By their logic this should be considered a big win. Amazon is no longer force feeding their high paid jobs into the local market. Those neighborhoods will be more equal now, even if it means having less.
This is a terrible kind of logic. It's better for everyone to be worse off just to make sure some people don't benefit more than others? This kind of toxic mentality is one of the things that turns me off the most from many so-called progressive movements.
It's definitely a mixed bag. Someone above asked if you would rather live in a city where everyone makes $20k or a city where some people make $20k and some make $50k. The missing part of that equation is obviously cost of living. The latter sounds nicer in theory, unless it drives the minimum annual price of housing to $25k. In which case prosperity becomes an existential threat to the people making $20k.
Now, with the right mix of upzoning, public housing, rent control, and social services, the threat doesn't have to hurt anyone, but in San Francisco and in Seattle we're not doing remotely near enough to ensure the people on the low end aren't hurt by the prosperity.
Talking about cost of living is avoiding the underlying point.
Would you rather live in a society where everyone just gets enough to survive, or one where everyone gets enough to survive, half can afford basic consumer goods, and the other half can afford luxury consumer goods?
A significant number of people would genuinely pick the former. Some people really do think the pursuit of equality is just even if it makes everyone worse off.
I think this is a strawman argument. I really don't believe there are a significant number of people that would rather have everyone be poor so long as they're equally poor.
Plenty of people support policies that do exactly that. Plenty of people also have positive opinions of, say, the Cuban revolution despite all the metrics indicating that the overwhelming majority of Cubans were ultimately worse off because of it.
There really are people who think that eliminating inequality is worth it even if it makes everyone worse off, and say so explicitly. Usually they try to frame it as having some sort of positive externalities, but when you dig deep and probe specifically they will say that lowering inequality is good even if it leaves everyone worse off. I've met plenty of these people. Maybe I'm exposed to this view more often than you seeing as I live in San Francisco.
It's not just people supporting policies with that effect (like the GND). I've met plenty of people pushing for equality of outcome over opportunity, and seriously proposing confiscating all the wealth of the rich to do so.
The folks making $30k in the second population may now be spending a bunch more in childcare and hours more on their commutes, because they've been priced out of the city and now have travel from further away.
The only way to be priced out is if the city refuses to accept more people and build enough housing for people. This is a conscious choice by power brokers in cities, to restrict housing availability and enrich homeowners and landlords and real estate speculators.
Pricing people is not an inevitable consequence of population growth, it's the consequence of an older generation of haves deciding that younger and less wealthy people do not deserve housing in a city.
That’s my first instinct too, but things can get really messed up if the “haves” control the political process. What if they don’t like living near the “have-nots”, and ban the construction of multi-family housing near downtown? Now that the supply of housing is constrained, prices start going up. Suddenly, the have-nots can barely afford rent.
I don’t think inequality is inherently evil, but it’s critical that we prioritize increasing the supply of all essential goods and services (housing, medical care, education) to create prosperity for everyone and prevent the have-nots from suffering. Via inequality, we can reward people for creating prosperity, but it’s important that this excess wealth only bids up the price of luxuries like yachts and art, not basic needs.
> That’s my first instinct too, but things can get really messed up if the “haves” control the political process. What if they don’t like living near the “have-nots”, and ban the construction of multi-family housing near downtown? Now that the supply of housing is constrained, prices start going up. Suddenly, the have-nots can barely afford rent.
In my experience, the people that support these housing policies are the kind that would rather everyone have $20k instead of $30k/$50k. Opposition to building denser housing is generally more prevalent with "progressives". At least judging from my experience in San Francisco.
San Francisco politics are controlled by wealthy landowners. Progressive opponents to development make a more sympathetic appeal, but it looks like a Baptist-bootlegger coalition to me.
It's a bit more nuanced than that. A lot of the progressive housing obstructionists rent at a fraction of the market rate due to long term rent control (one of the more prominent anti-housing activists rents a 2 bedroom apartment for only $670 a month). Many of said residents are heavily nativist and disdain the "techies" and people from "flyover states" moving to "their city". Blatant nativism is not socially acceptable, so pursuing exclusionary policies under the guise of protecting renters makes it more palatable.
This is a big motivation for California environmentalism. It’s not like rich Malibu landowners don’t want Tijuana levels of coastal density, it’s just think of the poor endangered amphibians so guess that mansion on the bluff will have to stay lonely.
I'm not sure I follow. Low density housing is much worse for the environment than high density housing. Lower density means more transportation burden, larger energy costs to deliver utilities, greater risk of those utilities breaking, and more wildernesses being paved for roads and housing.
