6 ms·

How many of them would not be making $250k if they moved away from the HCOL area? Rents in NYC have been through the roof. Even with wages up due to the great r

by shmatt 4y ago

How many of them would not be making $250k if they moved away from the HCOL area? Rents in NYC have been through the roof. Even with wages up due to the great resignation, it hasn't kept up with housing. Spending 50%+ of your post tax high pay check on housing has become the norm. You could live far away from the city and spend 3-4 hours commuting every time you wanted to enjoy the city life or your employer asked you to come in. Or you could move away and risk getting fired or "salary adjusted" The article kind of ignores the fact the high salary is directly tied to office location. You can save more by moving away from HCOL areas, but you most likely won't be part of the $250k article anymore

Someone1234 4y ago
HCOL has an interesting parallel to when women entered the workforce in large numbers, you'd think that households going from single-income to dual-income would make them better off, but much of that new income went into property prices leaving a lot of households little better off in the long term, and leaving single-income households much worse off. To be clear, NOBODY is suggesting women in the workforce is a bad thing, I am merely saying that HCOL's housing cost just suck almost all the regional income gain back out of the market leaving households little better off overall. The best thing we could do as a society is more full-remote jobs, to break up HCOLs and revitalize more rural areas.
- TimPC 4y ago
  Georgists have studied the mechanism by which land captures the value of labour quite extensively and many of them even predicted this trend. The solution to land capturing excess amounts of labour is to reduce total labour capture by taxing land instead of labour.
  - newaccount74 4y ago
    Would that not just lead to increased rent? Is there a way to do it so that rents become lower?
    - throw123123123 4y ago
      Taxes on land dont have economic incidence on rents. The reasoning is that land's profit stems from its location and the land owner doesn't have any bargaining power - his only choice is to not rent the land and absorb the loss of all value. Its not the same with property taxes because builders/buyers can choose not to build, so there is some distortion.
      - pandaman 4y ago
        A land owner has a whole continuum of choices because he is setting the rent price. It's no different from any other seller on the market. The higher price will push the potential tenant elsewhere but if other places are taxed the same way they may also need to raise prices so it will be a wash in lost customers and higher rent across the board.
        TimPC 4y ago
        You can draw the supply and demand curves to see what happens when you add the tax. The supply curve is a straight vertical line since land is in fixed supply. When you tax someone $2000 for land, their demand for the same land falls by $2000. So if you charge the tenant the tax, prices will fall by $2000 making the landlords absorb the cost. If you charge the landlord the tax both the supply and demand curves are unchanged and the tenants pay the same. Taxes on most things change prices by adjusting both supply and demand, it’s the adjustment to supply that can pass on part or most of the tax to the customer. If supply doesn’t adjust you can’t do that.
        pandaman 4y ago
        I really can't. What are supply and demand curves for non-fungible goods? Each plot of land is unique. The asking price doesn't not affect its size. It does affect the time on market: the higher the ask, the longer it will take to rent out.
        TimPC 4y ago
  - soramimo 4y ago
    Interesting. Can you recommend a book or an article on this?
    - TimPC 4y ago
      Progress and Poverty is the most interesting original source but the first few chapters are an outdated theory of capital. I’d recommend one of the modern abridged editions that skips this.
      - soramimo 4y ago
        Thank you! Quick follow up question, which abridged edition would you recommend? Also, are there any recent books on the subject that you would recommend?
- beiller 4y ago
  Maybe its a chicken egg type problem. The solution was that households became dual income. I think the drive for a household to become dual income was probably the HCOL and not vice-versa.
  - bumby 4y ago
    >I think the drive for a household to become dual income was probably the HCOL and not vice-versa. I'm not sure that's correct. I don't have the statistics off hand, but I believe the average home prices were much smaller multiples of household income when most households had a single income.
- jjoonathan 4y ago
  It's almost like the economy is designed to funnel money away from labor.
- Aloha 4y ago
  This is more than likely confusing correlation with causation. There are a host of regulatory issues that made building anything expensive that arose just as women joined the workforce. The largest source of increase in COL over the last is housing. Rents have nearly doubled in constant dollars in most large cities.
  - BlargMcLarg 4y ago
