9 ms·

Inflation, probably followed by corruption. Minimum wage would rise to the point where a person could afford a 1BR apartment within a 1 hour drive without traf

Inflation, probably followed by corruption. Minimum wage would rise to the point where a person could afford a 1BR apartment within a 1 hour drive without traffic. Then the rents of those 1BR apartments would rise to capture that new minimum wage. Then minimum wage would rise to afford the new rent, and so on. Eventually someone's going to say "Hey, I own an apartment block downtown, I'm supposed to rent it out to the hoi polloi, but I'll let you live there rent free if you work for me and do exactly as I say, wink wink". This is a very common situation in much of Latin America - both inflation being transmitted through CoL-indexed social goods, and the corruption that comes from trying to bypass that. Any durable solution needs to address the questions of "How do we ensure that there are enough 1BR apartments within a 1 hour drive for everyone who wants one to get one?", "How do we incentivize the construction of these 1BR apartments?", "How do we maintain the desirability of these apartments once they're built?", and "How do we prevent one firm from owning all of the desirable 1BR apartments and setting whatever price they want?"

dv_dt 5y ago
If the rent pricing exceeds the production or maintenance cost of the apartments by too high a profit margin, then a government or regulated private entity should be formed to build them at a reasonable margin, thus controlling the minimum wage growth. Alternately a large enough ratio of government controlled units within a market could be managed to provide a market weighting to reasonable prices. (you can see that in play in some European cities).
glenstein 5y ago
>Then the rents of those 1BR apartments would rise to capture that new minimum wage. This is commonly expressed as a consequence of raising the minimum wage, but in the most nuanced discussions of inflation that I've been exposed to, people are mindful of the fact that inflation ripples out into different segments of the economy in different ways. I think the most plausible outcome is that certain segments of the economy function as shock absorbers, which take the hit of inflation disproportionately as the economy rebalances itself and relieves pressures on segments of the economy that were being squeezed unsustainably hard. And so there is indeed a ripple effect of raising the minimum wage, namely there's more money to spend, but it radiates out into the economy in disproportionate ways, and can be a net benefit to wage earners because prices on critical necessities may rise, but not in proportion to the rise in wages.
- nostrademons 5y ago
  That's a real phenomena, of inflation rippling outwards and occasionally hitting buffers that cannot pass the price increase on and hence take the hit of inflation disproportionately. Unfortunately it rarely works the way any progressive would want it to. The "buffers" are firms in competitive markets - basically anyone who can't raise prices because there are dozens of other competitors doing the same thing and one of them is going to undercut you if you try. This includes most unskilled labor, many small businesses, small farmers, etc. It most definitely does not include the S&P 500, who got to be one of the top 500 biggest companies by having high margins, economies of scale, and pricing power. This is why the S&P 500 index is roughly double what it was two years ago, while median real wages have fallen about 5%.
  - galangalalgol 5y ago
    Minimum wage has always seemed to me to be an unfair way to mandate a minimum standard of living. You are placing that burden solely on business sectors that cannot automate most of their workforce. I don't know what the right naswer is, both universal income and negative income tax have issues too. Sunsidized housing... Yeah I have no answers.
  - glenstein 5y ago
    I think the phenomenon you're talking about at the end of your comment is something that happens in spite of the beneficial effect of increased wages, rather than something that would count as evidence that people don't benefit from increased wages. Otherwise it would stand to reason that cutting wages would turn the equation inside out, so that buying power goes up with lower wages and economic gains go increasingly to the bottom of the more you lower wages. I don't think that it swings one way or the other, which is to say I don't think that they're so determinative of each other. Those two things just seem too remote from each other to be regarded as in immediate causal connection. There are other contributing variables exerting their influence at the same time: investing, and lending, and spending, and taxing and policy choices are significant inputs that all happen in parallel with wage increases in particular policy and economic climates that have different outcomes from country to country. It also seems to fly in the face of reason to suppose that efficient markets don't see market-wide increases in prices. Firms don't just compete against each other but against the existential question of solvency, and if we're really talking about competitive markets, then these pressures are experienced collectively. So neither the evidence of the stock markets nor the theory about competitive markets never increasing their prices seem to do the work that they would need to do, to suggest that people seeing wage increases are not benefiting from them.
