Changes in housing costs in metropolitan regions are more easily navigated by some

Rents may be down in parts of San Francisco but some people moving within the region or outside of it have encountered higher housing prices:

While rents in San Jose have fallen 6 percent since January, tech havens in Santa Clara County — including Mountain View, Sunnyvale and the city of Santa Clara — have seen rents fall by at least 11 percent during the covid pandemic, according to a new study by Apartment List. Rents also declined in the East Bay.

The exodus of now working-from-home techies from the Bay Area has left openings and rent discounts at complexes near the tech giants. The uncertainty of the pandemic has driven renters back home, to spacey outer-suburbs or to remote towns and resort communities such as Lake Tahoe…

The demand for more living space and the shortage of homes for sale has driven up single family home prices in Silicon Valley, with suburban buyers pushing median prices to $1.33 million in Santa Clara County and $1.63 million in San Mateo County in September, according to CoreLogic data…

Popov said rent declines have generally decreased the farther away you get from San Francisco. Outer markets in Salinas and Sacramento, for example, have seen rents climb.

The effects of COVID-19 illustrate how housing prices within a region or within contiguous regions do not necessarily all follow the same patterns. Even as one area might experience less demand in one part of the market – rental units in particular neighborhoods communities, other portions of the market – such as single-family homes – may be more expensive.

In a market like this, those who can move around have some advantages. First, those with resources and particular occupations can move away from areas with more cases of COVID-19. This could have a direct effect on health. Some of these workers might return when COVID-19 is no longer a concern but for now they can be in less dense areas and work from home.

Second, some people are more able to move than others. Even if prices are going up in desirable locations, they can pay more. They have particular occupations that allow them to work from home, an option that is less possible certain job sectors. Perhaps their social networks and connections to local institutions are more fluid and accessible remotely.

This discussion occasionally comes up when people look at available jobs throughout the United States. The question will arise: how come more people do not move to go where the jobs are and take advantage of the economic opportunities? Moving is not a simple task. It involves more than just having a good job or not.

The same can be true of housing costs. The price of renting or buying a home can vary dramatically from place to place. Yet, a large number of people may not move one way or the other for a variety of reasons. And since jobs and housing prices are linked for many, it can be hard for many to simply leave the expensive Bay Area or move within the region to take advantage of lower rents or costs in some areas.

Boost economic opportunity by giving all Americans a car

In discussing the possibility of free transit, the alternative of providing cars comes up:

Instead of the pledges to expand electric vehicle charging stations that fill their presidential platforms, the candidates should all be focusing on how to eliminate car ownership. Because right now, if our only goal were to improve individual economic outcomes, we’d just give every person in this country a brand-new car. In the same way universal health care has been made part of the Green New Deal, universal access to zero-emission transportation needs to be included, too.

A driver’s license has has become virtually required to participate in much of U.S. society. But what if the piece of plastic we use to validate our identities guaranteed access to so much more? Imagine a single card—or an app—that, like in many other countries, could unlock train rides, bus rides, bike rides, scooter rides, van rides, car rides anywhere in the nation. Now imagine what we might achieve when those services are not only funded adequately, but also free for everyone to use.

Free transit alone isn’t nearly enough to fix this country—but it could be one piece of a bigger, truly universal transportation solution that might.

This reminds me of a program I once heard about in Wisconsin. A group provided lower-income residents a reliable used car so that they could then access jobs and other opportunities. If the goal is to help people find steady employment, having a car that works without needing a lot of maintenance or a lot of gas can go a long way.

The paragraphs above do bring up a conundrum in the United States: if many people need to drive significant distances on a daily basis to find good work (spatial mismatch) and having a car is expensive, what are those without resources supposed to do? A consequence of sprawling cities, suburbs, and regions is that people need to provide their own transportation and this comes at a significant cost. As noted in the article, even free transit may not solve everything if mass transit does not connect where people live to where people work.

As people try to promote free transit (and better transit), this conversation could lead to a different kind of car commercial at the holidays. Used Toyota Corollas for those who need them! A Christmas gift of a reliable used car could just mean the difference between a good life and a tough life.