There's nothing environmentalist about low density sprawl.
Let me spell it out then. Low density housing is much better for seaside mansion owners who like their beautiful unimpeded views. Environmental concerns about some random newt are a fig leaf since they don’t want to come out and say don’t build high density low income housing next door.
Ah, I didn't get that you were referencing how environmentalism was being abused as a political tool - I thought you were actually saying there was environmental concerns about greater density.
All politics are controlled by wealthy landowners. Whether this is cause or consequence of landlords eventually capturing all income gains in the unlanded class is another question.
I agree with you, but I don't believe the 'inequality' complaint is generally about $30k vs $50k. It's a mischaracterization of their argument. The complaint tends to be about <$30k vs >$250k.
> It's Amazon's fault for bringing in high-paying jobs.
That's not a fair description of the criticism. Amazon isn't "bad" for providing people high-paying jobs, Amazon is bad for dumping the financial pollution from their high-paying jobs in downtown Seattle. Those are not the same thing.
It's possible to recognize that high wages for employees are great, but to also to recognize that these high-wage earners drive the cost of living up for all nearby residents, and since those residents can't also work for Amazon they have no recourse.
"Financial pollution?" No, high paying jobs do not drive up the cost of living. Unwillingness to accommodate growing populations and reluctance to building housing is what is what is driving up costs of living.
Most cities would kill for this so-called "financial pollution".
> Most cities would kill for this so-called "financial pollution".
Their governments would, true. Most of their residents would not, because they'd have to bear the cost of the higher income residents. (See how most people's reaction to the Amazon HQ2 search was, "please not here")
> They absolutely do. Higher income folks can outbid and outpay for all basic essential services, driving the price of those services higher.
By why does bidding have to happen in the first place? Because there isn't enough supply. If increase of supply matches increase of demand, the price doesn't go up. Cities like Seattle have built a lot of housing but there's still more to be done. Seattle only built one unit of housing for every 3 jobs added. At least it's not as bad as San Francisco where only one unit of housing has been added for every 6 jobs.
> Their governments would, true. Most of their residents would not, because they'd have to bear the cost of the higher income residents. (See how most people's reaction to the Amazon HQ2 search was, "please not here")
Er, no, most people really did want Amazon to move there. New York is the exception not the norm, probably because the fallacious belief that well paying jobs causes costs to rise is generally more prevalent among so-called progressives (which disproportionately live in liberal cities).
True. Though I think there was a lot of misinformation about the Amazon deal. Lots of people thought that New York was actually giving Amazon 3 billion dollars, when in reality it was just waiving 3 billion worth of taxes over several years. It's like discounted rent as a move-in incentive.
No, Seattle proves that even if you get everybody with a pulse building apartment buildings, you still can't build enough supply to soak up the excess capital.
"Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash.
It turns out that situations can be more complicated than "ECON 101: everything is just supply vs demand". I'm using daycare as an example above, but you can repeat this for lots of things (healthcare, housing, transportation, etc). This is how high income earners can "break" an economy with higher cost of living, despite not doing anything wrong themselves. And this isn't a hypothetical situation, this is how the problem is actually playing out today, across most mid-sized to major cities in the US nationwide.
But the point is, there's still a shortage. It's not the mere fact that wealthy people exist that is causing the cost of daycare to go up. It's the fact that there isn't enough daycare. If the demand for daycare went up and the supply didn't change then daycare would have gotten more expensive with or without Amazon.
> "Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic.... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash.
Sure wealthy people may be the only ones they can afford scarce goods and services, but wealthy people don't directly cause through scarcity. Scarcity is caused by lack of supply relative to demand. A sudden influx of residents increases demand, but this is fixed by increasing supply.
I'm really confused at why you're using this as an example of how the rules of supply and demand don't apply. This is a perfect example of of how supply and demand functions: demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand.
> demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand.
So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect".
Except it hasn't. Daycare wages are effectively flat. (In real world dollars, they're actually dropping, once you factor in CoL/inflation).
If "everything is just basic supply and demand", how do you explain all the instances like this where supply and demand are fundamentally broken.
It's weird that you two are arguing over the child care market as a hypothetical, because in Seattle the supply growth has been capped by a licensing bureaucracy. You can read more about the wage issue here:
> So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect".
You're changing topics. In the previous comment you were talking about the price of daycare, now you're talking about the wages of daycare workers. Those are two different markets. Perhaps there's plenty of people willing to work as daycare workers, but there aren't enough daycare centers being opened because of restrictive permitting processes. So the supply of daycare workers is still high (and thus, wages don't go up) but the supply of daycare centers is insufficient.