colechristensen 5y ago
Zoning. You link the "zones which employ people" and "zones which house people" to balance so you don't have significantly more jobs than homes. Next you zone for type of housing, where you only allow a certain percentage of the most profitable 1BR apartments to be built, and require those to be above certain size thresholds so that a variety of life situations can actually live in your city. You don't need to "incentivize" construction, the people that do that already make enormous amounts of money.
- puffoflogic 5y ago
  > only allow a certain percentage of the most profitable 1BR apartments to be built Ah yes, the "ban return on investment and ban certain construction" method of promoting construction. Works 100% of the time, every time. See: SF, Seattle, etc.
  - rdtwo 5y ago
    Market forces will always fill the luxury apartment slot first but honestly what passes for luxury will be mid to low quality in a decade
- ben_w 5y ago
  From what I’ve seen in and outside America, my gut feeling (I don’t claim expertise) is that zoning can make things worse. The apartment directly under mine is used as an office. Down and to one side is a psychiatrist. Ground floor is a cafe and a pizza takeaway. The apartment opposite me has a grocery store on the ground floor, an office on the second, a dentist on the third, and it looks like the rest of the units are residential. I may be missing something important about the rules here because I can’t read German well enough, but it feels self-balancing. America… well, this is a tourist perspective, but I didn’t realise how realistic SimCity was before I visited.
  - antiterra 5y ago
    Mixed light-commercial and residential is all over the place in US cities. Those places work best when they are supported by transit and fully walkable resources, which often limits their adoption in the US to areas that are highly dense or have newer commuter rail development. Zoning can keep big lot single homes and giant warehouse areas from disrupting those spaces.
cbozeman 5y ago
That's a very long way of saying, "We don't have enough housing in America."
- missedthecue 5y ago
  trust me, price controls on labor will surely fix the housing shortage!
  - deleted 5y ago
    [deleted]
ummwhat 5y ago
My pet theory is cities are malthusian. Contrary to popular belief, Malthus didn't predict runaway population growth. What he actually predicted (and was right for most of human history), is that any gains in productivity would be eaten up by population growth until the average wealth per person diluted down to it's previous level. So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels. This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.
- astrange 5y ago
  This is 60s boomer philosophy (it's called "cities as growth engines".) The people running California cities now also believe this, which is why around 1970 they essentially made it illegal to ever build or change anything. This was supposed to stop people from moving to California, but since they won't even build enough housing to let their own children live there it's just brought us where we are now.
- greiskul 5y ago
  There is also the Georgian explanation that rent seeking landlords will always increase rent to match any gains in production. Assuming that a landlord will always charge the maximum they can that market will sustain, any increase in production will mean an increase in what the market can pay for housing, and with time, what the landlord can extract from tenants. It neatly explains how cost of living correlates to job opportunities, and how all the productivity gains from technology end up not increasing the general population wealth.
  - crate_barre 5y ago
    Isn’t that where remote work kicks in but we’re too stupid to realize? If the tech people don’t need to concentrate in one area, good luck jacking up the prices to siphon off that wealth. Tech needs to create a box. Literally, a hurricane proof box that that plugs into plumbing. Drop it anywhere in the world and fucking live in it. It’s the same box for everyone, like the iPhone, iPhones are not more expensive in Bay Area or NY. All this nonsense over the fact that we all simply need to live in a box somewhere.
bduerst 5y ago
New construction is unlocked by increased income-linked demand and rents only marginally increase.
andy_ppp 5y ago
Norway is really corrupt hey.
113 5y ago
Surely if it's the case that rent will always absorb any increase in wealth then that is a housing problem, not a wage problem.
breadbreadbread 5y ago
rent control

