>There is no state, metropolitan area or county in the U.S. where workers earning minimum wage can afford a two-bedroom rental home by working 40 hours a week, according to the study.
This seems like an unreasonably high standard for a single minimum wage income unless they're using the excess here as a proxy for other necessities.
Edit: This seems unreasonably high because it greatly exceeds the standard of living we expect for a single minimum wage income household. Sure it would be nice if a single minimum wage household could rend a 2br but that's not what we currently expect them to be able to do. Saying "people who make X can't afford Y" when we didn't expect them to afford Y in the first place isn't very meaningful when you're discussing the ability of people making X to have a standard of living that meets our expectations for people making X.
To need two bedrooms on a single income I guess you have a child or someone else you are supporting like an elderly relative, and possibly a partner as well.
So that means attempting to support a family of two or three on one minimum-wage job.
Exactly, and I'm not sure where people's entitlement here comes from.
American 2-BR apartments in upscale complexes are HUGE (I've seen figures as high as 1300 sq. ft), and in Europe they would easily have a 3-4 person family living in them, with more than 1 person working.
Why does that seem unreasonable to you? Seems to me that there should be tons of places in this country where anyone would be able to afford to rent a small house. That literally none exist is pretty damning.
Minimum wage as adjusted in comparison to rent and home values, started going down in the mid 1970s, so that makes sense that you may not have seen it.
> per the Piketty, Saez, and Zucman data ... The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today.
I asked about the deductions, not just the marginal rate.
My understanding is it matched what's more typical in Japanese C-levels these days. You don't have a crazy salary, but your car is a company car, the company has a deal with the good schools to cover tuition for your kids, you don't pay for breakfast, or lunch ever because you'd be at the office so the company handles it, etc.
Edit: Guys, there's several ways to being down the marginal rate, deductions are only one of them.
In a nutshell, most expenses that businesses can still deduct were once deductible by individuals, the largest (by dollars) being interest deductions for any type of loan.
I mean, this is why I don't look to the Mises Institute for real economic analysis. This is blog post is case in point, they base the whole idea of the deductions reducing the marginal rate on one anonymous former accountant, interspersed with bitching about 'liberals'.
EDIT: I mean, their charts are blatantly mislabeled (even against their argument), showing a top marginal rate of over 90%. These people are just incompetent.
And I'm not citing the Mises Institute for economic analysis, I'm citing it as one of the many dozen potential resources you could have looked at for the historical information you were asking for, namely the deductions that were lost in the 1986 tax reform.
Would you name a country where 1% is taxed @ 90%? and what exactly would it acomplish so a google eng. would suddenly have 30-40K after tax income with 2 mil mortage that would really help make things right.
Google engineers are not the top whatever-percent that needs to be taxed like that, no. It's mostly the idle billionaire class. Warren Buffet agrees with me, FWIW.
That exaggerates how much they’d be taxed, but generally speaking such governments provide more public services (eg health care, quality education) and also build housing. Even in the USA, HUD used to have a bigger budget than the department of defense.
"To better understand how rents and affordability have changed over time, Apartment List analyzed Census data from 1960 - 2014. We find that inflation-adjusted rents have risen by 64%, but real household incomes only increased by 18%."
-- https://www.apartmentlist.com/rentonomics/rent-growth-since-...
The graph lower down on the page is informative, too: only in Las Vegas and Austin did the median rent increase equally to the change in median renter income. In every other urban area, the rent went up faster.
Minimum wage has been $4-10/hr (inflation adjusted) throughout its history in USA; only about as high for the single-person poverty level ($6/hr for single, $10/hr equivalent for a family of 3)
That article puts the average living space sq ft/person at 233 sq ft (959 sq ft/home) in 1938, 387 sq ft/person (avg 1,289 sq ft/home) in 1960, and at 1,046 sq ft (2,657 sq ft/home) today.
That is, since 1960, the average house size has risen 106%, while real rent has risen by 64% (https://www.apartmentlist.com/rentonomics/rent-growth-since-...) since 1960. This would seem to suggest that today's real dollar buys more living space than real dollars past did, but that we're also demanding larger and larger housing.
This is small comfort to the low-income earner looking for housing, of course, but it's nonsensical to expect real housing prices to remain static while the living space allocated to each home grows.
I don't want a big space though, I just want it within an hour commute of my job. Who decided we wanted a few bigger spaces instead of more abundant smaller spaces?
When I bought my house 11 years ago, I could get an older small house or a 21st century house that was too big. I wanted a detached house but I don't need surplus space and I certainly don't want to deal with extra heating/cooling/cleaning/maintenance on that unneeded space. This was in an affordable mid-size town away from the coasts.
I ended up buying a small house that was built in the 1940s. I still wish I could have got something with modern wiring and no lead paint, but the same compact size. I can't tell if people are really demanding larger homes over time (per cheald above) or if people who aren't custom-building are forced to pick from a size range that has offered fewer small houses over time.
Interesting. My theory is that as the exurbs developed and people moved further away from the cities, home sizes got bigger. For instance if you drive 2 hours outside New York you can find huge 3 story houses that cost much less than a tiny house with a tiny yard in the older bedroom communities closer to the city.
But then you have a terribly long commute and as you said crazy amounts of upkeep. I think millennials saw their parents dealing with this and they value living closer to the city.
The minimum was wage enacted such that a single breadwinner earning minimum wage would be able to support a family. A family needs 2 bedrooms and a livable apartment, not the bottom of the barrel, squeezed in to one bedroom.
It is simply not viable or desirable to require the lowest skill jobs to pay enough to support a family. It has never been the case that the least skilled laborers in an economy were able to support families without support from other sources (e.g. a multigenerational house).
Because not all jobs are that valuable. This is essentially replacing welfare by minimum wage, and why should welfare be administered non-progressively through employers instead of the government tax and redistribution?
Should it be illegal do do low positive value work?
No argument. But you seem to be making a value inference that low-value jobs aren't good enough to merit the worker a 2br place without two incomes. Why not? What level-sets what you "should" be able to get, for your low-value work?
The market sets the value, obviously. Social welfare is great -- Medicaid, Unemployment, SNAP, WIC, etc, but shouldn't be paid directly by employers to recipients. Why should an unemployed person getting a low-value job suddenly shift all their welfare support burden from the state to their employer?
Conversely, you are arguing that a minimum wage worker should be able to rent a mid-range (40%) 2-bedroom apartment. Who is suppose to rent the cheaper 10-20% apartments? Why do you think the lowest 4% in wages of USA population deserve an average apartment?
That's a good consideration, but you're forgetting about the part-timers & the unemployed.
I'm not arguing that minimum wage should merit a 2br. I'm just challenging the notion that it shouldn't. There seems to be a sort of, "if you don't work hard and make lots of money, you don't deserve good things", built into that notion. When really, there's not exactly an intrinsic reason why a 2br is too good for a minimum wage worker.
If it's a tight city with high demand and not enough housing, sure, competition for scarce 2br is intense. But if there is plenty of space & housing, why not? SF is a microcosm, most of the country is not like that.
I would like to see the comparison for the EU or Japan... I found this https://www.citylab.com/equity/2015/06/where-europeans-spend..., which suggests it is more reasonable, but doesn't reflect the minimum wage. Maybe it isn't such an unreasonably high standard?
That's true but they aren't arbitrary decisions designed to make one area look bad for the purposes of an article. They are well-defined areas [1] [2].
> Q10. What does the term "HMFA" mean?
> HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined metropolitan statistical area (MSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the MSAs when the geography is not the same as that established by OMB.
Specifically the top 3 are:
San Francisco, CA HMFA
San Jose-Sunnyvale-Santa Clara, CA HMFA
Oakland-Fremont, CA HMFA
The overriding, pervasive problem with regional comparisons is that people give undue attention to non-standard, arbitrary distinctions -- e.g. political borders -- where comparisons across standardized areas (e.g. those defined by the OMB) would be more useful and generate more informative results.
This is an example of a good comparison in a never-ending sea of bad ones.
That's correct. That's why we don't use arbitrary distinctions for proper regional comparisons and why groups like the OMB spend so much time developing standardized areas for comparison.
Your comment is more revealing than even you may realize. There are an infinite number of political borders to be drawn around any "city," but changing those borders doesn't actually change anything about the reality on the ground.
That's why it's important to make like-like comparisons.
No, there's something else to it. It's often used as a misdirection technique, a way to change the subject from an uncomfortable discussion of something the commenter would like to avoid to a raucous debate about irrelevant details. (Not saying that's what's happening here, but.) Another form of the pattern is to just show off how smart the commenter is, disrupting the discussion in the process by getting caught up in details.
I should go dig into the Greek Sophists. They probably had a word for it. They definitely taught it as a technique.
WOW. How about misleading people with cherrypicked examples? That is what is done in Multiple Testing and reporting “sensational” findings. Here are two links:
Tons of people on HN live in the bay area so they can’t imagine things being even more expensive elsewhere in the country. Thus a critique of the methodology behind the loaded headline is dismissed, even voted down.
Welcome to HN. Violate the GroupThink, get downvoted into oblivion. It's happened to me twice in two days (and for one of them, I knew when I posted that it would happen).
But back to my point... the true generalization is that the Bay area, broadly, is the most expensive place in the US to live. Worse than New York. If you narrow down, you can find individual blocks of New York that are more expensive, but across the entire metro?
Sure, the headline/argument is a little sensationalist. But reducto absurdum in the other direction is no better.
I'm fairly sure that high rents in Marin County are not driving homelessness up. And why the focus on minimum wage? Most people who are working minimum wage jobs live with another primary earner.
People live with their spouses because they can't afford ot move out?
And maybe teenagers want to move out of their parents house, but I don't have much sympathy that they can't afford a 2 bedroom in marin county as their first place.
Yes, and are those people earning a living, but just falling a little short of the high prices those areas have? Or, if rents magically dropped in half over night, would they still be homeless?
That's my favorite conspiracy theory. That VCs own the property and are fine with channeling their fund's money (which isn't all or even mostly theirs) into rent.
Disclaimer- I don't really believe it's that simple.
Haha, no, it's definitely not that simple, but it is a fun conspiracy theory. It's really to highlight the "wealth funnels up" effect which happens in a very broad and indirect way
Why is this a conspiracy theory? VCs are very wealthy and at least in theory financially savvy so they probably have a diversified portfolio of investments, some of which is definitely real estate. Seems obvious to me.
If I had to guess somewhere in the next ten years when the absurd number of boomers who have been putting their retirement savings into second and third homes all try to cash out at the same time, flood the market, and find out that it was all just Monopoly money.
When all the boomers sell, the sudden influx of houses on the market is will lower prices so that people like me (I'm in my early 30's) won't have to pay a million dollars for a 2 bedroom condo. On the other hand would falling housing prices cause another recession (I'm no economist) cause me or other people like me to lose their jobs and not be able to afford a house anyway?
Within the next 2-3 years, there is likely to be another recession which will, if patterns follow, will be longer than the previous one. It would be bad news for a lot of boomers getting out of the market for retirement.
As someone who is on the precipice of purchasing a new home, this is my top concern and reason for potentially continuing to rent.
So naturally I am attuned to comments like this, and articles elsewhere, which talk about this subject.
Do you have any further insight into why you think there will be a recession in the next 2-3 years? Other than "it's a cycle and we're lined up for another one" ... Are there other market conditions that are making that more and more of a reality?
