The Homework Newsletter

The HomeWork: December 08, 2021

December 08, 2021

Welcome to the December 08, 2021 Main edition of The HomeWork, the official newsletter of California YIMBY — legislative updates, news clips, housing research and analysis, and the latest writings from the California YIMBY team.

News from Sacramento

The Legislature is in recess until after the New Year. Stay tuned for California YIMBY’s policy updates soon after the holidays.

Housing Research & Analysis

Get a Good Job With More Pay, the Landlord Takes It All Away

Cities with job growth attract new residents and develop a more productive workforce, but the workers who move to growing cities will see their wage gains eaten up by the urban housing shortage. A new paper, aptly titled “Location, Location, Location” by UC Berkeley’s Nobel Prize-winning economist David Card, finds that workers who benefit from pay increases in higher-wage regions also see less take-home pay after accounting for higher housing costs.

Housing shortages give property owners monopoly power to absorb higher wages by charging higher prices, earning larger windfalls from the increasing productivity of the local economy (a pattern known classically as the Law of Rent).

Key takeaways:

  1. Card et al (2021) find that over one-third of the wage premium in higher-income metro areas is “attributable to [local] earnings premiums.” Nearly two-thirds of the effect is the result of higher productivity from the geographic clustering or “agglomeration” of highly skilled and specialized workers.

  2. Workers across the pay scale, not just those with the most education, benefit from agglomeration effects in higher-wage cities in these clustered industries.

  3. Here’s the catch: housing is more expensive in those cities, “enough so to more than completely offset their larger effects on nominal earnings.” In other words, “movements to larger or to higher earnings locations mean reductions in real income.”

Black suburbanization, not gentrification, is changing Black neighborhoods

A new working paper by Bartik & Mast (2021) at the W.E. Upjohn Institute finds that patterns of Black households moving to suburbs in the US are key to understanding increased spatial segregation since 1970.

Key takeaways:

  1. Black households pursued the same quality of life improvements and security from urban disinvestment as white households during “White Flight,” and the data bears this out: “suburbanization entirely accounts for Black households’ relative improvements in several key neighborhood characteristics, while Black city dwellers saw declines.”
  2. Over half of the increase in class segregation within Black communities is explained by suburbanization.
  3. Black populations in central urban neighborhoods have declined steeply since 2000. But this is largely not the result of “gentrification” by in-migration of wealthier white residents. These neighborhoods remain majority Black, high-poverty areas, but have seen a decrease in total population and in-migration.

Houser Headlines

YIMBY Social – Top Posts

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