That's easy: this doesn't happen in a vacuum of supply/demand. Not everything is a perfectly efficient market.
A daycare, like any other business has costs associated with rent (which has gone up a LOT) and employees (who are taking care of my kids and should be paid a decent living wage in a rising-cost-of-living environment).
What evidence do you have that they are price gouging rather than simply trying to maintain a working business. Why do you think adding more daycares would significantly change this dynamic?
If there are 500 daycare slots and 2,000 people that need daycare then only the wealthiest 25% are going to be able to afford it. If this gets expanded to 1,500 slots then 75% can get daycare. That's how scarcity drives up supply. If the demand for something exceeds it's availability then its price rises.
Are there operational costs that make operating a daycare at lower than $X per child per day unprofitable? Maybe. If it's rent then the discussion shifts to the supply of real estate. If it's wages then it's about the accessibility of labor.
> By why does bidding have to happen in the first place? Because there isn't enough supply. If increase of supply matches increase of demand, the price doesn't go up.
Housing isn't as easy to create as normal products. There's a multi-year lag time to get new housing built. Here in Seattle we just had a number of high-rise luxury apartments open right next to Amazon's HQ within ~6 months of each other. As a result, rents in the area flatlined for a period. It was a good thing.
Those apartments were initially conceived probably ~3-5 years ago. 5 years ago AMZN was a $150B company, now it's worth 6x as much. If you had a time machine and could go back 10 years and look at how fast Amazon would grow in the 2010s, you'd absolutely invest massively in housing. We didn't have one, instead housing prices skyrocketed along with the rise of this one company that dominates our local economy.
> probably because the fallacious belief that well paying jobs causes costs to rise is generally more prevalent among so-called progressives
Are you trying to argue that Amazon's growth has no impact on the cost of living in Seattle? How is this a 'belief' thing? There is a preponderance of evidence that the rise in the tech sector in Seattle has dramatically increased housing prices here.
A growth in jobs can lead to increased demand, but that alone isn't enough to make prices rise. What caused the increase in price was the failure to accommodate that growth. You pointed this out yourself in your first two paragraphs, I'm not sure why you turned a 180 in this last one.
I didn't turn a 180. I laid out that housing supply cannot keep up with the rise in demand in my first two paragraphs, which leads to the conclusion that the rise in demand will result in a rise in prices.
Housing supply can keep up with rising demand of enough of it gets built. If not enough of it is being built then Seattle needs to address why construction is too slow, to expensive, etc.
There are individual cities that have larger populations than the entirety of Washington State that have lower rents than Seattle. Demand does not cause higher prices , lack of supply causes prices.
It takes a long time for housing to get built, or rather upzoned, bought out by a private developer, deconstructed and then rebuilt. It would have looked absolutely foolish 10 years ago to start the process of upzoning and building as much housing as we'd have needed to keep housing prices flat over the last decade.
Like I said in my original comment, if we had known how much was coming down the pike, we'd have started the process of building more housing immediately. We did not (and could not) know, so we're doing the next best thing and building as much as possible right now.
Your argument about individual cities is a red herring. Show me a city that went through a similar level of high wage worker growth in such a short amount of time and somehow managed to build enough housing to keep housing prices flat.
Sure it may be difficult to accommodate the demand quickly. But at this point you've agreed on the point I'm making: the lack of supply - not the demand - of housing is what causes rents to rise. There are cities with orders of magnitude greater demand for housing that have low rents because the supply exists.
A rapid spike in demand will probably be accompanied with a temporary increase in cost as supply catches up, but it will not result in long-term cost increases unless the supply is constrained. Seattle, San Francisco, Portland, etc. are not dense cities by any means. If apartment buildings are taking 10 years to get built then there is massive mismanagement or onerous regulation going on.
That is the fault of Seattle's extremely conservative zoning code, under which somewhere between two-thirds and three-quarters of the city (depending on how you measure it) has been left frozen in amber, restricted to suburban-style single family housing only. Opportunities to build are scarce and therefore expensive.
capitalism and greed renders the costs of goods and services. If an establishment wants to charge more because rich people are shopping, so be it. You don't necessarily have to, however. There's the option (hopefully given the opportunity) to expand and maintain the price. Alternatively, you can offer a lower tier of product or service at lower cost. I appreciate supply and demand, but no one forces you to raise your prices as demand increases. Many cultures choose not to accommodate increased demand, just to keep the quality as it was, for the set supply they've always accepted.