Rates of indebtedness, quality of debt(AAA, BBB ratings etc), stock market overvaluation, real estate overvaluation. Take your pick, conditions are very similar to 2007. Whether anything actually happens is the trillion dollar question.
Reading through this now. There's a lot here and I have to admit, much of it is out of my wheelhouse. But I can get the gist of what's being said. I appreciate the link.
Makes me definitely consider putting this housing search on the back burner. In my area we've seen massive price increases in just the last 3 years. I was on a tour of a home yesterday and the agent told me that the previous home tour was with a bay area investor who had cash on hand for the home.
Hard to compete with that. And maybe it's just the wrong time to be competing at all.
I am not an investment advisor But you can approximate the returns you would get from real estate appreciation by carefully investing what you would spend on a home (down payment, taxes, mortgage etc.). Though if theres a major downturn that could also be risky.
There are many indicators that one could look at, "inverted yield curve" is one, but given it's popularity if it actually flips, it might actually trigger the recession in the behaviour that follows, so you end up needing to predict the predictor. And many indicators can get into "lucky socks" cargo cult territory quickly because they happen to match up events/stats with recessionary time periods.
All I can really say is be very sceptical of anyone who says they know for sure - I'm going mostly off my reading of cycle behaviors with some hand wavy harder measures (but economics is a terrible field and even the rigorously defined measures in the end have poor real-world predictive accuracy.)
We've already collectively decided that. The problem is that a significant fraction of people have been misled about which policies will fix it. The problem is that local governments are controlled by the landlords, and they use zoning restrictions to limit supply and keep prices up. The fix is to transfer that power to the state government, which will allow enough housing to be built.
Municipalities aren't like states of the Union. Municipalities have no power except that which is granted to them by the state. There is nothing legally stopping any state government from passing a law tomorrow to change how municipalities are run.
This is overly dismissive of the concerns of poor and working class renters. A big problem in this debate is that privileged, largely white people who want more affordable market rate housing claim to be speaking on behalf of poorer people and claim that the same set of policies and approaches will work for everyone. They dismiss them as “misled” instead of listening carefully to their expressed needs for much more subsidized housing construction and controls on gentrification of their communities. Those are things that local governments can affect, so generally disempowering them is a concern to these communities.
this is 100% not true. Local governments are controlled by old people who are fighting change. Landlords would love to increase the density of properties to make more money from a single property.
It's all anecdotal but recruiters and lot of developers seem to frown on me for not being interested in moving to SV. I'd rather be unemployed in the midwest (which i am) than employed in the SV. Why give up my 1.5 acres and 4500sq ft home for the hell i see advertised on here so often.
They don't, probably. Totally different business models. The conspiracy theory is idiotic. VCs aren't in business to make the relatively flat world of rent. They're looking for that 100x return.
Or, you know, just like the whole point of being a VC is diversifying so much that you catch the one 100x return, they've also diversified their capital also into more stable returns as well so they're not so feast or famine.
Yes, diversifying to catch the 100x, but that's still investing in startups. Doing a corrupt rent pass-through with general partners' money will never generate a 100x.
I mean, I've literally seen it. If you have to pay rent for office space anyway, it might as well go back to you. And I'm sure there'd be internal issues at the fund if someone was doing this and charging above market rates, but otherwise, what's the harm?
What you're describing sounds much more like VCs with offices subletting that space to startups they're funding until the startups grow big enough to get their own space than the more conspiratorial "VCs own the property management companies your startup is leasing from."
In any case, what you're talking about is renting office space -- the linked article is reporting on renting residential space. There's no evidence I can find to suggest that Silicon Valley style VC funding is secretly behind Essex Property Trust, AvalonBay Communities, or other residential REITs.
I think you are missing the point, VCs, the corporate entities DJF, Sequoia etc are not landlords. But their millionaire/billioniare founders and partners almost certainly are.
> Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.
> According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer.
Unfortunately I have to agree with the "myth": outside of urban bubbles like the one I live in, yes, Americans do prefer that. It is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it.
> it is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it.
Incentives play a major role in defining such a culture. It doesn't have to be a positive seemingly self-selected incentive to want to live in the suburbs, but negative ones play a major role as well, such as the insanely high costs to own property... due to severe limitations on developing high density multistory buildings in cities, which is why modern cities are exclusively full of either a mega skyscrapers or a single family homes. Or the ease of an automobile-first lifestyle - which is almost always a reaction to poorly developed mixed density urban areas, causing urban sprawl, not a cause of it.
Just because a lot of people have responded to opting the easiest options given to them doesn't mean the easiest option was the result of market/personal choices. Rather it was ultimately a result of the intention, or more often unintentional, side effects of government policy, not a prolonged series of personal choice.
This is hardly limited to just urban sprawl and land development. Thomas Sowell has a brilliant book on how this same cycle has been applied across US culture/politics/economics for decades after WW2 - well beyond just real estate - to nearly every major sector which influences modern US lives: https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell...
If one considers government economic and social policy by their results, not simply their good intentions, this pattern can be seen in countless places. Yet the popular reaction by the media and political parties is so often to blame personal choice and 'unrestrained' markets for the output.
Part of it's that these cities make it hard to build more housing, sometimes illegally. I give money to CARLA[1] which enforces the housing laws in California.
> At what point do we collectively decide, you know what, this is ridiculous.
When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.
Not really. Frequently cited by young workers are the desire/"need" to be in a big, walkable city, diverse, lots of food options, etc. The concentration of companies seems to be merely a bonus.
It is slowly starting to change as more tech companies arent even located in the bay area anymore. Companies flocked to the bay area for the employee skills but now more of the talent can be found in other cities as well.
You are probably missing the fact that many VCs are likely heavily invested in Real Estate and this chain simply loops back to them, what incentive would they have for changing the status quo?
> The National Low Income Housing Coalition used that number to calculate the hourly wage a household must earn to afford a home while spending 30 percent or less of their income on rent.
This is a nit, but I don't think that's a reasonable way to calculate the relationship between housing cost and affordability. Some expenses do scale with housing cost (mainly things that depend on local labor), but many important ones don't (car payments, grocery bills). So in an area with very high housing prices and a relatively-high minimum wage, you'd expect low-income workers to be able to spend more than the "standard" 30% on housing, and still be able to afford other daily necessities.
I certainly don't mean this as a refutation of the article however -- the Bay Area is a very hard place to live on a low income.
Not your OP and not answering your question directly, but the aforementioned "tech-to-housing cost" ratio isn't so straightforward for finding out where to work. For the record, your parent seems to have thrown out Houston anecdotally. AFAIK it doesn't have a tech scene much different than would be expected from a metro area of ~6M people but it's super cheap to live in as cities go.
The 'cheap' big cities (sticking to the US, those in the middle of the country: Chicago et Houston in particular) have just enough tech to show up on the hypothetical chart and are cheap enough to place well. But IMO, even as a U of Illinois alum and massive fan of Chicago, the tech density isn't such that you would be able to find particularly interesting work, especially compared to the Bay. That said, surely there enough startups that need app/web developers to pay your rent in those relatively inexpensive areas if that's your thing.
The cities that interest me are those with a high density of tech at a lower cost: Austin, Portland, Raleigh, etc. The Bay housing cost is trickling down there too; there are so many people making _so much_ in the Bay that still can't afford to stay that when they start moving to these places they can really affect the smaller markets. Austin has had a crazy housing boom in the last ~15 years, but it would take a _lot_ more people moving to Chicago to move the needle there.
You still face issues with inequality squashing culture, like in Austin, which has a strong history of art and music and is so much cheaper than the Bay but so much more expensive than the areas around it. Bigger cities can generally support the diversity of people needed to maintain a viable culture if they aren't 7x7 miles and surrounded by water on three sides like San Francisco is. In other words, you could move out of the Bay to one of these places and live happily for a few years before you find these same problems following you to your new home.
This is a bit of an exploration but I think about leaving the Bay daily as my wife and I get more serious about starting a family. We talk about this often, and to each family, it's the most important thing in their lives. SV is really in for a wake-up call as it sheds talent that can't afford to stay.
FWIW as someone working in tech in Texas I would say that Austin is probably only 30% more expensive than other cities in Texas overall and has real estate maybe 20% more expensive. Meanwhile it is far and away the major Tech hotspot here with Dallas a distant 2nd.
That's because they don't try to stop builders from building more housing, at every turn. Plus, they don't have as much of those awful regulations and zoning as CA
Absolutely correct. However that can lead to scores of unique problems on their own, from overdevelopment exacerbating the effects of natural disasters (like the flood zone houses being destroyed last year), to utterly hellish development decisions.
I once Googled “Houston zoning fail” with my fiancée when she didn’t believe me that Houston had no zoning laws. We saw an arial photo of a huge skyscraper right next to a low density residential neighborhood and maybe 30 parking spots at best, and we laughed for 10 minutes straight.
This thread really paints a bad picture for the mindset of a lot of people in the high-earning technology industry.
That someone would argue against every job being enough to afford a roof over your head just due to their own need for validation of their importance is frankly sickening.
There are very real reasons to object to an artificial floor to salaries (minimum wage) that have nothing to do with validation.
How expensive do you really want your burger to be? Operational costs get passed on to the consumer after all. Raising the minimum wage just increases the rate of inflation leaving everyone holding the bag.
Also, jobs should pay what they are worth to the business and nothing more. Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
Maybe we should be talking about realigning education to give people valuable skills instead of pushing for the non-skilled to get an artificial raise that evaporates in meaning due to inflation.
EDIT
I'm really surprised by the push back on this from a community of entrepreneurs. Anyone who has run a business will tell you that you can't just raise salaries without increasing costs. It's Econ 101 but apparently that's not the general sentiment here. I hear a lot of complaints about how things "should" be and what's "fair" but the math and reality isn't there to support that. Some jobs just don't have much economic value and pretending that's not the case isn't going to solve anything. It's nice to imagine a situation where janitors and fast food employees can have a middle class lifestyle but who is supposed to pay for that? When the costs of good raise dramatically, their additional pay will get sucked up by inflation. Again, Econ 101.
> How expensive do you really want your burger to be? Operational costs get passed on to the consumer after all. Raising the minimum wage just increases the rate of inflation leaving everyone holding the bag.
This doesn't make sense to me. If it were possible to raise the price of that burger, why wouldn't it already be raised, regardless of operational costs? A business's costs to produce a good typically does not have much to do with the price customers are willing to pay for it.
You're talking about margin and fast food is definitely a low margin business (barring soda).
If salaries increase, the business will literally have to raise the price of goods sold or go out of business. That's different than raising the price to achieve a higher margin (and opening your self up to competition from people who can operate with a lower margin).
If a rational business owner could raise prices and make more revenue, they would, regardless of what their costs are. Why would they wait for their costs (salaries) to increase?
Because your competition's costs are increasing by the same amount at the same time, and their ability to compete on price is hindered by the increase in costs to the same degree yours is.
Their entire analysis hinges on counting benefits as wages. Sorry but my health insurance doesn't pay my rent or put food on the table. Also given that health costs in the US are wildly inflated this analysis seems lacking as health insurance accounts for a very large chunk of employer benefits and are almost entirely eaten up by inflated costs.
Because of competition. Costs set a floor for prices, and competition pushes the price towards that floor (in a well functioning market). If you raise costs for all producers, it will raise that floor price.
I don't agree with the person you're responding to, but to answer your question, one possibility is pressure from the competition. If, say, Burger King wants to compete with McDonalds on price, they can pay their workers less. This forces McDonald's to pay their workers less to stay competitive.