The seven American counties where there is no black-white income gap

Pew looks at the seven places in the United States where black residents have higher median incomes than whites:

Yet, a tiny number of places exist where black household income is greater than that of whites. Of the 364 large U.S. counties whose populations are at least 5 percent black, there are seven, according to a Stateline analysis of U.S. Census Bureau American Community Survey data for 2010-14…

The greatest similarities may be their proximity to core urban areas and high-paying corporate or government jobs, as well as their supply of affordable, albeit expensive, homes and good schools.

Valerie Wilson of EPI said affluent black families may have had to move farther from cities to find the good housing and schools they seek because the black middle class, with less net worth, cannot afford rising housing prices in the cities or private schools.

The article stresses that there are no lessons to be learned here even as there might be some patterns. The seven places do raise a number of interesting questions worth exploring:

  1. The emphasis here is on the movement of black households to these counties. At the same time, what traits do the white residents of these counties have (that they are not living in areas with more inequality)?
  2. Did the counties or local governments do anything to help promote these trends? I’m guessing these are largely the result of the “free market.” Yet, just because it happened in seven counties suggests this is a pretty rare outcome of the this free market.
  3. What are the levels of residential segregation in these counties? Simply suggesting that blacks and whites have similar incomes doesn’t necessarily mean that the two groups regularly interact.
  4. That this kind of equality can only be found in suburban areas likely would not please many suburban critics. However, many large cities and closer suburbs have a range of issues – from concentrated poverty to a lack of affordable housing – that can limit the opportunities for non-whites to succeed.

These places would be worth watching in the coming years.

Shift in US toward more inequality across cities

The differences in per capita incomes across US cities have grown in recent decades:

Until the early 1980s, a long-running feature of American history was the gradual convergence of income across regions. The trend goes back to at least the 1840s, but grew particularly strong during the middle decades of the 20th century. This was, in part, a result of the South catching up with the North in its economic development. As late as 1940, per-capita income in Mississippi, for example, was still less than one-quarter that of Connecticut. Over the next 40 years, Mississippians saw their incomes rise much faster than did residents of Connecticut, until by 1980 the gap in income had shrunk to 58 percent…

Yet starting in the early 1980s, the long trend toward regional equality abruptly switched. Since then, geography has come roaring back as a determinant of economic fortune, as a few elite cities have surged ahead of the rest of the country in their wealth and income. In 1980, the per-capita income of Washington, D.C., was 29 percent above the average for Americans as a whole; by 2013 it had risen to 68 percent above. In the San Francisco Bay area, the rise was from 50 percent above to 88 percent. Meanwhile, per-capita income in New York City soared from 80 percent above the national average in 1980 to 172 percent above in 2013.

The article has a long discussion of the various reasons behind this. But, I think the conclusion is correct:

Growing inequality between and among regions and metro areas is obvious. But it is almost completely absent from the current political conversation.

Inequality may be a broad issue for the entire country to address but what is happening in different places is unique. This may make it difficult to address variations within a presidential race where the candidates are supposed to represent everyone. Imagine a Republican or Democrat trying to appeal to a particular metropolitan region: “my platform is built around what Detroit needs!” or “the success I’ve helped create in Burlington, Vermont is what we should bring to the entire country!” (This does highlight the unique role mayors or former mayors could play in national elections. They are likely to think more at the city or metropolitan level but it is really hard for such experience to translate into national electoral success.) But, city-level issues certainly could be addressed by Congress or by states.

Americans not so sure playing field is level, American dream attainable

Data from recent years suggests fewer Americans think they can get ahead:

Surveys continue to show that Americans, in large numbers, still believe in many of the tenets of the American dream. For example, majorities of Americans believe that hard work will lead to success. But, their belief in the American dream is wavering. Between 1986 and 2011, around 50 percent of those polled by Pew consistently said they felt that the American dream was “somewhat alive.” However, over that same time period, the share who said it was “very alive” decreased by about half, and the share that felt it was “not really alive” more than doubled…

The majority of Americans once thought the playing field was more or less level. No more. Back in 1998, a Gallup poll about equal opportunity found that 68 percent thought the economic system was basically fair, while only 29 percent thought it was basically unfair. In 2013, feelings about fairness had reversed: Only 44 percent thought the economic system was fair, while 50 percent had come to feel it was unfair. Another 2013 poll found that by an almost two-to-one margin (64 to 33 percent), Americans agreed that “the U.S. no longer offers an equal chance to get ahead.”

