4 ms·

> It's not as if the other costs of running a government increased by x%. Isn't it? If those workers want to buy houses, or rent, as most do, then it has gone

> It's not as if the other costs of running a government increased by x%. Isn't it? If those workers want to buy houses, or rent, as most do, then it has gone up. And since that is the majority of what people pay. So these workers costs have gone up significantly, with a raise in house prices.

burfog 7y ago
There is an increase, but it is delayed and diminished. The city budget is not 100% salary. The city may buy water, textbooks, fire engines, fencing, sod, bleachers, asphalt, diesel, and so many other things. Rent and mortgage payments don't immediately change for all existing workers. The bubble may turn in to a crash, meaning that these workers never face higher housing costs. Workers will normally be spending about 15% to 45% of their income on housing, meaning that most of their costs are unaffected by a housing bubble. Workers buy so many other things: food, computers, gasoline, cars, etc. So if housing goes up by 50% now, next year the workers might need an extra 20% to maintain lifestyle, and that might mean the city budget needs to go up by 10% next year or the year after. If housing crashes, it could be less.