Raising the minimum wage would raise it across the board, thereby allowing McDonalds to raise prices and remain competitive.
However paying workers less results in a lower demand for that job; increasing turnover and increasing operational costs. It isn’t as simple as a unilateral decision to lower wages. In fact, companies like Chick Fil A actually pay higher wages because it gives them a competitive advantage in higher quality employees with lower turnover.
The issue isn’t as simplistic as people seem to imply.
Also, there's some evidence that higher minimum wage drives more dollars thru the local economy, because minimum wage earners spend most/all of their wage, typically locally.
The solution to the "but the market" is governmental action -- when market forces create an undesirable situation, its totally reasonable and rational to have a super-market entity enforce rules. This is not even a generally disagreeable point, we see it all the time, environmental laws, natural monopolies (eg: civic infrastructure), etc. The only question is where do we draw the line?
The problem with a lot of libertarian type arguments is people seem to put the primacy of the market as an inviolable fact above human dignity.
>Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
Unless you are advocating for age discrimination in pay, the fact that a "high school student" can be the one working at McDonalds is irrelevant. McDonalds employees an extremely wide age range of people. Does the 60 year old working the cash register (I've seen countless of these lately) who can't get a job anywhere else deserve to live on the street because you don't think they are important enough to rent?
It is both, to some degree. If our society was willing, for example, to pay $14 for a Big Mac, it's possible a McDonald's cashier working in San Francisco could be paid a livable wage.
When a Big Mac sets you back only $4 in a nearby city, however, the idea of charging $14 becomes an intractable problem.
simply not true because there is no definition of reasonable. A more applicable phrase is if you cant afford to pay employees a wage that employees that can do the job will accept, then it is a failed business.
Is it reasonable that a family of 4 is entitled to a 2 bedroom house? America is 5% of the worlds population but consumes 25% of the worlds resources because what we consider to be poverty in the US is wealthy or at least middle class living to much of the world.
My inlaws had 4 families in a single family home (Approximately 2500 sq ft). Each family had at least two kids (one had 3). Plus their grandmother lived there. They grew some of their own food, never ate out, cooked everything from scratch.
There was always an adult (or older kid) to watch the kids, so no daycare costs. All are well adjusted. When someone lost their job, there was a tremendous amount of support and no one ever had food insecurity, was homeless, had to leave their kids alone etc.
The kids grew up in a fun household and the place was very clean and kept up.
2 of the families saved enough to move out so now there are 3 families left, and the grandma moved back to their originating country. The two oldest kids left for college.
My point there is no consistent definition of "reasonable".
As an individual, improving your education and skills can help solve your employment issues.
However, it is not so simple as a society. Even if we had a magic wand that could suddenly make everyone in the world an expert on every subject, we would still need people to work at McDonald's flipping burgers.
We don't have enough highschool students to fill those jobs. There are going to be adults supporting themselves and their families that are going to be working those jobs.
Improving the skills of people doesn't suddenly change the makeup of what work needs to be done in a society. Sure, in the long run, we can use those advanced skills to improve automation and make obsolete more of those lower skilled jobs, but that isn't going to happen overnight.
Not everyone can be a highly skilled worker, and even people with valuable skills can and do end up jobless or working at minimum wage.
While I think a Universal Basic Income or stronger welfare is a better solution to the problems of homelessness and poverty, raising the minimum wage is a step in the right direction and one that is far more likely to be accepted by our lawmakers.
>Also, jobs should pay what they are worth to the business and nothing more. Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
If this is your argument, you’re going to have to explain why business owners are entitled to the surplus value created by their workers’ labor.
This arrangement seems to be currently enforced with all kinds of threats of violence and deprevation(loss of healthcare, housing, etc), all of which are barbaric by the standards of any other developed country.
Starting a business isn't an obvious proposition, and an entrepreneur takes a lot of risk and puts a lot of startup money (their own or OPM / investors' money) on the line. I've never been that business person / VC and do resent occasionally that my software creativity and grit fuels their occasional outsized returns. However, they had the vision and so get the "surplus value" ... and I get a comfortable-enough lifestyle in return, especially given that lately I earn a somewhat-Bay-Area salary after having moved to North Carolina. If I were renting in the Bay Area I'm sure I'd be looking to get out, and since I sold our condo (unfortunately too soon, in 2013) there, I'm forever priced out of ever returning -- I won't pay the inflated rents there.
I look at four of my relatives who started a Salesforce consultancy, especially my younger older brother who started the whole ball rolling. Though a full-time Boeing 757 pilot for a major airline, he got a software degree, specialized in Salesforce work, started working with others, hired an initial team, and introduced several family members to the whole gig. The relatives founded a partnership and had around 40 billable, very good, consultants working with them, and had committed to longer term real estate leases. They had some marquee clients and a good reputation. Then they hit what hits a lot of family businesses -- intractable personality conflicts. (I'd joined this partnership briefly in 2013 but then bowed out after several months since I guess SFDC consulting isn't my thing and greenfield software constructing/craftsmanship is, and mostly because I sensed those personality troubles brewing.) So ... my younger older brother and younger brother both were left winding down this once-promising consultancy, taking low pay, risking a bunch of collateral (e.g., homes) they thought they would lose at one point, and eking out a low, but at least in the end positive, return. They each would have done significantly better just working on their own for the four years ... and I benefited financially by sticking with the startup world.
So ... I'd like to take a flyer some day on starting my own business one of these years, and I won't feel bad about taking some outlandish returns. If things turned out real well I think I'd pay "my team" more than had been promised them. But I've seen the risks founders take and admire that, and they deserve their gains.
> why business owners are entitled to the surplus value created by their workers’ labor.
Because they are the ones taking the risk. People love to demonize companies, but they fail to acknowledge the thousands of companies that have failed, taking the owner’s capital with it. There is a survivorship bias because all of the companies we hear about are generally making a profit, but there are countless companies that have failed.
So why should the owners get the surplus? Let’s ask another question, why should owners have to suffer loses? Owners are on the hook for loses, why shouldn’t they benefit from the surplus?
> Before you argue the world is like this, let me just ask you why do superfund sites exist then?
The vast majority exist because the operations predated environmental regulations. Also, a significant number are a result of government activities at various levels.
No one is entitled to anything, that is the point. Business owners and employees agree to a mutually beneficial arrangement. But business owners arent entitled to anything except adherence to the agreement. If the employee can get a better deal someplace else, they will. The agreement is between the parties and no one else.
External forces like starvation are not "threats of violence".
What you seem to be suggesting is that government setting of prices would improve things. This has been shown time and again to not work because only the parties involved can correctly evaluate the value.
Raising minimum wage slightly only has slight negative effects. If raising minimum wage really had no negative consequences you could raise minimum wage to $100 and it would be wonderful.
Where government has shown itself to be effective is being a third party that enforces the agreements made between parties, setting the limits of those agreements (e.g. no voluntary slavery), and making sure that the rules are consistent enough that people can make business decisions and rely on the outcomes.
The government just ruled that labor cannot collectively sue in a class action for wage violations. This is an incredibly bad decision, in that people should be able to group together and pool their bargaining as long as they are doing it freely.
>you’re going to have to explain why business owners are entitled to the surplus value created by their workers’ labor
My workers didn't put their names on the loans necessary to start the business. My workers are free to walk away from the business if someone else gives them a better pay rate, or if they just decide they don't want to do the job anymore. They don't get stuck holding the bag if someone's sick or has a personal emergency.
I want to pay the folks working for me well and appropriately, but if the whole thing blows up in our faces, the worst they have to deal with is finding a new job, where an owner has to find a way to pay off any outstanding loans and whatnot. Obviously it's not right to fleece your workers and pocket giant gobs of cash, but at the same time they did not take the risk in opening the business and thus the owners should get more. If they want the extra surplus value of their labor, then I would encourage them to start their own business.
Not only high school students get paid minimum wage.
On minimum wage you cannot even afford a room in the bay area.
The economy is driven by demand. Economic prosperity is the result of EXACTLY the same thing that causes inflation. Dollars wanting to get spent on things that don't exist yet.
However, I will say that the problem is more easily solved by simply building more housing, but everyone who owns property resists that because shortages drive up the price of the thing they own. Imagine if there was a shortage of food, and the people with good refrigeration units and lots of stored grain were drafting and passing legislation against growing new crops. That is the housing situation in the bay area.
Many people who own property absolutely want to put more units on. Others who own property want to stop it because of NIMBY.
Lets say you have a single family home worth $2 million and you replace it with an 8 plex. You can sell each unit for $1M and still make a killing while also dramatically increasing the affordability of the area.
The answer is simple, but the NIMBYs are stopping it due to "neighborhood character"
we do have that legislation against growing new crops today... The farm bills pay people to not grow crops.
Historically speaking, the interstate commerce clause of the constitution was eviscerated as part of the new deal for exactly this reason.
<<An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than the limits that he was permitted and so was ordered to pay a penalty.
In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states").
The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'"[5]>>
There are skills that are very valuable in society that pay very little. For example, maybe a software engineer gets married and has kids. Those kids go to school so the software engineer can go to work all day. The teachers and school staff are most likely getting paid way less than the engineer. Then one of those kids ends up with a mental health disorder or drug addiction. They see a social worker who helps them and gets paid much less than the engineer.
Then on the weekends the engineer wants to have fun with her family and goes out to eat at a fast food place, gets a lawn service so they don't need to do their own yardwork. Those people may be getting paid minimum wage.
So these people who are making the lifestyle you have possible, should not be allowed to afford a place to live because what they do is not valuable? Is that what you're saying?
> So these people who are making the lifestyle you have possible, should not be allowed to afford a place to live because what they do is not valuable? Is that what you're saying?
People will get paid what the market will bear. Supply and demand and all of that. There is no "should", it doesn't enter the equation and as you can see with minimum wage, any attempt to out smart the market will result in inflation/deflation...
Given that Corporate profits have been at all time highs recently I think their responsibility to their workers is obviously being circumvented in order to increase shareholder value. You are stuck in this Corporation first mindset. You ought to get out of it.
The problem isn't that we need to raise salaries to meet housing. The problem is a housing problem. We need to reduce the cost of housing so that people can afford a roof over their head.
There's two ways to reach the desired state here (no full time employed individual cannot afford housing) - increase pay, and decrease housing costs. The trouble with increasing pay is that the rents themselves are set by the market - the bay area has dramatically under built housing for decades, and is still not building much. Raising pay for everyone is essentially a giveaway to current landowners - rent will just rise to absorb the new money flowing into the same amount of housing units. This effect can be observed (at a much higher scale) in the Mountain View housing market - landlords adjust their rent increases with the google stock price. Better solutions include:
A floor on the minimum allowable job is not a floor on the minimum possible standard of living. $0/hr and homeless is also an option. Now, a UBI or job guarantee that pays the cost of our desired minimum standard of living - then we might have something.
Not really comparable. You can go on Craigslist and find decent 2bd apartments in Capitol Hill for $1500-2000 during winter when demand dies down (November-February). I've personally lived in these.
I've lived here since 2014, and have been successively priced out of every single apartment I've had at the end of a lease. I had a ~10 minute commute from West Oakland at first, then when the landlord doubled my rent it became a ~30 minute commute from El Cerrito. When the rent went up 30% there, I was forced all the way out to Pleasant Hill after spending months looking in Berkeley/Albany for something affordable.
I now pay the same rent for a 1 bedroom in Pleasant Hill that my 3 bedroom in West Oakland rented for in 2014. And after 6 months of a hellish 1 hour+ commute I'm realizing it is completely untenable from a mental health perspective. This is for a single person who makes six figures. I can't even imagine what has happened to working class families in that time period.