    FWIW the rise in women working has increased individualism and requirements in men pre-dating, which partially reflects in RE (more individual space, less families). This doesn't mean women working is the problem, rather we should've thought harder about what measurements should've been taken when introducing women into the workforce. Several countries are now "fixing" this retroactively, though more so to give women a fighting chance rather than actually helping out workers as a whole (e.g. forced paternity leave).
- noelherrick 4y ago
  I regret to inform you there are lots of people who think that women in the workforce is a bad thing. Fundamentalist evangelical Christians often view this as a negative. There was a conservative thinker on the Ezra Kline show who espoused this view just recently.
- dragonwriter 4y ago
  > NOBODY is suggesting women in the workforce is a bad thing Lots of people, and not just religious conservatives, are arguing th as that, because the exact effect you point out makes it hard not to either say that or that capitalism is a bad thing or that people working more for less is a good thing.
- 62951413 4y ago
  NOBODY? How about anybody who cares for the future of their people or the stability of their society? Forcing women to work is arguably the root of most social ills in the last two generation.
giantg2 4y ago
So how do all the people making under $250k survive in those HCOL areas? It still seems lifestyle choices are a factor.
- paulmd 4y ago
  They survive by not having $200k (average and median) in student loan debt that needs servicing. It's always been an unspoken truth behind the "the people with really high student debt have huge earning potential" counterargument for student-debt cancellation: yup, they do, those are your doctors (in particular). They go into tons of debt to get there, they forego many years of income due to an extended educational/credentialing period. And generally, so few people are willing to take that risk that we already have a massive shortage of them. And unless you reform the educational system, the cost of that student-loan debt all gets rolled into the cost of their services and we all pay it. And it does show up as income in this fashion. It's one of the reasons that fixing the problem is so tough - it's really at the nexus of several broken systems that have complex problems with many stakeholders who are all reticent to reform.
  - ac29 4y ago
    > They survive by not having $200k (average and median) in student loan debt Where do you get $200k from? The average student loan debt for a bachelors degree is $26-36k, depending on type of institution: https://nces.ed.gov/fastfacts/display.asp?id=900 https://nces.ed.gov/fastfacts/display.asp?id=900
    - phonon 4y ago
      It goes way up for advanced degrees. https://educationdata.org/average-graduate-student-loan-debt#:~:text=The%20average%20graduate%20student%20loan,among%20PhD%20holders%20is%20%24159%2C625 https://educationdata.org/average-graduate-student-loan-debt....
      - giantg2 4y ago
        "Among federal borrowers" This doesn't include people who get graduate degrees paid for by their parents or by the company they work for. I got a Masters and didn't take on any debt because the company paid for most of it and I only needed to pay a few hundred in fees each semester. Now is a good time for me to say that it was still a waste of money and time. It was no benefit to me and didn't increase my comp. It would have been better to just work 2 extra hours at my job every day instead.
chiefalchemist 4y ago
> commuting every time you wanted to enjoy the city life How do you enjoy the city life when half of your disposable income goes to shelter? And you haven't eaten yet?? But as long as enough people are willing to chase that dream rents will be high. That is, they will reflect what the market can bear.
deleted 4y ago
[deleted]
jghn 4y ago
> You could live far away from the city and spend 3-4 hours commuting every time This is an example of my point. That's a choice one makes. One might claim, and I'd agree, that it's a shitty choice to have to make and it's better to bite the bullet of high housing costs, but it's still a choice.
rayiner 4y ago
> How many of them would not be making $250k if they moved away from the HCOL area? I live in the D.C. metro, considered a "HCOL area." I'm less than an hour from downtown DC. Our house (almost 3,000 square feet) was under $500k in 2016, and there's still plenty of similar houses between here and D.C. that are still under $500k. But most folks making $250k would rather live an hour on the other side of DC, in the expensive Virginia suburbs where similar houses cost twice as much, but they can be surrounded by college educated professionals with similar complexions to themselves... I used to work in Manhattan and had a great, 30 minute commute from New Rochelle. Looking at Redfin are plenty of 3BR homes in the $500s and $600s within a mile or so of the New Rochelle Metro North Station. That's not cheap, but the PITI on that is a couple of thousand dollars less per month than what the 28% rule gives you for a $250k/year income.
maxerickson 4y ago
A larger percentage of people reported living paycheck to paycheck in lower income groups. You can spend an awful lot on rent at $250k and still have plenty of money left.

