm skeptical. New York accommodates more people per square mile than anywhere else in the country, and your reason for why it's expensive is that it's not doing a good job accommodating even more? California hasn't exactly been anti-growth overall. Los Angeles is a worldwide poster-child for unrestrained sprawl. The state not only allowed it to grow, but built a ton of freeways, making LA the world's first real car city. The Bay Area has not only interstates and state freeways, but county freeways, and stretches 75 miles across, with sprawl from Walnut Creek to Gilroy. And yet it's still expensive. Meanwhile, Portland has a strictly enforced Urban Growth Boundary, and it's cheap. I suppose it's possible that in the 21st century, someone will show that there's an alternative possibility: a giant metropolis that, through less regulation, has cheap housing. Maybe Austin will become the utopia with 20 million people and $600 rents? We'll see...
  - natrius 16y ago
    > New York accommodates more people per square mile than anywhere else in the country, and your reason for why it's expensive is that it's not doing a good job accommodating even more? Yes. Zoning restricts what can be built in the city, so less housing is built than the market demands. Skyscrapers everywhere probably wouldn't be too pleasant, so there's a place for regulation, but if you want prices to go down, loosening regulations will help. > Meanwhile, Portland has a strictly enforced Urban Growth Boundary, and it's cheap. Portland is only cheap relative to California and a few other cities. The growth boundary is part of the cause. That doesn't mean it shouldn't be done, but there are costs. http://www.kiplinger.com/tools/bestcities_sort/index.php?sortby=cost&sortorder=DESC http://www.kiplinger.com/tools/bestcities_sort/index.php?sor... > California hasn't exactly been anti-growth overall. ... And yet it's still expensive. California and most of the rest of America don't really control growth; they just force cities to grow horizontally rather than vertically. This is generally more expensive, and results in cities that are less walkable.