It really depends what the absolute value of the remaining 50% is. If it's <=$2k/month then yeah, that's pretty bad. If it's $5k/month then you can still live a very nice life and afford many things, in the Bay Area. Don't forget, products bought online still cost the same anywhere in the US (well, almost, there's sales tax involved).
I think people get way too caught up in "oh but I pay <insert large percentage> on housing, that's terrible". It doesn't matter. What matters is how much money you have left after having to pay for rent/mortgage, food, car lease/insurance/registration/gas and utilities. If that amount of money allows you to go to restaurants, go on world trips, buy the latest gadgets/hardware then who cares.
I feel that people complain about this because they imagine some kind of unrealistic scenario "oh, I make $150k/year, imagine how much I would be saving if my rent/mortgage wasn't %50 of my income". Newsflash: rent and mortgages are that high _because_ you (and many others like you) make that amount of money, so pick your poison :) Of course, it's a completely different situation for most people that aren't working as engineers for tech companies in the area...
I was making $72k in Houston. Was paying $1000 for a nice apartment $1BD. Moved to Seattle tocmaken $105k with rent costing me $1600.
72k-(1k12months) = $60k
$105k-(1.6k12) = $85k
So in total I'm making more in Seattle than I was in Houston.
People are just scared of those high prices because they grew up around apartments that were costing $600/month a decade ago. Times changed and rent went up everywhere but people are still being shocked by those high prices because we're slow to adapt.
That's surprising to me -- Craigslist shows a number of 1BR places around Oakland in the $1500-$2000 range. Which is still crazy expensive in an absolute sense, granted, but should be reasonably affordable for a single person with a 6-figure income.
Deep East Oakland is one of the most dangerous places in the country. It’s on a whole other level from an iffy gentrifying area like SOMA. It’s something you just don’t mess with. $1500-$2000 in one of Oakland’s more acceptable areas is likely fraudulent, or is actually advertising a room and not an apartment.
No, that's not it. Further south from Fruitvale. Anywhere near the Oakland Coliseum BART station. And south from that BART station is ground zero. There are areas over there that the police won't go to without SWAT and a large presence.
In a normal city, that lifestyle is dirt cheap. As in, your total spending could be under $15k/year. That frees up a whole lot of possibilities beyond a $100k/year bachelors-degreed corporate 9-5. Grad school, skipping college altogether, the arts industry, the nonprofit sector, part-time work, etc. all become feasible. And if you do go for a high-end white collar gig, your savings percentage is ludicrous - you could very quickly get the point of sustaining the same lifestyle on investment income alone.
If you can tolerate strangers in your kitchen and living room, it's rarely the optimal move to pursue that lifestyle at a high-stress white-collar job in an expensive area, where it's merely prudent. Do it in the sort of place where it's liberating.
I'd also guess that people making the tradeoffs necessary to land at a $100k job are motivated, at least in part, by the desire to live better than this. People who made those tradeoffs during a less severe phase of the housing crisis are feeling a little cheated right about now. Are they the most sympathetic victims in the world? Of course not. They'll be fine. The market will adjust - Bay Area companies will pay more, or have a harder time hiring as word gets around about what those job offers really entail. But it takes time for those cultural memes to propagate - just like it took a while for the general public to catch on that law school is no longer a meal ticket - and people caught up in that latency are going to be a little pissed as the material conditions that their oh-so-alluring "$100k" can buy get worse and worse every year.
As an aside, $1500-$2000 is a lot to pay for a room in Oakland. You'd expect to be in SF for that. Out south and west (towards Daly City) rooms can be $1200 or even $1000.
People always set undisclosed criteria on "I cannot afford" statements. The problem isn't unsustainable rents, the problem is renting the size of place you want, in the location you think you deserve, at the price you (and everybody else) wants to pay.
Shouldn't employers provide Japanese style sleeping capsules for employees at that point? Or can they keep up wages with the increasing cost of living?
That's how you end up with the factory-campus style places like the iPhone factories in China where the workers basically never leave.
On a more serious note, though, some employers do want to build housing near their headquarters (such as Google, for example), but are blocked by city councils. From what I read here, it sounds like you can't put up new housing anywhere near SF.
Ive always suggested that the tech companies need to just start setting up satellite campuses in the central valley. Plenty of cheap housing out there.
There was something like that in North of France last century. The coal mining companies constructed a lot of houses for their employees (wikipedia page, in french https://fr.wikipedia.org/wiki/Coron_(urbanisme)).
It's definitely not bad. It provided poor miners with a decent place to live. Today a lot of them are still here, renovated and retired miners still live in them, most of them for free (my grandparents for example).
I may be wrong, but I believe in the US, the coal mining companies constructed these as well. This led to the workers essentially becoming indentured servants. [citation needed]
>I may be wrong, but I believe in the US, the coal mining companies constructed these as well. This led to the workers essentially becoming indentured servants. [citation needed]
Yep. It also led to one of the bloodiest government orchestrated massacres in US history when striking miners were cleared from their homes in Ludlow, Colorado by the national guard [0]
If your apartment in Oakland was built before 1976, it's rent controlled and that's definitely illegal. Even if there wasn't a former lease, they can't raise the rent by more than a certain amount, often less than 1%.
I also found that specific 1976 law when he brought up the rent increase, but it turns out my building was built in the 80's. I don't necessarily agree with rent control anyways, and I'm not angry at the landlord for wanting to earn market rate on his property. It's just really exhausting to live somewhere like this.
Or Charlotte. Or RTP. Or Austin. Or Phoenix. Or Chattanooga. Or all the other various wonderful places to have satisfying lives and careers and not pay astronomical rent. Seriously getting sick of hearing about the renting woes. Give them the middle finger and move. It's not worth it.
Availability and pay of tech jobs is a sore spot for Charlotte and Chattanooga. I'd enjoy living in either (especially for the high quality internet service in Chattanooga), but employers have major leverage in these places. I don't consider full-time remote employment an acceptable alternative.
> Availability and pay of tech jobs is a sore spot for Charlotte and Chattanooga
? I live in Charlotte, and there is no shortage of 90-135k$ salaried jobs with full benefits, especially if you code in C# or Java. That salary range is _more_ than enough for the house of your dreams, and the ability to be the sole provider for your family if you wish, (however being a DINK is pretty fun, too).
For comparison, I have heard 90k in Charlotte is like 135k in NYC and 150k in the bay area.
A quick Stackoverflow job search shows seven postings in the past month. Two of them are what I would consider regular software engineering jobs. That's horrific to somebody who's worked in a healthy job market where, after a layoff, you can land another good job in a matter of days. Also there's the matter of career fulfillment. In Charlotte, you can either work for a startup for 60-90k or a soul-grinding finance job (or similar) if you want more. There aren't many of the former positions either.
RTP is a much better proposition in that part of the country. Similar cost of living and a real software industry.
So I know people who work as devs at banks- they live in big houses, work reasonable hours, have families and kids and hobbies like restoring cars or fishing. How is that more soul-grinding than working 10 hour days at some SV unicorn for imaginary equity with an hour commute to a one bedroom apartment?
Not sure if you are being sarcastic or not. I definitely see HNs pro-at all costs-SV bias but I think it's a website dedicated to tech news and not income maximization? Oh and I can't smell any of y'all so that isn't really an issue.
I've been on here for many years and a lot of the most interesting insights I've gleaned have come from people who do not prioritize income above other things in life, plus a lot of the really interesting people on here are not sweaty nerds.
>Or Charlotte. Or RTP. Or Austin. Or Phoenix. Or Chattanooga
All of which are wonderful places for a centrist/libertarian/conservative white person to live. I dream all the time of having that luxury. Maybe things will go back to normal some day. But the political climate in this country has made practically any red state unlivable for someone like me.
Or, if you really want to influence change and impact the country, staying in a dark blue state and living within an ideological bubble isn't going to change anything. Charlotte has seen a great migration from blue-collar democrats from the Ohio/PA/NY areas, and I believe PHX is seeing the same from Chicago and surrounding areas.
For me personally, virtue signaling do-gooders with billions of dollars that just happen to live in a city with a crippling homeless problem doesn't sound attractive to me.
>Or, if you really want to influence change and impact the country, staying in a dark blue state and living within an ideological bubble isn't going to change anything.
I really don't want to influence or impact anything. I just want to live a happy life where I don't fear getting murdered at a traffic stop for the color of my skin.
Contrary to popular opinion, there are many more people of color being murdered at a traffic stop in blue states than red states, so not sure what you are trying to poke at here. Maybe the KLS shooting? That was the only incident in my entire time living here I can think of. The fact that that was done by an officer of color doesn't seem to dawn on anyone, or that maybe it was actually justified, but anyways, I think you have your mindset made up and there's no point in trying to argue against the narrative. I just want to tell you, being someone not white myself and lived in red states most of my life. You face the occasional ignorant comment ("go back to where you came from, foreigner!") it's nothing compared to the crime that occurs daily in NYC, Chicago, or the Bay Area, so I think your chances are better down here.
They train the cop to look for impairment signs of marijuana, and guess what, if the blood test comes back negative, then it's the position of the DA and the police department that it's the blood test that's wrong. Surprise, he primarily pulled over black people.
We've also built a new baseball stadium, but it doesn't have access to the city's public transit system because as the county commissioner said "we don't want to invite a certain kind of person here". The transit system, MARTA, is known as "Moving Africans Rapidly Through Atlanta".
And don't get me started if you're Hispanic or Middle Eastern. Brown is the new black is the saying.
Have you actually been to those places before, or are you just assuming they're all saturated with bigots? Austin is known for being a very liberal city.
And Houston is one of the most diverse cities in the country. Black mayor, also a former lesbian mayor. Conservative country leadership, liberal city leadership and it balances out fairly well. You aren’t tripping over heroin addicts shooting up on sidewalks, not are you dodging human shit or getting harassed by mentally unstable homeless people as you might in San Francisco.
I studied in Chapel Hill ~15 years ago and I remember that area as pretty liberal. IIRC, during the Iraqi War when the Congress was busy renaming french fries to freedom fries, the city of Carrboro had a "consume French goods day".
I’m at most centrist definitely not conservative or White and I’ve been a software developer in Atlanta for 20+ years with no issues finding jobs, I just bought a newly built 5 bedroom 3-1/2 bath 3000 square foot house for around $300K in a good school district and I’m 20 minutes away from the northern business district (Alpharetta).
There is life outside of SV and great salary vs cost of living.
That's getting to be a joke. My dad lives in a suburb (about 20 miles away) and it is so built up with new housing there are constant traffic jams everywhere. They have improved some of the roads (they are constantly working on them), but the number of new houses going in far outstrips the capacity of the roads. What used to be drives of a few minutes now, during the day, are often 30 minutes to an hour. None of the local cities are willing to deal with the issue, so it's just going to get worse and worse.
I was shocked when I compared cost of living and discovered various online calculators show that making $60k in Tucson, Arizona is about the same as making somewhere in the $104-140k range in the Bay Area (I'm not sure of what the different assumptions are between calculators that lead to the range, could see it be something like including Oakland vs San Rafael).
The difference is much much greater than that if you have a family and are looking to buy a House in the bay area with a decent size back yard. In most parts of the country you can do that on a houshold income of about 40k to 100k.