Perhaps as a result of all of this, there are signs that the very idea of the American dream is changing. The American dream has long been equated with moving up the class ladder and owning a home. But polling leading up to the 2012 election revealed something new—middle-class Americans expressed more concern about holding on to what they had than they were with getting more. Echoing these concerns, Pew reported in 2015 that when asked which they would prefer—financial security or moving up the income ladder—92 percent selected security. This is a seven percentage point increase since just 2011, when 85 percent selected security over economic mobility.

And while majorities of Americans continue to say that home ownership is a key part of the American dream in general, when a survey asked people which things were the most important to their personal American dream, only 26 percent selected “owning a nice home” as a top choice, while 37 percent chose “achieving financial security” and 36 percent chose “being debt free.” In a 2013 Allstate/National Journal Heartland Monitor poll that asked respondents to define what it means to be middle class, 54 percent of respondents chose “having the ability to keep up with expenses and hold a steady job while not falling behind or taking on too much debt,” and only 43 percent defined being middle class as earning more, buying a home, and saving…

Three thoughts:

  1. Presumably, the economic crisis of the late 2000s contributed to this but so likely have other trends such as a declining amount of trust in social institutions and the decades-in-the-making changes brought about by economic globalization.
  2. Some have suggested that these numbers mean Americans no longer want these traditional markers of the American dream – like owning a home. More precisely, the surveys suggest Americans are more pessimistic about their own chances of owning a home. But, if the economy turned around (wages started going up, more good jobs became available, etc.), I suspect many Americans would go back to earlier behaviors. Maybe this would change if the pessimism and economic trouble continues. Yet, Americans have shown a willingness in the last century or so to consume at high levels when economic times are good.
  3. There has never truly been an “equal chance of getting ahead” in the United States. There have been times – such as after World War II – when prosperity was more broadly shared among the population and the gap between the rich and the poor shrank. Additionally, perceptions of this matter beyond the social realities. If people feel that social conditions are unequal, they can be unequal indeed.

More sociologists and other scholars advocating for marriage?

There isn’t much data here presented to defend a trend but here is a brief look at recent research that highlights the benefits of marriage in the United States:

The new wave of pro-marriage scholarship is challenging orthodoxy in academic fields with reputations — fair or not — of being politically liberal, and perhaps even antimarriage, or at least marriage-neutral. Part of the shift is because marriage itself has changed within the last few generations. “Criticism of marriage as a social institution comes from the universal and basically compulsory system of marriage in the 1950s,” said Philip Cohen, a sociologist at the University of Maryland at College Park who has been critical of some recent scholarship promoting marriage. “When people got married who did not want to get married, especially women, and when women’s rights within marriage were much more limited, employment opportunities much less, domestic violence taken much less seriously, when rape wasn’t even a crime within marriage — that system deservedly had a bad rap.”

The new champions of marriage disagree on how, and even whether, to encourage marriage through public policy. Nonetheless, there is an emerging consensus around an idea that would have sounded retrograde just a few decades ago: that having married parents is best for children’s well-being, that marriage is beneficial for parents’ psychological and economic stability, and that it should be a priority in public policy…

It’s low-education (and often low-income) “fragile families” that most concern researchers. Princeton University sociologist Sara McLanahan recently wrote that children growing up with a single mother are “doubly disadvantaged”: They spend less time and receive less money from their biological fathers, and their mothers are also likelier to earn less than married mothers are. Children born to unmarried parents fare worse on a wide variety of measures, including an increased likelihood of developing behavior problems and of not making it to college…

Single people aren’t resisting matrimony because of some sort of moral weakness or stubbornness, these critics say, but because they have existing disadvantages, including economic ones. “The people who get and stay married — and make it look like married people are better off than people who aren’t married — were better off already,” Cohen said. “Marriage is a privileged position.” Simply prodding the currently unmarried into matrimony will not magically make them more stable, healthy, and wealthy.

