Inequality

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Shem
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Re: Inequality

Post by Shem » 26 Nov 2019, 02:08

D.A. Ridgely wrote:
25 Nov 2019, 22:15
Driverless cars might fix LA, or at least considerably ease the pain.

The major metro areas in Texas are still affordable. Yeah, it's Texas, but there is little that isn't absolutely unique to LA or NYC that isn't available in DFW and the thing about poorer people in large metro areas is that they can't really afford all that much of the good life no matter how close it may be to them. For that matter, for overall quality of life places like Austin or Charlottesville, however expensive they may seem compared to most other cities their size, are extremely livable and affordable. Especially younger people without children have, it seems to me, precious little reason not to move rather than complain that this place or that place is too expensive. Unless you're rich, every house or condo you might actually want to live in is "too expensive" when you're a first-time buyer.
Semi-related; have the floods in Houston prompted any changes to zoning requirements down there to alleviate the risk of future floods?
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Re: Inequality

Post by thoreau » 26 Nov 2019, 02:45

Jadagul wrote:
JasonL wrote:
25 Nov 2019, 20:53
Those are all choices. People can make that choice but you don’t get to strike out every lower cost short commute metro in the country and still cry about there being a unique housing shortage.

Too and we all know this, the people who live there absolutely do not believe it should be cheap to live there because that lowers the value they get from living there.

There is nothing to be done about traffic in LA. It’s trash and at capacity and will be forever until the place slides into the ocean.
I mean, yes, everything is a choice on some level.

But if most of the best jobs are in places that are phenomenally expensive to live, that is a problem. It is a problem because people have to play massive amounts of money to live near their jobs if they want a decent job. It's a problem because the best jobs are jobs we _want people doing_, and we're making it way harder for them to do those jobs. And it's just generally inefficient.

(And honestly, your second point is ceasing to be accurate, as the populations involved change. All my friends live in-ish L.A. and also desperately want it to be cheaper.)

Now could people move to cheaper metros? Sure. But in addition to that being a massive move, it almost universally moves you to lower-paying jobs as well as to less exciting neighborhoods.
There's no great mystery in why housing is so expensive in close proximity to the most desirable jobs.

The more important question is why we are seeing so much clustering of highly desirable jobs and apparent hollowing out of other locales. Naively one would think that the internet would make location less important, yet we see so much clustering in this digital era. I think there are lessons in that.
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Re: Inequality

Post by Jadagul » 26 Nov 2019, 02:50

Clustering makes perfect sense to me; and it seems to be pretty consistent and reliable.

The thing is, housing doesn't have to be _so_ expensive there. Sure, housing in Manhattan is gonna be more expensive than in Ames. But if we built more housing the price would go down. If we moved an average 2-bedroom from $2700 in NYC and $2000 in L.A. to like $2000 and $1500 that'd be a huge win!

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Re: Inequality

Post by Eric the .5b » 26 Nov 2019, 02:54

Painboy wrote:
25 Nov 2019, 22:37
Well the housing shortage might just be going away soon.

The Silver Tsunami: Which Areas will be Flooded with Homes once Boomers Start Leaving Them?
Which would generally lower prices, anyway.

Not that I think national rent control has a hope in Hell.
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Re: Inequality

Post by JasonL » 26 Nov 2019, 07:58

Does “most of the best jobs” imply the greatest percentage of jobs valued by the highest skilled people or does it imply the greatest percentage of jobs that provide good standard of living to the greatest percentage of people?

The former is reasonably concentrated but I’m not at all certain the latter is.

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Re: Inequality

Post by D.A. Ridgely » 26 Nov 2019, 09:05

Shem wrote:
26 Nov 2019, 02:08
D.A. Ridgely wrote:
25 Nov 2019, 22:15
Driverless cars might fix LA, or at least considerably ease the pain.

The major metro areas in Texas are still affordable. Yeah, it's Texas, but there is little that isn't absolutely unique to LA or NYC that isn't available in DFW and the thing about poorer people in large metro areas is that they can't really afford all that much of the good life no matter how close it may be to them. For that matter, for overall quality of life places like Austin or Charlottesville, however expensive they may seem compared to most other cities their size, are extremely livable and affordable. Especially younger people without children have, it seems to me, precious little reason not to move rather than complain that this place or that place is too expensive. Unless you're rich, every house or condo you might actually want to live in is "too expensive" when you're a first-time buyer.
Semi-related; have the floods in Houston prompted any changes to zoning requirements down there to alleviate the risk of future floods?
I don't know. Like most people who live in DFW, I mostly just sneer at and otherwise ignore Houston.

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Re: Inequality

Post by thoreau » 26 Nov 2019, 10:32

Jadagul wrote:Clustering makes perfect sense to me; and it seems to be pretty consistent and reliable.