In the bay area penninsula, currently, you would need an income of about 600K in order to get the same type of house and yard combination (which would roughly cost 2M to 3M). And that's with the vast majority of your income going towards paying off that mortgage AND property taxes.
Yup. I have a friend who works in a sf hospital. Works 2 weeks on and gets 2 weeks off. 12+ hour shifts and lives at the hospital. She owns a home in phoenix and flys into sf every 2 weeks. Gets the high salary and gets low col in phoenix.
Does she sleep in a spare hospital room? I feel like the hospital wouldn't allow that due to the fact that the room would potentially need to be allocated to a patient.
That's what happens when you don't allow population density to grow to its equilibrium state. An overpriced, congested city, with absolutely no culture, as the only people who can justify living in SF are basically engineers, designers, and marketing people at tech companies. People living on a dime trying to do something interesting (art, tech, music, ...) is what gives cities their characters. When you take that away, you get a homogeneous group of people making between 100k and 200k a year who think about nothing other than money.
I've always thought it would be cool to create a site which matched people living on a dime trying to do something interesting (art, tech, music, ...) with cities/suburbs (i.e. urban development organizations) looking to diversify and grow a culture scene. Like Sacramento/Gilroy/Detroit/Yakima.
Sort of like an Airbnb but matching cities/towns and culture makers wanting permanent, low cost housing.
I think it's very important to note that the entire purpose of minimum wage, per FDR, who instituted it, is to ensure it's enough to support an entire family of four on only one income earner alone, above merely sustenance levels, and allow them not only to rent but to own a home. And by that metric, we've horribly failed as a country.
“By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act)
The tech gravy train won't last forever –everyone, us tech workers included, will be better off from advocating for fairer wages, even if that means taking a pay cut in the meantime. Otherwise I fear the extreme wealth gap will bring upon a new Gilded Age worse than the one pre-1929. And we all know how that turned out...
At the time, the labor pool wasn't truly global yet. It's one argument to pay living wages inside a closed-ish economy, it's another when low skilled jobs, especially in manufacturing, are done for pennies on the dollar across the globe. There's always tradeoffs.
Across the globe, in countries where they're paid pennies on the dollar, the cost of living is also a magnitude lower than it is here.
We should be paying our workers here a wage that keeps up with the cost of living. That's the human thing to do. Otherwise, we're the cartoon evil economists in a "See why these two lines don't intersect? That's why the poor people must starve" type of situation.
The problem is, the Corporations building sneakers, toasters, and clothing aren't going to have ANY jobs here to pay living wages for. They're gonna ship the jobs overseas cuz, you know, profit.
Let them. The US already doesn't manufacture nearly at the capacity it once did for this same reason. The US can implement trade policy to either disincentive producers from leaving or incentivize manufacturers to stay if they really have to. The specific solutions to that are probably outside both our realms of expertise.
Profits are not people, so why do we care about the bottom line more than fellow human beings?
What kind of degenerate society listens to economists with their intersecting lines espousing their regressive views on supply and demand? Probably the same cesspool that pays chemists with their arrows and triangles to stand up in front of impressionable children and preach their wantonly destructive opinions on fire.
Joking aside, scarcity is real. It works the same no matter how you feel about it. Descriptions of scarcity and related dynamics are just that, descriptive, not normative.
You can distribute scarce things in more equitable ways, but prices generally reflect physical realities that can't be waved away by a sufficiently woke fiat. Set the maximum rent at $500 and the minimum wage at $5,000,000 and we still can't all live in San Francisco's current housing stock.
I’m minoring in economics from a top 5 school. I understand the fundamentals of how the economy works. I respect the tools economics gives us for modeling our world.
But economics is just that— a tool. We mustn’t follow it blindly, especially in the case the “optimal” configuration is one that leaves many more persons impoverished, homeless, and even dead who may have been able to been saved from such a fate.
Externalities, by their definition, are hard to quantify. And unfortunately, too often economists discount the pricelessness of human life.
It’s a nobel intention but home ownership is always going to be impossible for many in a growing city which refuses to build new housing, no matter how much wages are. Elevating the salaries of those at the bottom isn’t a solution to SF’s current housing problems as those at the top will just bid higher. Building is necessary.
Coming from someone not in the bay area the most expensive place I've ever lived was outside of Boston (Waltham) and even then it was a summer sublet. Why is housing so expensive, more importantly why are landlords allowed to adjust their prices so aggressively and based on some anecdotal evidence seen in this thread, randomly? I'm currently locked into a lease and I'm 95% sure the price is pay is what im locked into for a full year, but are landlords really raising prices monthly?
Not really, it's mostly once/yr (leases do lock the price). But they can be very aggressive increases (e.g., +$500/mo).
There are some areas/buildings that are rent controlled though, then the increase is very small once/yr. But in those cases new leases make up the difference. I had a rent controlled one bedroom apt in SF for $2k/mo, when I left it was then priced at $3k/mo.
"To remedy the situation, the coalition urges Congress to invest in housing assistance."
Of course their answer is federal subsidies. Never mind that regulations can be passed at the local level to ameliorate the situation -- without costing the government a cent -- by allowing for more housing construction. With interest groups like these we'll never get anywhere.
After living here since 2009 I think I've figured out the Bay Area and San Francisco. SF is a city that doesn't want to be a city. It just doesn't want to grow up. Silicon Valley has since spilled over into San Francisco and we have a combination of massive job growth, prosperity and extremely limited new construction. Every year more people arrive than we construct housing for.
Compounding the problem are many local politicians. Serious local political players are divorced from reality denying the relationship between supply and demand with the cost of rent; while focusing on price fixing techniques such as rent control as a solution.
The only way out of this is to build. We have to make this decision.
Well, we could also repeal / sunset Prop13 and allow existing properties to reach their actual market values. This would suck in the short term, but it would lead to way more liquidity in the market, even if 0 new units were built.
1. It uses a two-bedroom home as a baseline instead of a one-bedroom. While I understand that may be interesting for historical reasons, it's not a practical metric for modern considerations. If we want to talk about housing affordability, it's more honest to discuss one-bedroom apartments for single earners. We could also talk about two-bedroom apartments for dual-income earners.
2. The 30% pre-tax rent metric doesn't make sense to me at all. Why would that be invariant across income levels, and across states, given both graduated taxation and the vast differences in both income tax and sales tax across different states? In California, 30% pre-tax works might work out to more than 40-45% post-tax, depending on your income, and the remainder doesn't translate well to purchasing power given varying state sales taxes.
I'm not saying that affordable housing is not a problem, because it clearly is. Just that, to address the problem honestly, we need to use better metrics to figure out what a fair solution is.
Re #1 - why would a 2 bedroom not be more applicable when discussing affordability? Having a roommate is pretty standard when trying to save money, and I don’t think ‘not wanting one’ changes wether or it it’s not affordable that way.
The study talks about a 2-bedroom apartment on a single, minimum-wage income. There is no discussion of dual incomes or roommates. The idea is for a single family to live in the 2-bedroom
My gut feeling is that they had the prices for 1BRs and for 2BRs, and the numbers sounded more impressive with the 2BR. They could've easily displayed both so people could do their own calculations for roommates, etc.
You’re not supposed to be able to support a kid on a minimum wage. The minimum wage supports the minimum lifestyle - single person household with minimally acceptable levels of food/clothing/shelter/other.
Not really... most of my voting has been aligned with moderate redistribution. But I’m more for taking the destitute and giving them a minimal lifestyle (housed, fed, clothed, small amount of entertainment) than taking people with minimal lifestyles and giving them more for no additional economic output.
I don’t think there should be people getting too few calories in the US, or living in mold infested slums, but I don’t see a problem with a minimum wage worker living in a small bedroom with shared bathrooms and beans/rice with chicken three times a week.
The problem with this assumption is that you imagine all minimum wage workers are 18 year olds living on their own. In reality there are countless(millions?) of people trying to support a family on those wages and are forced to turn to government assistance to make up the difference.
As a libertarian I'm sure you hate the idea of people using government assistance more than forcing corporations to pay them a fair wage in the first place.
FDR, when signing into law one of the first acts that started the legal framework behind the minimum wage, blatantly disagreed with you.
> In my Inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.
2. The standard in the Bay Area is for landlords to require tenants have gross earnings of 2.5 to 3.5 times the rent and to verify this with pay stubs. Personally I think this is ridiulous and antiquated as it should be my personal choice to blow half my cash on rent if I want to! But that’s the way it is.
Landlords don't care about personal choices. They want tenants who can still afford to pay rent even if they have an unexpected major expense one month.
In practice some prospective tenants simply falsify their incomes. I'm not condoning this but all it takes is Photoshop and a ladder printer.
Opening satellite offices all over the midwest, NE, and south is just begging to happen. Cost of living is comparatively dirt cheap in MN, MI, WI, OH, IL, IN, MS, TN, GA, AR, AL, NY (outside of NYC), PA, etc, and quality of life is very high. But alas those locations aren't trendy, so the west coast obsession continues despite the wild costs.
I'm surprised that not more tech companies are opening branches in Sacramento. There are already some far-distance commuters going from Sac to the Bay on 4 AM carpools.
Mid-tier Midwestern cities are quickly gentrifying with bikeshares, kombucha shops, craft breweries, and bookstore/brewpub combos. Madison, Indianapolis, & Cincinnati often get mentioned in these conversations, but I know Detroit is having a bike renaissance right now and land is _dirt cheap_ in all of these cities.
I know Indianapolis in particular has had an influx of tech companies opening large campuses, including Salesforce, Genesys, and Infosys. This has gone hand-in-hand with rises in indie music festivals and a blossoming craft brewing industry.
It's also possible that those places don't have something many people (especially young and tech/science oriented) want, such as temperate weather, mountains to hike, national parks, beaches, low humidity, politics, food, marijuana, etc. It's trendy for a reason.
I've mentioned this before, but I'm surprised that more companies aren't looking at opening a satellite office in Reno. 4 hour drive to SF, 1 hour flight, and it's half an hour away from Tahoe.
When I left San Diego for the Bay Area in 2008, I repeatedly heard from others, "I could never leave this place".
As I prep to sell my Bay Area house and move back to San Diego, I have only heard "I don't know if I can stay here much longer". That sentiment is the same regardless of the person's occupation, from VC partner to guy at Staples recycling my old electronics.
This is why I just ignore Bay Area (in fact, all of California) recruiters these days. I know y'all work on some cool poop over there, but unless you're willing to triple my salary, I'll stay put here in Florida.
So, which came first to the bay area? the engineers, or the companies? Are we at a point where most people move in to the bay area for work? Or is it the other way around (ie. companies wanting to establish a foothold in an area known for its prestigious/unique population of software-engineers)?
My point is, not only are the employees losing here, but also the employers. I no longer understand the motivation of companies to continue expanding at problematic locations (such as the bay area and new-york).
If Google left the bay area completely tomorrow, would that somehow restore the equilibrium?
For better or worse, I think a good analogy is making a movie in Hollywood versus anywhere else. Yes you could make your movie in New Hampshire, but it'd be that much more inertia to find a screenwriter, to cast the talent, find the crew and get funding, etc.
And for tech startups, where time is of the essence and the secret recipe for making a blockbuster tech IPO is somewhat ephemeral, why risk it if the opportunity really is as amazing as you are telling the VCs and LPs.
Another aspect is a lot of startups have the back-up plan to get acqui-hired by FANG or Cisco which are located in SF/Bay Area, so it make sense to have the key talent on the team prepared for that eventual integration/docking with the mothership.
