20% of Americans speak a language other than English at home

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Occasionally, statistics about the United States stand out. Here is one I recently saw involving language as reported by the AP:

In the United States, one in five people age 5 and over speak a language other than English at home, according to data from the U.S. Census Bureau. In immigrant-friendly Los Angeles, more than half of people do.

This is likely linked to relatively high levels of immigration in recent decades (and projections for more foreign-born residents in years to come). Pew summarizes the trend:

There were a record 43.2 million immigrants living in the U.S. in 2015, making up 13.4% of the nation’s population. This represents more than a fourfold increase since 1960, when only 9.7 million immigrants lived in the U.S., accounting for just 5.4% of the total U.S. population…

PewForeignBornPopulation

And by far, the language other than English spoken most at home is Spanish.

Wealthy Americans: “Zip code is who we are”

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I would argue this is not just true of “the new American aristocracy“; where people live has a significant impact on their lives.

Zip code is who we are. It defines our style, announces our values, establishes our status, preserves our wealth, and allows us to pass it along to our children.

On an everyday basis, living in a certain location could affect these aspects of life:

  • social networks and local relationships with different groups of people (race/ethnicity, social class, similar interests)
  • schools
  • access to jobs
  • other local amenities such as community services, recreation, shopping
  • health

Now, the upper class may use their zip code in unique ways. The full paragraph that includes the excerpt at the beginning of the post suggests the zip code becomes a way to keep others out:

Zip code is who we are. It defines our style, announces our values, establishes our status, preserves our wealth, and allows us to pass it along to our children. It’s also slowly strangling our economy and killing our democracy. It is the brick-and-mortar version of the Gatsby Curve. The traditional story of economic growth in America has been one of arriving, building, inviting friends, and building some more. The story we’re writing looks more like one of slamming doors shut behind us and slowly suffocating under a mass of commercial-grade kitchen appliances.

This has been happening for decades in the United States as residents of particular races and ethnicities (primarily whites) and social class (primarily the middle and upper classes) had various mechanisms, now some illegal and others more nebulous (such as exclusionary zoning), to keep those they did not like away from their residences. And this will likely continue for decades more, perhaps particularly for the top 10%.

Americans can spend a majority of their time in a few spaces in their home and still want large homes

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Americans may not need such large homes if a recent study is correct in showing where they spend their time inside their house:

A research team affiliated with UCLA studied American families and where they spend most of their time while inside their homes. The results were fascinating, but really not all that surprising. Here’s one representative example:

As you can see, most square footage is wasted as people tend to gather around the kitchen and the television, while avoiding the dining room and porch.

This is part of the reason newer homes do not need formal living rooms or dining rooms and instead often focus on open floor plans connecting kitchens with living areas.

However, while this study may have measured where people actually spend time in their homes, it does not necessarily mean that homeowners do not desire extra features. I can think of at four additional arguments homeowners might often make:

  1. They need significant amounts of space to store their stuff. Indeed, why get rid of stuff when you can just purchase a larger house?
  2. Even if the family or household members do end up in certain spaces more than others, this does not necessarily mean that they do not need separate spaces occasionally to have their own space away from each other.
  3. Certain spaces may be highly specialized and helpful, such as a dining room that accommodates large family meals or a hobby room where a homeowner can pursue their interests or a quiet and comfortable space.
  4. A larger home is a sign of success or tied to a particular lifestyle. For example, many homeowners may no longer use a porch but still prefer that look.

I’m also reminded of a recent survey that suggested the largest regret homeowners have is that they did not purchase a larger home.

See also a February 2017 post titled “Explaining why Americans desire larger homes.”

We bought a Toyota Echo for $6,600 in December 2006; sold it for $1,500 eleven and a half years later

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Our family recently bid adieu to our 2000 Toyota Echo with its manual locks, manual windows, cassette deck plus CD player, and over 163,000 miles.

ToyotaEchoMay18.jpg

Despite its features that were outdated even when we bought it, it served us well:

-No major repair issues.

-30+ MPG. Not quite the Geo Prizm or small Honda Civics but good for commuting.

-Obtaining decent all-season tires provided much better traction in winter and handling.

-Decent size inside, particularly for headroom.

-Low insurance costs plus some resale value twelve years later.

There are not too many of these early Echoes left; this probably has less to do with their reliability and more to do with their limited sales in the first place.

As shopping malls suffer, suburbs experience consequences

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The slow death of many shopping malls is well documented and it does not just affect retailers and developers; it has consequences for suburbs.

When anchor stores close, it can be hard to find businesses to replace them, because they occupy the multistory buildings at mall entrances that are often at least 100,000 square feet. If no replacement tenant is found, the loss could trigger a decadeslong downward spiral for the shopping mall and surrounding communities.