As the article notes, scholars on different sides of the political spectrum disagree on what policies to enact to promote marriage and have different definitions of what marriage should be. But, could the two sides ever come together to promote a middle policy or in order to broker a compromise? If anything, it might be the pressure within each academic discipline that keeps the sides apart.

Ferguson doesn’t get much revenue from the Fortune 500 companies in town

Many suburban communities give tax breaks to corporations so that they locate in their community. Ferguson, Missouri is one such case where Emerson Electronics and other businesses don’t pay as much as they might in local taxes:

In 2014, the assessed valuation of real and personal property on Emerson’s entire 152-acre, seven-building campus was roughly $15 million. That value has gone up and down over the last five years as Emerson has sold off some buildings and built others, but it has not exceeded $15 million in the period since the data center was completed. So what happened to that brand-new $50 million dollar building?…

For tax purposes, Emerson’s Ferguson campus is appraised according to its “fair market value.” That means a $50 million dollar solar-powered data center is only worth what another firm would be willing to pay for it. “Our location in Ferguson affects the fair market value of the entire campus,” Polzin explained. By this reasoning, the condition of West Florissant Avenue explains the low valuation of the company’s headquarters.In fact, the opposite is true: The rock-bottom assessment value of the Ferguson campus helps ensure that West Florissant Avenue remains in its current condition, year after year. It severely limits the tax money Emerson contributes to the Ferguson-Florissant district’s struggling schools (Michael Brown graduated from nearby Normandy High School, a nearly 100 percent African American school that has been operating without state accreditation for the last two years), and to the government of St. Louis County more generally. On the 25 parcels Emerson owns all around St. Louis County, it pays the county $1.3m in property taxes. Ferguson itself receives far less. Even after a 2013 property tax increase (from $0.65 to the state-maximum $1 per $100 of assessed value), Ferguson received an estimated $68,000 in property taxes from the corporate headquarters that occupies 152 acres of its tax base—not even enough to pay the municipal judge and his clerk to hand out the fines and sign the arrest warrants.

St. Louis County doesn’t just assess Emerson a low market value. It then divides that number in three—so its final property value, for tax purposes, ends up being one third of its already low appraised value. In some states, Ferguson would be able to offset this write-down by raising its own percentage tax rate. Voters would even be able to decide which services needed the most help and raise property taxes for specific reasons. But Missouri sets a limit for such levies: $1 per $100 of property. As Joseph Pulitzer wrote of St. Louis during the first Gilded Age, “millions and millions of property in this city escape all taxation.”…

Emerson Electric isn’t the only business on Ferguson’s West Florissant Avenue. The street is also home to a number of big box stores including a Home Depot, a Walmart, and a Sam’s Club, located at the city’s northern limit. These companies all came to town in 1997 through something called tax increment financing—known (to the extent it’s known at all) by the acronym TIF. Along with low appraisals and tax abatements, TIF districts are one of Missouri’s principal tools for encouraging new development.

The conclusion here is that these tax policies reproduce the economic inequalities in Ferguson. Hence, the community has to find alternative sources of revenue, such as targeting motorists.

Here is where this gets trickier: if Ferguson didn’t offer these deals, could it have attracted these businesses? If many suburbs participate in the game of tax breaks, wouldn’t someone else offer good tax breaks? Where race matters here is that communities like Ferguson – lower income, transitioning from white to black over recent decades – have to offer even better tax breaks to compete. But, for all of these communities, it is a race to the bottom as a better deal to attract a corporation means less revenue for the city. Still, local politicians can sell the jobs created or the prestige generated. But, as this article points out, the jobs and prestige may not help much in the long run.

What you might need here is a metropolitan wide policy against such tax breaks or TIF districts to reduce the competition. Or, perhaps some tax revenue sharing program where sales tax and property tax dollars are partly redistributed to reflect who shops at or works at these facilities (they all don’t come from the community in which the firm is located). Yet, such policies require a lot of political will and again encounter the problem of race as communities, especially wealthier ones, will not want to share their revenues with others.