The thing is, housing doesn't have to be _so_ expensive there. Sure, housing in Manhattan is gonna be more expensive than in Ames. But if we built more housing the price would go down. If we moved an average 2-bedroom from $2700 in NYC and $2000 in L.A. to like $2000 and $1500 that'd be a huge win!
Clustering does make sense. However, ceteris paribis, I would expect more clustering when long distance communication is expensive and less clustering when long distance communication is cheap.

Also, the persistence of clustering in spite of cheap communication has implications for the survival of our sector, despite what the digital Kool Aid drinkers say.
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Re: Inequality

Post by Eric the .5b » 26 Nov 2019, 19:59

thoreau wrote:
26 Nov 2019, 10:32
Clustering does make sense. However, ceteris paribis, I would expect more clustering when long distance communication is expensive and less clustering when long distance communication is cheap.

Also, the persistence of clustering in spite of cheap communication has implications for the survival of our sector, despite what the digital Kool Aid drinkers say.
Given every tech dipshit goes to SF to annoy the local dipshits who'd rather build a wall around the place so they can whine in peace about housing costs rising while preventing any new construction...Sorry, lost my train of thought.

Oh, yeah, PHBs turn out to want to be able to see and pester their employees in person.
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Re: Inequality

Post by thoreau » 26 Nov 2019, 20:50

OK, so the persistence of clustering in spite of technological change is not so surprising, given human nature.

I guess the question, then is why the distribution of places with desirable jobs is (apparently) sharpening, with some places pulling far ahead of others faster than before, rather than most places growing in productivity at comparable paces. It suggests a less diversified economy, or at least less diversified in the sectors that need people instead of machines. Do the stats bear that out?
"They were basically like D&D min maxers, but instead of pissing off their DM, they destroyed the global economy. Also, instead of their DM making a level 7 paladin fight a beholder as punishment, he got a +3 sword of turning."
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Re: Inequality

Post by JasonL » 27 Nov 2019, 00:19

Network effects of tech and finance id guess play a role. Concentrations of money to invest and established pathways for those dollars to find returns in tech create their own momentum with density. Investors find signal value in “former googler startup” and startups seek smart money like “former Goldman Sachs hedge guy”.

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Re: Inequality

Post by Shem » 27 Nov 2019, 01:38

Labor pool is what really winds up hamstringing a lot of the attempts to expand outside of the currently popular areas for any given industry. Getting people trained to do jobs really drives home the extent to which local community colleges and training providers have their offerings shaped by the largest employers in the area, which in turn ensures that the employers have enough labor to continue to grow. We see it every so often; a business will decide to move part of their operation to Kansas or South Carolina or whereever in search of cheaper staffing costs, and it works out well for a while, but eventually everyone who is qualified to work there does, and they don't have the (for example) three Community Colleges and five coding boot camps within 15 miles to churn out enough entry-level employees to make up for growth and turnover.

Plus, density of industry makes it easier to partner to innovate. For example, there's a program at (IIRC) South Las Vegas CC that trains people to catch cheaters and security risks at casinos; I had the chance to talk to someone involved, and he said that someone properly trained can pay for their salary within three months. Having it makes for a big advantage, but the expense and limited value until there are enough employers around to use the service mean that it's the sort of advantage that can only make an established industry stronger, not help solidify one that's still growing.
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Re: Inequality

Post by Jadagul » 27 Nov 2019, 14:48

Also, more density enables more specialization, and specialization makes everyone richer. And even if _your_ job lets you collaborate with people who don't work nearby---and most people really underestimate how valuable at least some face time is for that sort of thing---that doesn't necessarily hold for the people you work with. Or work for. Or who work for you.

Honestly, I'm not too worried about the welfare of the Google software engineers. They're doing fine, regardless. But everyone else _also_ makes more money in urban cores. You make more working at McDonald's in San Francisco or Boston than you do in Lexington or Ames. (And no, that's not "just paying for cost of living"---you can't afford to pay people more unless they're producing more, in the long run.)

But those increased earnings, and increased productivity, gets eaten up by unnecessarily expensive housing. Fixing that problem is free money to the middle and lower-middle classes.

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Re: Inequality

Post by JasonL » 27 Nov 2019, 15:38

You don’t make that much more at Starbucks. The implied cost of living compression is pretty extreme in the equilibrium you are assuming. What does it take/what does life actually look like with density sufficient for cost of living to adjust that far?

I think you are somewhat modeling that density as a spherical cow. Everything about the place changes with multiples of density. Frictions in transport, housing, wages, school.

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Re: Inequality

Post by thoreau » 27 Nov 2019, 16:34

The problem with solving poverty via moving is that it requires the existence of middle options. Some cities have lots of economic activity but commensurately high costs of living. Some cities are cheap but also stagnating. Moving only improves the lot of low-income workers if there are middle-ground cities with enough economic activity to provide work but not so much that the cost of living is too high. (We'll leave aside, for now, the tough to quantify economic value of having friends and family who can babysit, give you a ride when your car breaks down, etc.) If locales are bifurcating, with the biggest locales pulling far ahead of the rest, the middle is harder to find.