“The communities wither away, and they never come back,” said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in New York City…

The process of a shopping mall shutting down is slow, often over the course of a decade or more. As stores are boarded up one by one, shopper traffic slows and crime in the area tends to spike, Davidowitz says.

“Malls are big, big contributors to city and state taxes, jobs, and everything,” Davidowitz said. “Once they close, they are a blight on the community for a very long time.”

There are a number of options for suburbs to consider when renovating or replacing malls: try to fill vacant retail space, creating more experiences such as interesting architecture, introducing more mixed uses, and just demolishing the mall and starting over.

But, all of these require time for change to occur, foresight and flexibility on the part of local officials and residents to think about what might be more appropriate in these spaces (as well as how they might diversify their local economy and tax base to offset the loss of tax dollars from a dying mall), and interest in developers and business interests in doing something new. Indeed, a suburb could work really hard to develop new ideas but without an infusion of capital, it may not happen. Or, it may take years for plans to come together and the requisite partners to feel comfortable and meanwhile vacant spaces are just sitting there.

More broadly, the lack of shopping malls hints at a changing way of life in suburbs. Whereas the new postwar suburbs were marked by driving, new shopping malls, and prosperity that allowed people the time and resources to make purchases, suburbs today might be known more for struggling to find retailers, driving to different kinds of places (and less celebration of driving in general), and pockets of prosperity in some places (where malls might still thrive) and then pockets of scarcity elsewhere (where retailers are in short supply or only certain kinds of retailers are available).

Would new local taxes on large tech firms really cause them to leave Silicon Valley?

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Several communities in Silicon Valley are considering levying special taxes on large companies, possibly affecting some of the biggest tech companies:

Cupertino, Mountain View and East Palo Alto have begun to ponder new taxes based on employer headcounts — levies that could jolt Apple and Google — and if voters endorse the plans, a fresh wave of such measures may roll toward other corporate coffers.

Alarmed by traffic and other issues brought on by massive expansion projects, the three Silicon Valley cities are pushing forward with separate plans to impose new taxes that could be used to make transit and other improvements…

A lot of factors point to this being a prime time for efforts such as these. San Francisco ranked fifth worst for traffic congestion in the world — and third worst in the U.S. — last year, according to INRIX Global Congestion Ranking. Record housing prices in 2018 boosted the median price of a single family home in the Bay Area to a record $893,000 in April, according to a CoreLogic report.

Federal tax cuts also have improved the balance sheets on an array of U.S. companies, large and small. Silicon Valley’s largest tech companies have contributed to the gridlock on freeways and soaring housing costs as they’ve grown rapidly in recent years, with brisk hiring and expansion in unexpected areas and mega-leases that gobble up huge swaths of office space.

If this works the way that some would argue it does, then the local taxes will be viewed by the tech companies as an unnecessary burden for their operations. They should then consider moving elsewhere where they are not subject to such local taxes. Indeed, if they wanted to move sizable operations, they could probably get numerous communities to offer them tax breaks.

However, this assumes that the local taxes are the primary factor that determines where companies and organizations locate. Instead, there are a variety of factors that both support and work against staying in their current location. I assume these are important reasons for why Apple, Facebook, Google, and others are in this location: the construction and maintenance of large headquarters, proximity to other like-minded organizations, an talented employee pool nearby, and the proximity to major cities like San Jose and San Francisco. Are local tax issues more important than these other concerns? Probably not. And even if they are, it would take some time before a large organization could significantly alter their operations in response.

Fighting smog not by reducing driving but by insisting on more efficient cars

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Smog and air pollution due to vehicles is a familiar sight in many large cities. Yet, Crabgrass Crucible suggests the fight against smog in Los Angeles did not target driving itself but rather automakers:

The ban on fuel oil easily found favor among antismog activists. After all, like the steps with which smog control had begun, it mostly targeted the basin’s industrial zones. Harder to swallow in Los Angeles’s “citizen consumer” politics of this era, even for antismog activists, were solutions that might curtail the mobility associated with cars. Consonant with national trends noted by automobile historian Thomas McCarthy, there was a widespread reluctance to question orthodoxies of road building and suburban development. Even the “militant” activists at the 1954 Pasadena Assembly only went so far as a call to “electrify busses.” By the 1960s, as motor vehicles were estimated to cause nearly 55 percent of smog, there were suggestions for the development of an electric car. Yet Los Angeles smog battlers of all stripes raised surprisingly few questions about freeway building. For many years, Haagen-Smit himself argued that because fast and steady-running traffic burned gasoline more efficiently, freeways were smog remedies. So powerful and prevalent were the presumed rights of Angelenos to drive anywhere, to be propelled, lit, heated, and otherwise convenienced by fossil fuels, that public mass transit or other alternatives hardly seemed worth mentioning.