I think that the success of the Amazon HQ2 process (for amazon, its a success) will lead to many other companies starting the same process. Towns are bending over backwards, and throwing money at the possibility..
I'm still surprised by that. I visited Manhattan in 2010 and was noticing 1br rents that average around 6k per month. Nothing luxurious, just a decent 1br. Manhattan is far larger than the entirety of SF, but when they talk about rents, they compare the entire greater NYC area to SF, which is disingenuous.
Honestly, I don't think SF is equipped to handle such a high population density. I'm not sure it ever will be. Oakland probably could though.
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[ 3.5 ms ] story [ 272 ms ] threadThis seems like an unreasonably high standard for a single minimum wage income unless they're using the excess here as a proxy for other necessities.
Edit: This seems unreasonably high because it greatly exceeds the standard of living we expect for a single minimum wage income household. Sure it would be nice if a single minimum wage household could rend a 2br but that's not what we currently expect them to be able to do. Saying "people who make X can't afford Y" when we didn't expect them to afford Y in the first place isn't very meaningful when you're discussing the ability of people making X to have a standard of living that meets our expectations for people making X.
So that means attempting to support a family of two or three on one minimum-wage job.
The average minimum age worker is 35, so it's not really fair to say "just don't have kids".
https://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.ht...
American 2-BR apartments in upscale complexes are HUGE (I've seen figures as high as 1300 sq. ft), and in Europe they would easily have a 3-4 person family living in them, with more than 1 person working.
I feel zero sympathy for Americans and for the utter clusterfuck of misery that awaits them over the next 20 years. This is just the beginning.
Edit: or just drive by downvote, I guess.
https://taxfoundation.org/taxes-rich-1950-not-high/
> per the Piketty, Saez, and Zucman data ... The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today.
From 1979 onward: http://www.cbo.gov/sites/default/files/cbofiles/attachments/...
Highest effective tax rate, before Reagan's reforms, was 37% of the income of the top 1%
My understanding is it matched what's more typical in Japanese C-levels these days. You don't have a crazy salary, but your car is a company car, the company has a deal with the good schools to cover tuition for your kids, you don't pay for breakfast, or lunch ever because you'd be at the office so the company handles it, etc.
Edit: Guys, there's several ways to being down the marginal rate, deductions are only one of them.
https://mises.org/library/good-ol-days-when-tax-rates-were-9...
In a nutshell, most expenses that businesses can still deduct were once deductible by individuals, the largest (by dollars) being interest deductions for any type of loan.
EDIT: I mean, their charts are blatantly mislabeled (even against their argument), showing a top marginal rate of over 90%. These people are just incompetent.
So it sounds like the incompetent one is...you...
And I'm not citing the Mises Institute for economic analysis, I'm citing it as one of the many dozen potential resources you could have looked at for the historical information you were asking for, namely the deductions that were lost in the 1986 tax reform.
No, 0.000184% (or 0.0000018, a factor of >180 different)
https://www.theblaze.com/contributions/the-myth-of-the-90-pe...
https://news.ycombinator.com/newsguidelines.html
The graph lower down on the page is informative, too: only in Las Vegas and Austin did the median rent increase equally to the change in median renter income. In every other urban area, the rent went up faster.
Minimum wage has been $4-10/hr (inflation adjusted) throughout its history in USA; only about as high for the single-person poverty level ($6/hr for single, $10/hr equivalent for a family of 3)
https://bebusinessed.com/history/history-of-minimum-wage/
https://247wallst.com/special-report/2016/05/25/the-size-of-...
That article puts the average living space sq ft/person at 233 sq ft (959 sq ft/home) in 1938, 387 sq ft/person (avg 1,289 sq ft/home) in 1960, and at 1,046 sq ft (2,657 sq ft/home) today.
That is, since 1960, the average house size has risen 106%, while real rent has risen by 64% (https://www.apartmentlist.com/rentonomics/rent-growth-since-...) since 1960. This would seem to suggest that today's real dollar buys more living space than real dollars past did, but that we're also demanding larger and larger housing.
This is small comfort to the low-income earner looking for housing, of course, but it's nonsensical to expect real housing prices to remain static while the living space allocated to each home grows.
I ended up buying a small house that was built in the 1940s. I still wish I could have got something with modern wiring and no lead paint, but the same compact size. I can't tell if people are really demanding larger homes over time (per cheald above) or if people who aren't custom-building are forced to pick from a size range that has offered fewer small houses over time.
But then you have a terribly long commute and as you said crazy amounts of upkeep. I think millennials saw their parents dealing with this and they value living closer to the city.
==========
Fair Market Rent (FMR) is typically the 40th percentile of gross rents for standard rental units.
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A. If you are at minimum wage, look for apartments in the 5th percentile, not a mid-range priced apartment.
B. Most minimum wage, one-income households only need one-bedroom apartment.
C. Or, get a roommate, rent drops in half.
Min wage is the single-person poverty level, and is much higher now than when it was enacted.
It is simply not viable or desirable to require the lowest skill jobs to pay enough to support a family. It has never been the case that the least skilled laborers in an economy were able to support families without support from other sources (e.g. a multigenerational house).
Why should it be though?
Should it be illegal do do low positive value work?
No argument. But you seem to be making a value inference that low-value jobs aren't good enough to merit the worker a 2br place without two incomes. Why not? What level-sets what you "should" be able to get, for your low-value work?
Minimum skilled worker = minimum wage salary = minimum quality apartment.
I'm not arguing that minimum wage should merit a 2br. I'm just challenging the notion that it shouldn't. There seems to be a sort of, "if you don't work hard and make lots of money, you don't deserve good things", built into that notion. When really, there's not exactly an intrinsic reason why a 2br is too good for a minimum wage worker.
If it's a tight city with high demand and not enough housing, sure, competition for scarce 2br is intense. But if there is plenty of space & housing, why not? SF is a microcosm, most of the country is not like that.
not_sure_if_serious.jpg
Figure out your housing budget, go on craigslist or another roommates website, and see what's available in that range.
If there are 10,000 people who want a 2-br apartment at $500/month, but only 1000 apartments, where will the other 9000 go?
Let's say we'll even construct the apartments for them, but that will take time. Where will they live during construction?
> Q10. What does the term "HMFA" mean?
> HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined metropolitan statistical area (MSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the MSAs when the geography is not the same as that established by OMB.
Specifically the top 3 are:
[1] https://www.huduser.gov/portal/datasets/il/il18/FAQs-18r.pdf[2] https://www.huduser.gov/portal/datasets/il/il18/area-definit...
This is an example of a good comparison in a never-ending sea of bad ones.
Your comment is more revealing than even you may realize. There are an infinite number of political borders to be drawn around any "city," but changing those borders doesn't actually change anything about the reality on the ground.
That's why it's important to make like-like comparisons.
I mean, it is to be expected so the title of the article doesn’t pack the punch it seems to.
In NYC and other places there are city blocks or neighborhoods that are the most expensive in the country, if you grouped by blocks.
This is called Simpson’s paradox
I should go dig into the Greek Sophists. They probably had a word for it. They definitely taught it as a technique.
https://www.marketwatch.com/story/10-most-expensive-neighbor...
https://xkcd.com/882/
Relevant topics:
Simpson’s paradox
Multiple testing
Confirmation bias
Tons of people on HN live in the bay area so they can’t imagine things being even more expensive elsewhere in the country. Thus a critique of the methodology behind the loaded headline is dismissed, even voted down.
But back to my point... the true generalization is that the Bay area, broadly, is the most expensive place in the US to live. Worse than New York. If you narrow down, you can find individual blocks of New York that are more expensive, but across the entire metro?
Sure, the headline/argument is a little sensationalist. But reducto absurdum in the other direction is no better.
And maybe teenagers want to move out of their parents house, but I don't have much sympathy that they can't afford a 2 bedroom in marin county as their first place.
You'd think VCs would push back on this too, because that's where their money is going.
VC -> Startup -> Employee -> Landlord.
Disclaimer- I don't really believe it's that simple.
I get a loan for a rent house, I'll be paying it for 30 years.
I take your rent check, pay the loan fee, and invest the rest.
The market crashed. I lose my investment. My renters lose their job. No one can afford rent that matches the minimum loan payment.
Where is the real money again?
So naturally I am attuned to comments like this, and articles elsewhere, which talk about this subject.
Do you have any further insight into why you think there will be a recession in the next 2-3 years? Other than "it's a cycle and we're lined up for another one" ... Are there other market conditions that are making that more and more of a reality?
This was recently posted on HN and gives a good overview of indicators to look at though it's pretty blatantly alarmist.
Makes me definitely consider putting this housing search on the back burner. In my area we've seen massive price increases in just the last 3 years. I was on a tour of a home yesterday and the agent told me that the previous home tour was with a bay area investor who had cash on hand for the home.
Hard to compete with that. And maybe it's just the wrong time to be competing at all.
Buy gold?
I can't speak to its accuracy, but it's certainly a sobering read.
If you need a general introduction, Dalio provides a nice starter for thinking about it: https://www.youtube.com/watch?v=PHe0bXAIuk0
A interesting proposed measure here based upon fundamentals IMHO to me is consumption investment ratio: http://necsi.edu/research/economics/econuniversal
All I can really say is be very sceptical of anyone who says they know for sure - I'm going mostly off my reading of cycle behaviors with some hand wavy harder measures (but economics is a terrible field and even the rigorously defined measures in the end have poor real-world predictive accuracy.)
I would say things are at that point. So move to a different city. Success != The Valley
In any case, what you're talking about is renting office space -- the linked article is reporting on renting residential space. There's no evidence I can find to suggest that Silicon Valley style VC funding is secretly behind Essex Property Trust, AvalonBay Communities, or other residential REITs.
And they also own residential rental property out here too.
I can't speak to the sv, but this isn't an unsubstantiated meme in Boulder.
Government policy:
https://www.amazon.com/Zoned-Out-Regulation-Transportation-M...
> Zoned Out forcefully argues that the debate about transportation and land-use planning in the United States has been distorted by a myth. The myth that urban sprawl is the result of a free market. According to this myth, low-density, auto-dependent development dominates U.S. metropolitan areas because that is what Americans prefer. Jonathan Levine confronts the free market myth by pointing out that land development is already one of the most regulated sectors of the U.S. economy. Noting that local governments use their regulatory powers to lower densities, segregate different types of land uses, and mandate large roadways and parking lots, he argues that the design template for urban sprawl is written into the land-use regulations of thousands of municipalities nationwide.
Unfortunately I have to agree with the "myth": outside of urban bubbles like the one I live in, yes, Americans do prefer that. It is the cultural norm and everybody's expectation. To a lot of people you may as well be a Martian to defy it.
Incentives play a major role in defining such a culture. It doesn't have to be a positive seemingly self-selected incentive to want to live in the suburbs, but negative ones play a major role as well, such as the insanely high costs to own property... due to severe limitations on developing high density multistory buildings in cities, which is why modern cities are exclusively full of either a mega skyscrapers or a single family homes. Or the ease of an automobile-first lifestyle - which is almost always a reaction to poorly developed mixed density urban areas, causing urban sprawl, not a cause of it.
Just because a lot of people have responded to opting the easiest options given to them doesn't mean the easiest option was the result of market/personal choices. Rather it was ultimately a result of the intention, or more often unintentional, side effects of government policy, not a prolonged series of personal choice.
This is hardly limited to just urban sprawl and land development. Thomas Sowell has a brilliant book on how this same cycle has been applied across US culture/politics/economics for decades after WW2 - well beyond just real estate - to nearly every major sector which influences modern US lives: https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell...
