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> Because there isn't enough supply. No, Seattle proves that even if you get everybody with a pulse building apartment buildings, you still can't build enough

> Because there isn't enough supply. No, Seattle proves that even if you get everybody with a pulse building apartment buildings, you still can't build enough supply to soak up the excess capital. For example: Why is there a shortage of daycare in Seattle? There's no shortage of space for it. https://www.seattletimes.com/business/developers-struggle-to-get-ground-floor-retail-leases/ https://www.seattletimes.com/business/developers-struggle-to... There's no shortage of demand for daycare - https://www.seattletimes.com/seattle-news/you-should-get-on-a-waiting-list-seattles-child-care-crunch-takes-toll-on-parents-providers/ https://www.seattletimes.com/seattle-news/you-should-get-on-... . And all those Amazon employees are flush with cash. "Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economics-for-preschool-workers-child-care-sector https://www.foxbusiness.com/personal-finance/broken-economic... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash. It turns out that situations can be more complicated than "ECON 101: everything is just supply vs demand". I'm using daycare as an example above, but you can repeat this for lots of things (healthcare, housing, transportation, etc). This is how high income earners can "break" an economy with higher cost of living, despite not doing anything wrong themselves. And this isn't a hypothetical situation, this is how the problem is actually playing out today, across most mid-sized to major cities in the US nationwide.

manfredo 8y ago
> For example: Why is there a shortage of daycare in Seattle? There's no shortage of space for it. https://www.seattletimes.com/business/developers-struggle-to.. https://www.seattletimes.com/business/developers-struggle-to.... There's no shortage of demand for daycare - https://www.seattletimes.com/seattle-news/you-should-get-on-.. https://www.seattletimes.com/seattle-news/you-should-get-on-.... . And all those Amazon employees are flush with cash. But the point is, there's still a shortage. It's not the mere fact that wealthy people exist that is causing the cost of daycare to go up. It's the fact that there isn't enough daycare. If the demand for daycare went up and the supply didn't change then daycare would have gotten more expensive with or without Amazon. > "Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic.. https://www.foxbusiness.com/personal-finance/broken-economic.... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash. Sure wealthy people may be the only ones they can afford scarce goods and services, but wealthy people don't directly cause through scarcity. Scarcity is caused by lack of supply relative to demand. A sudden influx of residents increases demand, but this is fixed by increasing supply. I'm really confused at why you're using this as an example of how the rules of supply and demand don't apply. This is a perfect example of of how supply and demand functions: demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand.
- maxsilver 8y ago
  > demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand. So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect". Except it hasn't. Daycare wages are effectively flat. (In real world dollars, they're actually dropping, once you factor in CoL/inflation). If "everything is just basic supply and demand", how do you explain all the instances like this where supply and demand are fundamentally broken.
  - bduerst 8y ago
    It's weird that you two are arguing over the child care market as a hypothetical, because in Seattle the supply growth has been capped by a licensing bureaucracy. You can read more about the wage issue here: https://www.king5.com/article/news/local/parents-struggling-with-daycare-waitlists-and-costs-in-washington/281-580894588 https://www.king5.com/article/news/local/parents-struggling-...
  - manfredo 8y ago
    > So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect". You're changing topics. In the previous comment you were talking about the price of daycare, now you're talking about the wages of daycare workers. Those are two different markets. Perhaps there's plenty of people willing to work as daycare workers, but there aren't enough daycare centers being opened because of restrictive permitting processes. So the supply of daycare workers is still high (and thus, wages don't go up) but the supply of daycare centers is insufficient.
- shawnb576 8y ago
  That's easy: this doesn't happen in a vacuum of supply/demand. Not everything is a perfectly efficient market. A daycare, like any other business has costs associated with rent (which has gone up a LOT) and employees (who are taking care of my kids and should be paid a decent living wage in a rising-cost-of-living environment). What evidence do you have that they are price gouging rather than simply trying to maintain a working business. Why do you think adding more daycares would significantly change this dynamic?

manfredo 8y ago

> For example: Why is there a shortage of daycare in Seattle? There's no shortage of space for it. https://www.seattletimes.com/business/developers-struggle-to.. https://www.seattletimes.com/business/developers-struggle-to.... There's no shortage of demand for daycare - https://www.seattletimes.com/seattle-news/you-should-get-on-.. https://www.seattletimes.com/seattle-news/you-should-get-on-.... . And all those Amazon employees are flush with cash. But the point is, there's still a shortage. It's not the mere fact that wealthy people exist that is causing the cost of daycare to go up. It's the fact that there isn't enough daycare. If the demand for daycare went up and the supply didn't change then daycare would have gotten more expensive with or without Amazon. > "Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic.. https://www.foxbusiness.com/personal-finance/broken-economic.... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash. Sure wealthy people may be the only ones they can afford scarce goods and services, but wealthy people don't directly cause through scarcity. Scarcity is caused by lack of supply relative to demand. A sudden influx of residents increases demand, but this is fixed by increasing supply. I'm really confused at why you're using this as an example of how the rules of supply and demand don't apply. This is a perfect example of of how supply and demand functions: demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand.

maxsilver 8y ago
> demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand. So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect". Except it hasn't. Daycare wages are effectively flat. (In real world dollars, they're actually dropping, once you factor in CoL/inflation). If "everything is just basic supply and demand", how do you explain all the instances like this where supply and demand are fundamentally broken.
- bduerst 8y ago
  It's weird that you two are arguing over the child care market as a hypothetical, because in Seattle the supply growth has been capped by a licensing bureaucracy. You can read more about the wage issue here: https://www.king5.com/article/news/local/parents-struggling-with-daycare-waitlists-and-costs-in-washington/281-580894588 https://www.king5.com/article/news/local/parents-struggling-...
- manfredo 8y ago
  > So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect". You're changing topics. In the previous comment you were talking about the price of daycare, now you're talking about the wages of daycare workers. Those are two different markets. Perhaps there's plenty of people willing to work as daycare workers, but there aren't enough daycare centers being opened because of restrictive permitting processes. So the supply of daycare workers is still high (and thus, wages don't go up) but the supply of daycare centers is insufficient.
shawnb576 8y ago
That's easy: this doesn't happen in a vacuum of supply/demand. Not everything is a perfectly efficient market. A daycare, like any other business has costs associated with rent (which has gone up a LOT) and employees (who are taking care of my kids and should be paid a decent living wage in a rising-cost-of-living environment). What evidence do you have that they are price gouging rather than simply trying to maintain a working business. Why do you think adding more daycares would significantly change this dynamic?