Once pollution controllers turned their sights to cars, they aimed not so much at Los Angeles roads or driving habits or developers as at the distant plants where automobiles were made. Probing back up the chain of production for smog’s roots, local regulators and politicians established a new way of acting on behalf of citizen consumers. Rather than pitting the residential suburbs of the basin against their industrial counterparts, in an inspired switch, they opened season on a far-flung industrial foe: the “motor city” of Detroit. The APCD’s confrontations with Detroit car makers had begun during the Larson era, but quietly, through exchanges of letters and visits that went little publicized. In 1958, after the nation’s chief auto makers had repeatedly shrugged off Angeleno officials’ insistence on cleaner-burning engines, the Los Angeles City Council went public with its frustration. It threw down the gauntlet: within three years, all automobiles sold within the city limits had to meet tough smog-reducing exhaust standards. Because its deadline had passed, a 1960 burst of antismog activism converged on Sacramento to push through the California Motor Vehicle Control Act. The battle was hard-fought and intense, but the state of California thereby wound up setting pollution-fighting terms for its vast car market. (232-233)

This helps put us where we are today: when the Trump administration signals interest in eliminating national MPG standards for automakers, California leads the way in fighting back.

Ultimately, this is an interesting accommodation in the environmentalist movement. Cars are significant generators of air pollution. Additionally, cars do not just produce air pollution; they require an entire infrastructure that uses a lot of resources in its own right (building and maintaining roads, trucking, using more land for development). Yet, this passage suggests that because cars and the lifestyle that goes with them are so sacred, particularly in a region heavily dependent on mobility by individual cars, the best solution is to look for a car that pollutes less. This leaves many communities and regions in the United States waiting for a more efficient car rather than expending energy and resources toward reducing car use overall. And the problem may just keep going if self-driving cars actually lengthen commutes.

A smaller housing bubble: prices up, easier credit but homeownership down, fewer involved

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Discussion of a looming housing bubble hints at similar factors to the problems of the 2000s:

The number of FHA-insured borrowers who are behind on mortgage payments has jumped, Wade wrote in her testimony. The use of down payment assistance is up. The frequency of FHA borrowers who are spending more than 50 percent of their income on debt payments has increased, too. And the number of borrowers refinancing their homes to take cash out for other uses has swelled…

After years of tight credit in the aftermath of the Great Recession, both conventional mortgage lenders and the FHA have been easing credit standards — allowing for low down payments, for example, or higher levels of borrower debt — to lure first-time and low- to moderate-income buyers back to the housing market, industry observers say. By making it easier for these groups to obtain mortgages, the observers argue, it is only natural to see a modest uptick in missed payments — especially by FHA borrowers — after almost seven years of steadily dropping delinquency rates.

Not all market observers are convinced that these changes are OK. As federally sponsored mortgage giants Fannie Mae and Freddie Mac, as well as the FHA, have introduced these easier credit requirements to promote more homeownership, some critics worry that the mortgage industry could be headed toward dangerous  territory if it continues to become easier to get a mortgage — especially amid what Edward Pinto, a fellow at the conservative think tank American Enterprise Institute, currently calls the “Housing Boom 2.0.” By allowing borrowers to take on more debt or put less money down on a house in today’s super-charged real estate market, observers such as Pinto argue, lenders could be setting themselves up for higher rates of borrower default in the event of a recession — something that Pinto believes is not too far off…

To be sure, observers such as Nothaft add, the current easing of today’s requirements is nowhere near where it was a decade ago. Leading up to the recession, lenders were allowing borrowers to provide no documentation of their finances and granting loans with no money down.

Given the fallout and long recovery time after the burst housing bubble of the late 2000s, few policymakers or lenders would want a repeat. Yet, there are some significant differences in the housing market right now:

  1. Prices may be up and demand may be high but fewer people are participating in buying and selling homes.
  2. Home construction is not at the same level as it was through the 1990s and early 2000s.
  3. Lenders are not quite providing mortgages with the same terms they had in the 2000s (as noted above).
  4. Homeownership in the United States is at relatively low levels: 64.2% in the first quarter of 2018 after even lower figures in previous years.

All together, this suggests that the scale of a new housing bubble would be smaller than the last one. Perhaps significantly smaller. Fewer buyers, sellers, and lenders got caught up in the rising housing values (and low interest rates) of recent years.

This does not mean that there would not be pain if housing prices and lending collapsed a bit. But, the consequences would simply exacerbate some of the issues various interested parties have discussed:

  1. If prices decrease, even fewer people might be willing to sell their homes. This drives supply even lower.
  2. How much lower could interest rates really go? How much profit could lenders generate?
  3. This could decrease motivation for builders and developers, particularly at the lower ends of the market where there is already significant demand.