If one considers government economic and social policy by their results, not simply their good intentions, this pattern can be seen in countless places. Yet the popular reaction by the media and political parties is so often to blame personal choice and 'unrestrained' markets for the output.
1. https://carlaef.org/donate/
When tech workers get over their “I simply MUST live in the Bay Area, ugh, anywhere else is simply unliveable” mindset that in turn drives companies to concentrate in said area.
Hate to be the bearer of bad news, but the VC is the landlord. They're not stupid, and this setup is intentional.
It's a company town. History doesn't repeat itself but it rhymes.
VC -> Startup -> Employee -> VC/Landlord
This is a nit, but I don't think that's a reasonable way to calculate the relationship between housing cost and affordability. Some expenses do scale with housing cost (mainly things that depend on local labor), but many important ones don't (car payments, grocery bills). So in an area with very high housing prices and a relatively-high minimum wage, you'd expect low-income workers to be able to spend more than the "standard" 30% on housing, and still be able to afford other daily necessities.
I certainly don't mean this as a refutation of the article however -- the Bay Area is a very hard place to live on a low income.
Especially if it pertains to tech jobs specifically
The 'cheap' big cities (sticking to the US, those in the middle of the country: Chicago et Houston in particular) have just enough tech to show up on the hypothetical chart and are cheap enough to place well. But IMO, even as a U of Illinois alum and massive fan of Chicago, the tech density isn't such that you would be able to find particularly interesting work, especially compared to the Bay. That said, surely there enough startups that need app/web developers to pay your rent in those relatively inexpensive areas if that's your thing.
The cities that interest me are those with a high density of tech at a lower cost: Austin, Portland, Raleigh, etc. The Bay housing cost is trickling down there too; there are so many people making _so much_ in the Bay that still can't afford to stay that when they start moving to these places they can really affect the smaller markets. Austin has had a crazy housing boom in the last ~15 years, but it would take a _lot_ more people moving to Chicago to move the needle there.
You still face issues with inequality squashing culture, like in Austin, which has a strong history of art and music and is so much cheaper than the Bay but so much more expensive than the areas around it. Bigger cities can generally support the diversity of people needed to maintain a viable culture if they aren't 7x7 miles and surrounded by water on three sides like San Francisco is. In other words, you could move out of the Bay to one of these places and live happily for a few years before you find these same problems following you to your new home.
This is a bit of an exploration but I think about leaving the Bay daily as my wife and I get more serious about starting a family. We talk about this often, and to each family, it's the most important thing in their lives. SV is really in for a wake-up call as it sheds talent that can't afford to stay.
I once Googled “Houston zoning fail” with my fiancée when she didn’t believe me that Houston had no zoning laws. We saw an arial photo of a huge skyscraper right next to a low density residential neighborhood and maybe 30 parking spots at best, and we laughed for 10 minutes straight.
That someone would argue against every job being enough to afford a roof over your head just due to their own need for validation of their importance is frankly sickening.
How expensive do you really want your burger to be? Operational costs get passed on to the consumer after all. Raising the minimum wage just increases the rate of inflation leaving everyone holding the bag.
Also, jobs should pay what they are worth to the business and nothing more. Why should a high school student working for McDonald's be able to afford a 2 bedroom apartment in the Bay Area? That's not some sort of right.
Maybe we should be talking about realigning education to give people valuable skills instead of pushing for the non-skilled to get an artificial raise that evaporates in meaning due to inflation.
EDIT
I'm really surprised by the push back on this from a community of entrepreneurs. Anyone who has run a business will tell you that you can't just raise salaries without increasing costs. It's Econ 101 but apparently that's not the general sentiment here. I hear a lot of complaints about how things "should" be and what's "fair" but the math and reality isn't there to support that. Some jobs just don't have much economic value and pretending that's not the case isn't going to solve anything. It's nice to imagine a situation where janitors and fast food employees can have a middle class lifestyle but who is supposed to pay for that? When the costs of good raise dramatically, their additional pay will get sucked up by inflation. Again, Econ 101.
This doesn't make sense to me. If it were possible to raise the price of that burger, why wouldn't it already be raised, regardless of operational costs? A business's costs to produce a good typically does not have much to do with the price customers are willing to pay for it.
If salaries increase, the business will literally have to raise the price of goods sold or go out of business. That's different than raising the price to achieve a higher margin (and opening your self up to competition from people who can operate with a lower margin).
See this study from Stephen Rose at the Urban Institute for a detailed look at this assertion that “wages have stagnated”:
https://www.urban.org/sites/default/files/publication/65351/...
Raising the minimum wage would raise it across the board, thereby allowing McDonalds to raise prices and remain competitive.
The issue isn’t as simplistic as people seem to imply.
This seems like an obvious outflow of monetary policy as economic driver, as per the liquidity trap analogy of the Capitol hill babysitting coop. (https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op...)
The solution to the "but the market" is governmental action -- when market forces create an undesirable situation, its totally reasonable and rational to have a super-market entity enforce rules. This is not even a generally disagreeable point, we see it all the time, environmental laws, natural monopolies (eg: civic infrastructure), etc. The only question is where do we draw the line?
The problem with a lot of libertarian type arguments is people seem to put the primacy of the market as an inviolable fact above human dignity.
No, it results in a lower quantity of labor supplied assuming labor supply (the function mapping price to quantity supplied) is unchanged.
Essentially you are ignoring price elasticity — which of course varies depending on the product.
Unless you are advocating for age discrimination in pay, the fact that a "high school student" can be the one working at McDonalds is irrelevant. McDonalds employees an extremely wide age range of people. Does the 60 year old working the cash register (I've seen countless of these lately) who can't get a job anywhere else deserve to live on the street because you don't think they are important enough to rent?
When a Big Mac sets you back only $4 in a nearby city, however, the idea of charging $14 becomes an intractable problem.
Is it reasonable that a family of 4 is entitled to a 2 bedroom house? America is 5% of the worlds population but consumes 25% of the worlds resources because what we consider to be poverty in the US is wealthy or at least middle class living to much of the world.
My inlaws had 4 families in a single family home (Approximately 2500 sq ft). Each family had at least two kids (one had 3). Plus their grandmother lived there. They grew some of their own food, never ate out, cooked everything from scratch.
There was always an adult (or older kid) to watch the kids, so no daycare costs. All are well adjusted. When someone lost their job, there was a tremendous amount of support and no one ever had food insecurity, was homeless, had to leave their kids alone etc.
The kids grew up in a fun household and the place was very clean and kept up.
2 of the families saved enough to move out so now there are 3 families left, and the grandma moved back to their originating country. The two oldest kids left for college.
My point there is no consistent definition of "reasonable".
Nobody deserves anything. People get unlucky, I get that. That doesn't change econ 101.
However, it is not so simple as a society. Even if we had a magic wand that could suddenly make everyone in the world an expert on every subject, we would still need people to work at McDonald's flipping burgers.
We don't have enough highschool students to fill those jobs. There are going to be adults supporting themselves and their families that are going to be working those jobs.
Improving the skills of people doesn't suddenly change the makeup of what work needs to be done in a society. Sure, in the long run, we can use those advanced skills to improve automation and make obsolete more of those lower skilled jobs, but that isn't going to happen overnight.
While I think a Universal Basic Income or stronger welfare is a better solution to the problems of homelessness and poverty, raising the minimum wage is a step in the right direction and one that is far more likely to be accepted by our lawmakers.
If this is your argument, you’re going to have to explain why business owners are entitled to the surplus value created by their workers’ labor.
This arrangement seems to be currently enforced with all kinds of threats of violence and deprevation(loss of healthcare, housing, etc), all of which are barbaric by the standards of any other developed country.
I look at four of my relatives who started a Salesforce consultancy, especially my younger older brother who started the whole ball rolling. Though a full-time Boeing 757 pilot for a major airline, he got a software degree, specialized in Salesforce work, started working with others, hired an initial team, and introduced several family members to the whole gig. The relatives founded a partnership and had around 40 billable, very good, consultants working with them, and had committed to longer term real estate leases. They had some marquee clients and a good reputation. Then they hit what hits a lot of family businesses -- intractable personality conflicts. (I'd joined this partnership briefly in 2013 but then bowed out after several months since I guess SFDC consulting isn't my thing and greenfield software constructing/craftsmanship is, and mostly because I sensed those personality troubles brewing.) So ... my younger older brother and younger brother both were left winding down this once-promising consultancy, taking low pay, risking a bunch of collateral (e.g., homes) they thought they would lose at one point, and eking out a low, but at least in the end positive, return. They each would have done significantly better just working on their own for the four years ... and I benefited financially by sticking with the startup world.
So ... I'd like to take a flyer some day on starting my own business one of these years, and I won't feel bad about taking some outlandish returns. If things turned out real well I think I'd pay "my team" more than had been promised them. But I've seen the risks founders take and admire that, and they deserve their gains.
They arent.
Because they are the ones taking the risk. People love to demonize companies, but they fail to acknowledge the thousands of companies that have failed, taking the owner’s capital with it. There is a survivorship bias because all of the companies we hear about are generally making a profit, but there are countless companies that have failed.
So why should the owners get the surplus? Let’s ask another question, why should owners have to suffer loses? Owners are on the hook for loses, why shouldn’t they benefit from the surplus?
Technically owners aren't on the hook for losses, LLC structures and LLC-like structures (C-corps) limit the loss possible.
They are only risking what they put up - presuming they don't break the law - and nothing more.
Another system would penalize investors and owners of companies for all potentially likely damages downstream of their activities.
Before you argue the world is like this, let me just ask you why do superfund sites exist then? Because of limited liability.
The vast majority exist because the operations predated environmental regulations. Also, a significant number are a result of government activities at various levels.
In many cases the companies aren't around, but the investors, and the investor's estates are.
The point being that LLC has shielded people from the consequences of their actions.
External forces like starvation are not "threats of violence".
What you seem to be suggesting is that government setting of prices would improve things. This has been shown time and again to not work because only the parties involved can correctly evaluate the value.
Raising minimum wage slightly only has slight negative effects. If raising minimum wage really had no negative consequences you could raise minimum wage to $100 and it would be wonderful.
Where government has shown itself to be effective is being a third party that enforces the agreements made between parties, setting the limits of those agreements (e.g. no voluntary slavery), and making sure that the rules are consistent enough that people can make business decisions and rely on the outcomes.
The government just ruled that labor cannot collectively sue in a class action for wage violations. This is an incredibly bad decision, in that people should be able to group together and pool their bargaining as long as they are doing it freely.
My workers didn't put their names on the loans necessary to start the business. My workers are free to walk away from the business if someone else gives them a better pay rate, or if they just decide they don't want to do the job anymore. They don't get stuck holding the bag if someone's sick or has a personal emergency.
I want to pay the folks working for me well and appropriately, but if the whole thing blows up in our faces, the worst they have to deal with is finding a new job, where an owner has to find a way to pay off any outstanding loans and whatnot. Obviously it's not right to fleece your workers and pocket giant gobs of cash, but at the same time they did not take the risk in opening the business and thus the owners should get more. If they want the extra surplus value of their labor, then I would encourage them to start their own business.
On minimum wage you cannot even afford a room in the bay area.
The economy is driven by demand. Economic prosperity is the result of EXACTLY the same thing that causes inflation. Dollars wanting to get spent on things that don't exist yet.