by shmatt 4y ago

Someone1234 4y ago

HCOL has an interesting parallel to when women entered the workforce in large numbers, you'd think that households going from single-income to dual-income would make them better off, but much of that new income went into property prices leaving a lot of households little better off in the long term, and leaving single-income households much worse off. To be clear, NOBODY is suggesting women in the workforce is a bad thing, I am merely saying that HCOL's housing cost just suck almost all the regional income gain back out of the market leaving households little better off overall. The best thing we could do as a society is more full-remote jobs, to break up HCOLs and revitalize more rural areas.

TimPC 4y ago
Georgists have studied the mechanism by which land captures the value of labour quite extensively and many of them even predicted this trend. The solution to land capturing excess amounts of labour is to reduce total labour capture by taxing land instead of labour.
- newaccount74 4y ago
  Would that not just lead to increased rent? Is there a way to do it so that rents become lower?
  - throw123123123 4y ago
    Taxes on land dont have economic incidence on rents. The reasoning is that land's profit stems from its location and the land owner doesn't have any bargaining power - his only choice is to not rent the land and absorb the loss of all value. Its not the same with property taxes because builders/buyers can choose not to build, so there is some distortion.
    - pandaman 4y ago
      A land owner has a whole continuum of choices because he is setting the rent price. It's no different from any other seller on the market. The higher price will push the potential tenant elsewhere but if other places are taxed the same way they may also need to raise prices so it will be a wash in lost customers and higher rent across the board.
      - TimPC 4y ago
        You can draw the supply and demand curves to see what happens when you add the tax. The supply curve is a straight vertical line since land is in fixed supply. When you tax someone $2000 for land, their demand for the same land falls by $2000. So if you charge the tenant the tax, prices will fall by $2000 making the landlords absorb the cost. If you charge the landlord the tax both the supply and demand curves are unchanged and the tenants pay the same. Taxes on most things change prices by adjusting both supply and demand, it’s the adjustment to supply that can pass on part or most of the tax to the customer. If supply doesn’t adjust you can’t do that.
        pandaman 4y ago
        I really can't. What are supply and demand curves for non-fungible goods? Each plot of land is unique. The asking price doesn't not affect its size. It does affect the time on market: the higher the ask, the longer it will take to rent out.
        TimPC 4y ago
- soramimo 4y ago
  Interesting. Can you recommend a book or an article on this?
  - TimPC 4y ago
    Progress and Poverty is the most interesting original source but the first few chapters are an outdated theory of capital. I’d recommend one of the modern abridged editions that skips this.
    - soramimo 4y ago
      Thank you! Quick follow up question, which abridged edition would you recommend? Also, are there any recent books on the subject that you would recommend?
beiller 4y ago
Maybe its a chicken egg type problem. The solution was that households became dual income. I think the drive for a household to become dual income was probably the HCOL and not vice-versa.
- bumby 4y ago
  >I think the drive for a household to become dual income was probably the HCOL and not vice-versa. I'm not sure that's correct. I don't have the statistics off hand, but I believe the average home prices were much smaller multiples of household income when most households had a single income.
jjoonathan 4y ago
It's almost like the economy is designed to funnel money away from labor.
Aloha 4y ago
This is more than likely confusing correlation with causation. There are a host of regulatory issues that made building anything expensive that arose just as women joined the workforce. The largest source of increase in COL over the last is housing. Rents have nearly doubled in constant dollars in most large cities.
- BlargMcLarg 4y ago
  FWIW the rise in women working has increased individualism and requirements in men pre-dating, which partially reflects in RE (more individual space, less families). This doesn't mean women working is the problem, rather we should've thought harder about what measurements should've been taken when introducing women into the workforce. Several countries are now "fixing" this retroactively, though more so to give women a fighting chance rather than actually helping out workers as a whole (e.g. forced paternity leave).
noelherrick 4y ago
I regret to inform you there are lots of people who think that women in the workforce is a bad thing. Fundamentalist evangelical Christians often view this as a negative. There was a conservative thinker on the Ezra Kline show who espoused this view just recently.
dragonwriter 4y ago
> NOBODY is suggesting women in the workforce is a bad thing Lots of people, and not just religious conservatives, are arguing th as that, because the exact effect you point out makes it hard not to either say that or that capitalism is a bad thing or that people working more for less is a good thing.
62951413 4y ago
NOBODY? How about anybody who cares for the future of their people or the stability of their society? Forcing women to work is arguably the root of most social ills in the last two generation.