The conditions and consequences of a housing bubble today or the next year or two could be very different than the economic crisis we now think we have some handle on from the late 2000s.

Determining who is super-rich, private banking edition

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Categorizing people into different income groups is an interesting exercise for social scientists but it may be necessary for certain occupations. Take private bankers as an example:

Call it economy-class rich. Business class? That’s $100 million. First class? $200 million. Private-jet rich? Try $1 billion…

The measure of what makes someone rich has changed dramatically in the past two decades. In 1994, when Peter Charrington, global head of Citi Private Bank, first joined the firm, “Three million was largely considered ultra-high net worth across the industry,” he recalled. “Fast-forward almost 25 years, and $25 million is how we define ultra-high net worth.”…

Placing investable assets of at least $25 million with a wealth manager—and clients with that amount or more tend to work with a few firms—can bring access to initial public offerings, and having at least $5 million in investments moves a client past one regulatory hurdle to taking part in private offerings…

It’s direct investment in companies and buildings where the line between the rich and seriously wealthy is most pronounced. “This is a threshold differentiator among the world’s wealthiest, compared to the merely very wealthy, let alone the 401(k) investor,” said J.P. Morgan Private Bank’s Duffy. “These very large families are investing in private companies, owning a percent of the company versus a share of a public entity.”

On one hand, $25 million is pushed as a rough cut-off line but, on the other hand, there are some fine gradations both above and below this level. Does the quest to differentiate oneself in terms of resources as well as to offer different levels of service to such people ever end? (Presumably it must stop with the wealthiest people in the world but then there may be a quest to keep pushing those number upward.)

Another piece of this that is worthwhile to consider is the true sign of wealth is to buy into capital or the “means and modes of production.” It is one thing to own objects or investments and it is another to own significant stakes in companies and buildings. For example, the growth machine model of urban development would involve these super-rich individuals who the clout and resources to influence and direct development.

The well-cultivated lawns of Levittown

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The history of environmentalism in the suburbs Crabgrass Crucible includes this description of how Levittown encouraged good looking lawns:

Abraham Levitt, among others, remained keenly aware of the additional work and expense suburban horticulture demanded, as well as the collective benefits that could follow if all Levittowners took the time and trouble to cooperate. However well-chosen and planted, all their grass, shrubs, and trees would die, and the chickweed prevail, if new owners’ commitments and skills were not also fortified. Through a gardening column in the Levittown newspaper, Abraham opened up a weekly line of communication to bring home to Levittowners how “lawns, like all living things, require care.” He “used to come around in a chauffeur driven car” to check on his homeowners’ floral upkeep. If lawns went unmowed or unweeded, he sent his own landscapers to do the job and followed up with a bill in the mail. Most developers at the lower end, like the Romano brothers, were far less solicitous, especially once their homes had been sold.

As lawn cultivation was taken up by new as well as longtime homeowners, its collective benefits, reinforced by the pressure of neighbors’ peeled eyes, helped make it the most ubiquitous of horticultural practices on Long Island. Whether these residents were white or black, however, their memories downplayed the landscaping contributions of builders and developers. Early Levittowners recalled a “sea of dirt” or mud that surged with rain, an uneven respreading of the topsoil, and scrawny, “inexpensive” shrubbery and trees. Residents later remarked little about any lawn damage from roaming children or dogs, or the neglect of lawn care by a neighbor next door. Instead, whether they were Levittowners or lived in African American Ronek Park, their recollections revolved around a joint if rival pursuit of horticultural handiwork. “Everyone” took up the mowing and watering and often the fertilizing and weed killing. As with Levittowners, Eugene Burnett remember “a kind of competition goin’ with that” that made Ronek Park yards into “some of the most beautiful lawns I’ve ever seen anywhere.” Caught up in the lawn-making enthusiasm, even Robert Murphy tried to plant one outside his Crystal Brook home. Yet for large lot owners, the dynamic was less intensely communal – the Murphy’s lawn was not even visible from the road. For denizens of Old Field, but also for smaller lots of horticultural hobbyists, lawns drew less investment of emotion or energy than other vegetation they cared about. (77)

Three pieces of this stand out to me:

  1. The pressure to maintain a nice lawn was present in the early post-war mass suburbs. It may have been present in earlier suburbs but fewer Americans could access those communities.
  2. It appears some of this pressure was promulgated by Abraham Levitt, part of the company that founded the community. At the same time, the developers of Ronek Park did less to landscape new homes there and the pressure to have a nice lawn also was present there.
  3. There are some hints that social class matters here regarding lawns. Was the lawn an essential part of purchasing a single-family home which offered access to the middle class American Dream? Could a poor lawn reduce or invalidate the success of the new suburban homeowner?

It is hard to imagine images of postwar suburban homes, whether in magazines, film, or television shows, without lush green lawns.