So then the question is whether network effects really are driving this bifurcation of locales, or if it just seems this way because the NYC, LA, and SF Bay greater metro areas attract so much attention. If there is such a bifurcation, loading up the car and moving is less of an option than you might hope. If there isn't, well, then the only appropriate response to low-income workers is "Are there no U-Hauls? No online apartment listings?"
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Re: Inequality

Post by JasonL » 27 Nov 2019, 19:15

Many people in the overall discussion about locales dramatically overestimate the premise that there are no middle places. The conversation quickly turns to snark about staying home in bumfuck or move to New York where "all the jobs are". It's goofy and untrue.

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Re: Inequality

Post by JasonL » 27 Nov 2019, 19:17

And moving doesn't solve poverty. The ability to earn vs cost of living is a real and obvious thing that for some reason makes people profoundly uncomfortable.

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Re: Inequality

Post by Warren » 27 Nov 2019, 19:31

JasonL wrote:
27 Nov 2019, 19:15
Many people in the overall discussion about locales dramatically overestimate the premise that there are no middle places. The conversation quickly turns to snark about staying home in bumfuck or move to New York where "all the jobs are". It's goofy and untrue.
I don't know how many people are trying to make that claim. But it is goofy and untrue.
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Re: Inequality

Post by Jadagul » 27 Nov 2019, 19:49

JasonL wrote:
27 Nov 2019, 19:17
And moving doesn't solve poverty. The ability to earn vs cost of living is a real and obvious thing that for some reason makes people profoundly uncomfortable.
But ability to earn also increases consistently with density. Because value created, yes even by Starbucks employees, increases with density.

That doesn't mean that, holding current policy and prices constant, it might not be financially advantageous to move to a place where you will earn less and also spend less. Insofar as that is your argument it is correct. But that also seems like something we should want to fix; we'd like people doing the jobs that produce _more_ value, not _less_.

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Re: Inequality

Post by JasonL » 27 Nov 2019, 21:11

Spherical cow. Low skill face to face doesn’t scale that way.

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Re: Inequality

Post by thoreau » 27 Nov 2019, 21:18

Of course middle places exist. The question is, how many people can they absorb? What if a sizable number of low-skilled workers leave LA, NY, and SF, maybe enough to move the needle on the cost of low-end housing and the price of low-skilled labor? What happens to the middle places? Obviously conditions change at least somewhat in the middle places, but do they get saturated before or after there's a noticeable effect on conditions in LA, NY, and SF?

And if we really are seeing increasing concentration of high-skilled labor because of network effects and whatnot, that has implications for the number of middle places and their capacities. If the middle places have high capacity, great. U-Haul can solve the problems of low-skilled workers in LA, SF, and NY. If the middle places don't have substantial capacity, I don't claim to know what to do about low-skill workers, but talking about moving isn't much of an answer.
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Re: Inequality

Post by JasonL » 27 Nov 2019, 21:23

There are forces pulling both ways. Remote locations and big corps divesting lower skill out of large cities. Financial services has been pressing south and west for a decade or more. Best places to start a career with my firm are Raleigh, Covington KY, Westlake TX and Albuquerque. Not home base Boston.

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Re: Inequality

Post by Jadagul » 27 Nov 2019, 22:03

JasonL wrote:
27 Nov 2019, 21:11
Spherical cow. Low skill face to face doesn’t scale that way.
No, I mean there's actually moderately robust empirical evidence that even low-skill work pays more and produces more in dense areas.

This also makes sense theoretically, because it enables more specialization. It's a real welfare and productivity gain that when my friends say "oh, we should go out for Indian food!" I can say "which kind?" And then pick my favorite Himalayan/Tibetan restaurant instead of the other Himalayan/Tibetan restaurant that is also within walking distance. And that's despite the fact that these cooks aren't any more individually skilled than any other low-end restaurant cook.

In a denser area, you have more people. And that means everyone can be more specialized, and then people who live there have more options, and everyone can get a better/more valuable experience even though no individual worker is more actually-skilled.

That's what a productivity increase looks like. And increased productivity means increased welfare-production, which means higher wages.

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Re: Inequality

Post by JasonL » 27 Nov 2019, 23:15

The wage variance by region in low skill employment has a total range of like 25%. Cost of living adjustments are very substantial.
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Re: Inequality

Post by JasonL » 27 Nov 2019, 23:21

Starbucks Manhattan is currently listing entry level at $12.50. Local Cincinnati entry is $10.

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Re: Inequality

Post by Shem » 28 Nov 2019, 02:28

JasonL wrote:
27 Nov 2019, 23:21
Starbucks Manhattan is currently listing entry level at $12.50. Local Cincinnati entry is $10.
Considering NYC minimum wage is $15/hour for businesses that employ more than 10 people (and $13.50 heading into $15 on 12/31/19 for smaller ones), I'd say your listing is out of date.
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