giantg2 4y ago

So how do all the people making under $250k survive in those HCOL areas? It still seems lifestyle choices are a factor.

paulmd 4y ago
They survive by not having $200k (average and median) in student loan debt that needs servicing. It's always been an unspoken truth behind the "the people with really high student debt have huge earning potential" counterargument for student-debt cancellation: yup, they do, those are your doctors (in particular). They go into tons of debt to get there, they forego many years of income due to an extended educational/credentialing period. And generally, so few people are willing to take that risk that we already have a massive shortage of them. And unless you reform the educational system, the cost of that student-loan debt all gets rolled into the cost of their services and we all pay it. And it does show up as income in this fashion. It's one of the reasons that fixing the problem is so tough - it's really at the nexus of several broken systems that have complex problems with many stakeholders who are all reticent to reform.
- ac29 4y ago
  > They survive by not having $200k (average and median) in student loan debt Where do you get $200k from? The average student loan debt for a bachelors degree is $26-36k, depending on type of institution: https://nces.ed.gov/fastfacts/display.asp?id=900 https://nces.ed.gov/fastfacts/display.asp?id=900
  - phonon 4y ago
    It goes way up for advanced degrees. https://educationdata.org/average-graduate-student-loan-debt#:~:text=The%20average%20graduate%20student%20loan,among%20PhD%20holders%20is%20%24159%2C625 https://educationdata.org/average-graduate-student-loan-debt....
    - giantg2 4y ago
      "Among federal borrowers" This doesn't include people who get graduate degrees paid for by their parents or by the company they work for. I got a Masters and didn't take on any debt because the company paid for most of it and I only needed to pay a few hundred in fees each semester. Now is a good time for me to say that it was still a waste of money and time. It was no benefit to me and didn't increase my comp. It would have been better to just work 2 extra hours at my job every day instead.

chiefalchemist 4y ago

> commuting every time you wanted to enjoy the city life How do you enjoy the city life when half of your disposable income goes to shelter? And you haven't eaten yet?? But as long as enough people are willing to chase that dream rents will be high. That is, they will reflect what the market can bear.

deleted 4y ago

[deleted]

jghn 4y ago

> You could live far away from the city and spend 3-4 hours commuting every time This is an example of my point. That's a choice one makes. One might claim, and I'd agree, that it's a shitty choice to have to make and it's better to bite the bullet of high housing costs, but it's still a choice.

rayiner 4y ago

> How many of them would not be making $250k if they moved away from the HCOL area? I live in the D.C. metro, considered a "HCOL area." I'm less than an hour from downtown DC. Our house (almost 3,000 square feet) was under $500k in 2016, and there's still plenty of similar houses between here and D.C. that are still under $500k. But most folks making $250k would rather live an hour on the other side of DC, in the expensive Virginia suburbs where similar houses cost twice as much, but they can be surrounded by college educated professionals with similar complexions to themselves... I used to work in Manhattan and had a great, 30 minute commute from New Rochelle. Looking at Redfin are plenty of 3BR homes in the $500s and $600s within a mile or so of the New Rochelle Metro North Station. That's not cheap, but the PITI on that is a couple of thousand dollars less per month than what the 28% rule gives you for a $250k/year income.

maxerickson 4y ago

A larger percentage of people reported living paycheck to paycheck in lower income groups. You can spend an awful lot on rent at $250k and still have plenty of money left.