However, I will say that the problem is more easily solved by simply building more housing, but everyone who owns property resists that because shortages drive up the price of the thing they own. Imagine if there was a shortage of food, and the people with good refrigeration units and lots of stored grain were drafting and passing legislation against growing new crops. That is the housing situation in the bay area.
Lets say you have a single family home worth $2 million and you replace it with an 8 plex. You can sell each unit for $1M and still make a killing while also dramatically increasing the affordability of the area.
The answer is simple, but the NIMBYs are stopping it due to "neighborhood character"
Historically speaking, the interstate commerce clause of the constitution was eviscerated as part of the new deal for exactly this reason.
<<An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than the limits that he was permitted and so was ordered to pay a penalty.
In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states").
The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'"[5]>>
Then on the weekends the engineer wants to have fun with her family and goes out to eat at a fast food place, gets a lawn service so they don't need to do their own yardwork. Those people may be getting paid minimum wage.
So these people who are making the lifestyle you have possible, should not be allowed to afford a place to live because what they do is not valuable? Is that what you're saying?
People will get paid what the market will bear. Supply and demand and all of that. There is no "should", it doesn't enter the equation and as you can see with minimum wage, any attempt to out smart the market will result in inflation/deflation...
1. Get rid of single-family-home zoning for large swathes of the bay area. 2. Incentivize developers to build more units per site, rather than fewer - https://www.sfhac.org/state-density-bonus-arrived-san-franci...
I now pay the same rent for a 1 bedroom in Pleasant Hill that my 3 bedroom in West Oakland rented for in 2014. And after 6 months of a hellish 1 hour+ commute I'm realizing it is completely untenable from a mental health perspective. This is for a single person who makes six figures. I can't even imagine what has happened to working class families in that time period.
I think people get way too caught up in "oh but I pay <insert large percentage> on housing, that's terrible". It doesn't matter. What matters is how much money you have left after having to pay for rent/mortgage, food, car lease/insurance/registration/gas and utilities. If that amount of money allows you to go to restaurants, go on world trips, buy the latest gadgets/hardware then who cares.
I feel that people complain about this because they imagine some kind of unrealistic scenario "oh, I make $150k/year, imagine how much I would be saving if my rent/mortgage wasn't %50 of my income". Newsflash: rent and mortgages are that high _because_ you (and many others like you) make that amount of money, so pick your poison :) Of course, it's a completely different situation for most people that aren't working as engineers for tech companies in the area...
this excessive rent expenditure is landing straight into the pockets of the lucky few who own the land.
72k-(1k12months) = $60k $105k-(1.6k12) = $85k
So in total I'm making more in Seattle than I was in Houston.
People are just scared of those high prices because they grew up around apartments that were costing $600/month a decade ago. Times changed and rent went up everywhere but people are still being shocked by those high prices because we're slow to adapt.
Fruitvale
If you can tolerate strangers in your kitchen and living room, it's rarely the optimal move to pursue that lifestyle at a high-stress white-collar job in an expensive area, where it's merely prudent. Do it in the sort of place where it's liberating.
I'd also guess that people making the tradeoffs necessary to land at a $100k job are motivated, at least in part, by the desire to live better than this. People who made those tradeoffs during a less severe phase of the housing crisis are feeling a little cheated right about now. Are they the most sympathetic victims in the world? Of course not. They'll be fine. The market will adjust - Bay Area companies will pay more, or have a harder time hiring as word gets around about what those job offers really entail. But it takes time for those cultural memes to propagate - just like it took a while for the general public to catch on that law school is no longer a meal ticket - and people caught up in that latency are going to be a little pissed as the material conditions that their oh-so-alluring "$100k" can buy get worse and worse every year.
As an aside, $1500-$2000 is a lot to pay for a room in Oakland. You'd expect to be in SF for that. Out south and west (towards Daly City) rooms can be $1200 or even $1000.
On a more serious note, though, some employers do want to build housing near their headquarters (such as Google, for example), but are blocked by city councils. From what I read here, it sounds like you can't put up new housing anywhere near SF.
https://www.mercurynews.com/2017/12/12/googles-massive-housi...
It's definitely not bad. It provided poor miners with a decent place to live. Today a lot of them are still here, renovated and retired miners still live in them, most of them for free (my grandparents for example).
Yep. It also led to one of the bloodiest government orchestrated massacres in US history when striking miners were cleared from their homes in Ludlow, Colorado by the national guard [0]
[0] https://en.wikipedia.org/wiki/Ludlow_Massacre
? I live in Charlotte, and there is no shortage of 90-135k$ salaried jobs with full benefits, especially if you code in C# or Java. That salary range is _more_ than enough for the house of your dreams, and the ability to be the sole provider for your family if you wish, (however being a DINK is pretty fun, too).
For comparison, I have heard 90k in Charlotte is like 135k in NYC and 150k in the bay area.
RTP is a much better proposition in that part of the country. Similar cost of living and a real software industry.
On second thought, I think people from SV use pseudonyms (and throwaways) more significantly.
All of which are wonderful places for a centrist/libertarian/conservative white person to live. I dream all the time of having that luxury. Maybe things will go back to normal some day. But the political climate in this country has made practically any red state unlivable for someone like me.
Or, if you really want to influence change and impact the country, staying in a dark blue state and living within an ideological bubble isn't going to change anything. Charlotte has seen a great migration from blue-collar democrats from the Ohio/PA/NY areas, and I believe PHX is seeing the same from Chicago and surrounding areas.
For me personally, virtue signaling do-gooders with billions of dollars that just happen to live in a city with a crippling homeless problem doesn't sound attractive to me.
I really don't want to influence or impact anything. I just want to live a happy life where I don't fear getting murdered at a traffic stop for the color of my skin.
https://www.11alive.com/article/news/investigations/the-drug...
They train the cop to look for impairment signs of marijuana, and guess what, if the blood test comes back negative, then it's the position of the DA and the police department that it's the blood test that's wrong. Surprise, he primarily pulled over black people.
We've also built a new baseball stadium, but it doesn't have access to the city's public transit system because as the county commissioner said "we don't want to invite a certain kind of person here". The transit system, MARTA, is known as "Moving Africans Rapidly Through Atlanta".
And don't get me started if you're Hispanic or Middle Eastern. Brown is the new black is the saying.
[1] Yes this Forsyth. https://www.youtube.com/watch?v=WErjPmFulQ0
There is life outside of SV and great salary vs cost of living.
That's getting to be a joke. My dad lives in a suburb (about 20 miles away) and it is so built up with new housing there are constant traffic jams everywhere. They have improved some of the roads (they are constantly working on them), but the number of new houses going in far outstrips the capacity of the roads. What used to be drives of a few minutes now, during the day, are often 30 minutes to an hour. None of the local cities are willing to deal with the issue, so it's just going to get worse and worse.
In the bay area penninsula, currently, you would need an income of about 600K in order to get the same type of house and yard combination (which would roughly cost 2M to 3M). And that's with the vast majority of your income going towards paying off that mortgage AND property taxes.
Sort of like an Airbnb but matching cities/towns and culture makers wanting permanent, low cost housing.
“By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act)
The tech gravy train won't last forever –everyone, us tech workers included, will be better off from advocating for fairer wages, even if that means taking a pay cut in the meantime. Otherwise I fear the extreme wealth gap will bring upon a new Gilded Age worse than the one pre-1929. And we all know how that turned out...
We should be paying our workers here a wage that keeps up with the cost of living. That's the human thing to do. Otherwise, we're the cartoon evil economists in a "See why these two lines don't intersect? That's why the poor people must starve" type of situation.
Profits are not people, so why do we care about the bottom line more than fellow human beings?
Joking aside, scarcity is real. It works the same no matter how you feel about it. Descriptions of scarcity and related dynamics are just that, descriptive, not normative.
You can distribute scarce things in more equitable ways, but prices generally reflect physical realities that can't be waved away by a sufficiently woke fiat. Set the maximum rent at $500 and the minimum wage at $5,000,000 and we still can't all live in San Francisco's current housing stock.
But economics is just that— a tool. We mustn’t follow it blindly, especially in the case the “optimal” configuration is one that leaves many more persons impoverished, homeless, and even dead who may have been able to been saved from such a fate.
Externalities, by their definition, are hard to quantify. And unfortunately, too often economists discount the pricelessness of human life.
edit: words
There are some areas/buildings that are rent controlled though, then the increase is very small once/yr. But in those cases new leases make up the difference. I had a rent controlled one bedroom apt in SF for $2k/mo, when I left it was then priced at $3k/mo.
Of course their answer is federal subsidies. Never mind that regulations can be passed at the local level to ameliorate the situation -- without costing the government a cent -- by allowing for more housing construction. With interest groups like these we'll never get anywhere.
Compounding the problem are many local politicians. Serious local political players are divorced from reality denying the relationship between supply and demand with the cost of rent; while focusing on price fixing techniques such as rent control as a solution.
The only way out of this is to build. We have to make this decision.
1. It uses a two-bedroom home as a baseline instead of a one-bedroom. While I understand that may be interesting for historical reasons, it's not a practical metric for modern considerations. If we want to talk about housing affordability, it's more honest to discuss one-bedroom apartments for single earners. We could also talk about two-bedroom apartments for dual-income earners.
2. The 30% pre-tax rent metric doesn't make sense to me at all. Why would that be invariant across income levels, and across states, given both graduated taxation and the vast differences in both income tax and sales tax across different states? In California, 30% pre-tax works might work out to more than 40-45% post-tax, depending on your income, and the remainder doesn't translate well to purchasing power given varying state sales taxes.
I'm not saying that affordable housing is not a problem, because it clearly is. Just that, to address the problem honestly, we need to use better metrics to figure out what a fair solution is.
I don’t think there should be people getting too few calories in the US, or living in mold infested slums, but I don’t see a problem with a minimum wage worker living in a small bedroom with shared bathrooms and beans/rice with chicken three times a week.
As a libertarian I'm sure you hate the idea of people using government assistance more than forcing corporations to pay them a fair wage in the first place.
SROs and workhouses... what a vision for the future. It’s a shame that we’ve given back all of the advances of the 20th century.
> In my Inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.
http://docs.fdrlibrary.marist.edu/odnirast.html
In practice some prospective tenants simply falsify their incomes. I'm not condoning this but all it takes is Photoshop and a ladder printer.
I know Indianapolis in particular has had an influx of tech companies opening large campuses, including Salesforce, Genesys, and Infosys. This has gone hand-in-hand with rises in indie music festivals and a blossoming craft brewing industry.
As I prep to sell my Bay Area house and move back to San Diego, I have only heard "I don't know if I can stay here much longer". That sentiment is the same regardless of the person's occupation, from VC partner to guy at Staples recycling my old electronics.
Making 50k in fl will net you more cash in your pocket compared to living in sf making 100k after your bills are paid.
My point is, not only are the employees losing here, but also the employers. I no longer understand the motivation of companies to continue expanding at problematic locations (such as the bay area and new-york).
If Google left the bay area completely tomorrow, would that somehow restore the equilibrium?
And for tech startups, where time is of the essence and the secret recipe for making a blockbuster tech IPO is somewhat ephemeral, why risk it if the opportunity really is as amazing as you are telling the VCs and LPs.
Another aspect is a lot of startups have the back-up plan to get acqui-hired by FANG or Cisco which are located in SF/Bay Area, so it make sense to have the key talent on the team prepared for that eventual integration/docking with the mothership.
#FirstWorldProblems
Honestly, I don't think SF is equipped to handle such a high population density. I'm not sure it ever will be. Oakland probably could though.