4 ms·

I love when simple, real-world examples of basic econ 101 show themselves. In all transactions- buying, selling, or exchanging labour for money- both sides of

by mabbo 5y ago

I love when simple, real-world examples of basic econ 101 show themselves. In all transactions- buying, selling, or exchanging labour for money- both sides of the agreement have to see a beneficial deal. You feel that the iPhone 27 is worth however much money, and the store selling you feels that the money is worth giving you the iPhone. If either side does not agree, there is no sale. "Plenty of available jobs" is what happens when the deal you are offering- cash for labour- is not an acceptable deal to the labour side. When businesses cannot be profitable at market-chosen labour prices, the businesses will close down.

war1025 5y ago
The article isn't actually about housing being unaffordable. It says housing is unavailable. They could build more housing, but no one wants to get caught holding the bag if the boom turns to a bust as the world returns more to normal. And even if they did choose to build the housing, housing next year doesn't solve the issue of housing today. That said, where I live we are building plenty of housing but we still can't fill jobs. Why exactly is hard to say, but general consensus is that government unemployment benefits are currently compelling enough that people will trade taking a hit on their income in exchange for not having to work. Can't blame them, I guess. Seems like a painful readjustment in the coming years as we unwind all the emergency decisions we made last year.
- jrs235 5y ago
  OP's comment still holds true: "Plenty of available jobs" is what happens when the deal you are offering- cash for labour- is not an acceptable deal to the labour side. When businesses cannot be profitable at market-chosen labour prices, the businesses will close down. When low paid workers can't afford to live locally because of availability of affordable housing, they must live further away. Commuting has a cost too so if low paid workers can afford housing an hour away, it still might be cost prohibited to take those jobs because commuting costs too much (or "affordable" transportation isn't available). Then if you include the 2+ hours of commute time per shift to take those jobs, it may very well make those jobs less attractive as the effective hourly pay rate is lower than elsewhere.
  - war1025 5y ago
    > Commuting has a cost too so if low paid workers can afford housing an hour away Maybe I'm wrong, but given my experience driving through the Rockies, I doubt there is any more housing an hour away than there is town. It's just a giant vastness of undeveloped land. Wikipedia says that the county Ketchum is in has a population density of 8 people/sq mile, and an area of 2600 sq miles. Wikipedia also says that many people commute in for work from neighboring Lincoln county, population 5000. I think the OP's comment is correct in general, but the particular situation in question has more nuance to it. I don't see any conflict between the two.
chansiky 5y ago
Another econ issue I'm seeing is that home ownership markets run in a different lane to "place to live" markets. Because homes are closer to investments nowadays than a "place to live", the rental prices don't seem to reflect the appropriate value to the demand of people looking to rent or buy for the sake of living.
- jdhn 5y ago
  This is primarily because the US had decided that housing is going to be the primary driver of wealth for the vast majority of people.
  - Wohlf 5y ago
    Land has been the primary driver of wealth for all of human history, very few modern countries are different.
  - ljm 5y ago
    This is playing out in a lot of Western countries. Canada, NZ, Australia... Can't speak for those but housing is seen as an investment in the UK too. Everyone wants their house prices to go up, to get a return on having a place to live. The government won't lift a finger because they also have their money in property, as does the electorate that keeps voting them in. Advocating for any kind of regulation or intervention would be sheer political suicide. The generation that has enjoyed affordable housing the most has been making short work of pulling up that ladder behind them.

by mabbo 5y ago

war1025 5y ago

The article isn't actually about housing being unaffordable. It says housing is unavailable. They could build more housing, but no one wants to get caught holding the bag if the boom turns to a bust as the world returns more to normal. And even if they did choose to build the housing, housing next year doesn't solve the issue of housing today. That said, where I live we are building plenty of housing but we still can't fill jobs. Why exactly is hard to say, but general consensus is that government unemployment benefits are currently compelling enough that people will trade taking a hit on their income in exchange for not having to work. Can't blame them, I guess. Seems like a painful readjustment in the coming years as we unwind all the emergency decisions we made last year.

jrs235 5y ago
OP's comment still holds true: "Plenty of available jobs" is what happens when the deal you are offering- cash for labour- is not an acceptable deal to the labour side. When businesses cannot be profitable at market-chosen labour prices, the businesses will close down. When low paid workers can't afford to live locally because of availability of affordable housing, they must live further away. Commuting has a cost too so if low paid workers can afford housing an hour away, it still might be cost prohibited to take those jobs because commuting costs too much (or "affordable" transportation isn't available). Then if you include the 2+ hours of commute time per shift to take those jobs, it may very well make those jobs less attractive as the effective hourly pay rate is lower than elsewhere.
- war1025 5y ago
  > Commuting has a cost too so if low paid workers can afford housing an hour away Maybe I'm wrong, but given my experience driving through the Rockies, I doubt there is any more housing an hour away than there is town. It's just a giant vastness of undeveloped land. Wikipedia says that the county Ketchum is in has a population density of 8 people/sq mile, and an area of 2600 sq miles. Wikipedia also says that many people commute in for work from neighboring Lincoln county, population 5000. I think the OP's comment is correct in general, but the particular situation in question has more nuance to it. I don't see any conflict between the two.

chansiky 5y ago

Another econ issue I'm seeing is that home ownership markets run in a different lane to "place to live" markets. Because homes are closer to investments nowadays than a "place to live", the rental prices don't seem to reflect the appropriate value to the demand of people looking to rent or buy for the sake of living.

jdhn 5y ago
This is primarily because the US had decided that housing is going to be the primary driver of wealth for the vast majority of people.
- Wohlf 5y ago
  Land has been the primary driver of wealth for all of human history, very few modern countries are different.
- ljm 5y ago
  This is playing out in a lot of Western countries. Canada, NZ, Australia... Can't speak for those but housing is seen as an investment in the UK too. Everyone wants their house prices to go up, to get a return on having a place to live. The government won't lift a finger because they also have their money in property, as does the electorate that keeps voting them in. Advocating for any kind of regulation or intervention would be sheer political suicide. The generation that has enjoyed affordable housing the most has been making short work of pulling up that ladder behind them.