dv_dt 5y ago

If the rent pricing exceeds the production or maintenance cost of the apartments by too high a profit margin, then a government or regulated private entity should be formed to build them at a reasonable margin, thus controlling the minimum wage growth. Alternately a large enough ratio of government controlled units within a market could be managed to provide a market weighting to reasonable prices. (you can see that in play in some European cities).

glenstein 5y ago

>Then the rents of those 1BR apartments would rise to capture that new minimum wage. This is commonly expressed as a consequence of raising the minimum wage, but in the most nuanced discussions of inflation that I've been exposed to, people are mindful of the fact that inflation ripples out into different segments of the economy in different ways. I think the most plausible outcome is that certain segments of the economy function as shock absorbers, which take the hit of inflation disproportionately as the economy rebalances itself and relieves pressures on segments of the economy that were being squeezed unsustainably hard. And so there is indeed a ripple effect of raising the minimum wage, namely there's more money to spend, but it radiates out into the economy in disproportionate ways, and can be a net benefit to wage earners because prices on critical necessities may rise, but not in proportion to the rise in wages.

nostrademons 5y ago
That's a real phenomena, of inflation rippling outwards and occasionally hitting buffers that cannot pass the price increase on and hence take the hit of inflation disproportionately. Unfortunately it rarely works the way any progressive would want it to. The "buffers" are firms in competitive markets - basically anyone who can't raise prices because there are dozens of other competitors doing the same thing and one of them is going to undercut you if you try. This includes most unskilled labor, many small businesses, small farmers, etc. It most definitely does not include the S&P 500, who got to be one of the top 500 biggest companies by having high margins, economies of scale, and pricing power. This is why the S&P 500 index is roughly double what it was two years ago, while median real wages have fallen about 5%.
- galangalalgol 5y ago
  Minimum wage has always seemed to me to be an unfair way to mandate a minimum standard of living. You are placing that burden solely on business sectors that cannot automate most of their workforce. I don't know what the right naswer is, both universal income and negative income tax have issues too. Sunsidized housing... Yeah I have no answers.
- glenstein 5y ago
  I think the phenomenon you're talking about at the end of your comment is something that happens in spite of the beneficial effect of increased wages, rather than something that would count as evidence that people don't benefit from increased wages. Otherwise it would stand to reason that cutting wages would turn the equation inside out, so that buying power goes up with lower wages and economic gains go increasingly to the bottom of the more you lower wages. I don't think that it swings one way or the other, which is to say I don't think that they're so determinative of each other. Those two things just seem too remote from each other to be regarded as in immediate causal connection. There are other contributing variables exerting their influence at the same time: investing, and lending, and spending, and taxing and policy choices are significant inputs that all happen in parallel with wage increases in particular policy and economic climates that have different outcomes from country to country. It also seems to fly in the face of reason to suppose that efficient markets don't see market-wide increases in prices. Firms don't just compete against each other but against the existential question of solvency, and if we're really talking about competitive markets, then these pressures are experienced collectively. So neither the evidence of the stock markets nor the theory about competitive markets never increasing their prices seem to do the work that they would need to do, to suggest that people seeing wage increases are not benefiting from them.

colechristensen 5y ago

Zoning. You link the "zones which employ people" and "zones which house people" to balance so you don't have significantly more jobs than homes. Next you zone for type of housing, where you only allow a certain percentage of the most profitable 1BR apartments to be built, and require those to be above certain size thresholds so that a variety of life situations can actually live in your city. You don't need to "incentivize" construction, the people that do that already make enormous amounts of money.

puffoflogic 5y ago
> only allow a certain percentage of the most profitable 1BR apartments to be built Ah yes, the "ban return on investment and ban certain construction" method of promoting construction. Works 100% of the time, every time. See: SF, Seattle, etc.
- rdtwo 5y ago
  Market forces will always fill the luxury apartment slot first but honestly what passes for luxury will be mid to low quality in a decade
ben_w 5y ago
From what I’ve seen in and outside America, my gut feeling (I don’t claim expertise) is that zoning can make things worse. The apartment directly under mine is used as an office. Down and to one side is a psychiatrist. Ground floor is a cafe and a pizza takeaway. The apartment opposite me has a grocery store on the ground floor, an office on the second, a dentist on the third, and it looks like the rest of the units are residential. I may be missing something important about the rules here because I can’t read German well enough, but it feels self-balancing. America… well, this is a tourist perspective, but I didn’t realise how realistic SimCity was before I visited.
- antiterra 5y ago
  Mixed light-commercial and residential is all over the place in US cities. Those places work best when they are supported by transit and fully walkable resources, which often limits their adoption in the US to areas that are highly dense or have newer commuter rail development. Zoning can keep big lot single homes and giant warehouse areas from disrupting those spaces.

cbozeman 5y ago

That's a very long way of saying, "We don't have enough housing in America."

missedthecue 5y ago
trust me, price controls on labor will surely fix the housing shortage!
- deleted 5y ago
  [deleted]

ummwhat 5y ago

My pet theory is cities are malthusian. Contrary to popular belief, Malthus didn't predict runaway population growth. What he actually predicted (and was right for most of human history), is that any gains in productivity would be eaten up by population growth until the average wealth per person diluted down to it's previous level. So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels. This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.

astrange 5y ago
This is 60s boomer philosophy (it's called "cities as growth engines".) The people running California cities now also believe this, which is why around 1970 they essentially made it illegal to ever build or change anything. This was supposed to stop people from moving to California, but since they won't even build enough housing to let their own children live there it's just brought us where we are now.
greiskul 5y ago
There is also the Georgian explanation that rent seeking landlords will always increase rent to match any gains in production. Assuming that a landlord will always charge the maximum they can that market will sustain, any increase in production will mean an increase in what the market can pay for housing, and with time, what the landlord can extract from tenants. It neatly explains how cost of living correlates to job opportunities, and how all the productivity gains from technology end up not increasing the general population wealth.
- crate_barre 5y ago
  Isn’t that where remote work kicks in but we’re too stupid to realize? If the tech people don’t need to concentrate in one area, good luck jacking up the prices to siphon off that wealth. Tech needs to create a box. Literally, a hurricane proof box that that plugs into plumbing. Drop it anywhere in the world and fucking live in it. It’s the same box for everyone, like the iPhone, iPhones are not more expensive in Bay Area or NY. All this nonsense over the fact that we all simply need to live in a box somewhere.

bduerst 5y ago

New construction is unlocked by increased income-linked demand and rents only marginally increase.

andy_ppp 5y ago

Norway is really corrupt hey.

113 5y ago

Surely if it's the case that rent will always absorb any increase in wealth then that is a housing problem, not a wage problem.

breadbreadbread 5y ago

rent control