How is it Amazon's issue?
> outbid and outpay for all basic essential services
There has been a rise in Seattle restaurant prices, but that was clearly due to the many new burdens placed on them by the city government.
If there's money to be made from increased demand, businesses will appear to satisfy it, resulting in no increase in prices. In other words, prosperity does not cause inflation.
The price rises in Seattle are in real estate, and that's because the government artificially restricts the supply of it.
> There has been a rise in Seattle restaurant prices, but that was clearly due to the many new burdens placed on them by the city government.
Not clearly. Much of the Seattle boom had a lot to do with Chinese investment. This recently took a downturn, with new Chinese politics and policies. Investment crashed, along with a bunch of luxury services and businesses (within the last year). Now you have areas that were traditionally high income, fueled by a combination of high-tech, medical, foreign investment, etc and fewer and fewer jobs and opportunities. The areas like Bellevue are struggling to keep expanding the high income standards without collapsing under the low-income needs and with fewer resources to power the bubble. Talking about AMZ is an abstract, since anyone blaming AMZ has a misunderstanding of the economics, for a partisan fairy tale. A high tide caused prices (and taxes) to rise and not all of them have fallen with the economic churn. While some of it is the govt, not all of it, imo.
As someone in Seattle that pays for daycare, that's a terrible example if you're trying to prove your point. Seattle has some of the highest daycare costs in the country, and it's largely because the overhead costs (due to intense bureaucracy) means Seattle's supply of daycare is absolutely terrible for a city of its size.
> See how most people's reaction to the Amazon HQ2 search was, "please not here"
I think this was only true for other deeply NIMBY cities like NYC and Boston. Other places are desperate for "financial pollution"/"economic opportunities".
I don't fault them for that, but they could definitely afford to improve the working conditions in the warehouses (including pay) which is part of the inequality.
Yes: that is exactly what I was going to point out. Seattle's own housing policies: https://www.citylab.com/equity/2015/07/how-a-seattle-plan-to... are the primary driver of financial strain in the city. Surrounding cities's policies (Bellevue, Kirkland, etc.) are even worse.
Actually, I think Western Washington has done pretty well as far as construction of housing. I grew up in Bellevue and it feels like there's a new apartment tower every time I come back to visit.
Contrast this with San Francisco where people routinely shut down housing construction over frivolous objections.
This. While I'm sure that city government could have done more to upzone faster, I'm not sure it would matter. The bottleneck isn't restrictions on builders, it's our construction capacity is completely tapped.
The only thing I see wrong with all the new housing in Seattle is that it all looks depressingly alike, especially around the new Facebook building.
It's like someone fed a bunch of pictures of apartment complexes into a generative adversarial network and built whatever it output. But kudos to them building in the first place rather than doing the San Francisco shuffle.
I understand the concern, but if you think about it a lot of the old brick apartment buildings that came before also looked very similar. There are tons of older brick apartment buildings with stairs up to a covered entrance, the only real differentiation between them is whether they have bay windows or a flat exterior.
I completely agree that the new, large, flat, monolithic buildings are not very visually pleasing, but I wonder if two generations from now people will look back at them longingly. Maybe they won't last that long.
It's always been the case that the majority of new construction hews to whatever style is currently in. It's more expensive to vary everything up and commission unique design languages for each building, and constructing housing affordably is more important than providing eyecandy for passers-by.
I live in East Village and it's basic five floor brick walk-ups everywhere.
I'm pretty disappointed with all of the brand new 3-6 story buildings on Capitol Hill. I get that we have a bunch of rich people whose views might have been impacted if the number of stories wasn't capped so low, but the hill is now damned near part of downtown, and we should have built much taller buildings to reflect that.
That's a very bad comparison. The taller buildings are "less efficient" because they're way narrower than the short buildings. If you look at the picture only about 20% of the land is occupied in the tall buildings while 80% of the land is used in the 6 story buildings. If you raised the number of floors on the building on the left while maintaining the same footprint it'd fit a lot more units.
You either build wide or you build tall. If you can only have a 200x200 feet footprint, then building a 30 story building on that footprint is 5x more efficient than building a 6 story building on that footprint.
Has it been demonstrated that if housing supply is less restricted, developers will want to build more? Is it always profitable for them to do so? I would think this is more complex, in that even if there were opportunities to build residences, it may not make sense to do so for a developer or property owner unless there were significant financial incentives to do so.
I mean if I told you, "hey build apartments. Hopefully that means all the rents will go down." -- isn't that actually a disincentive to build, as not as much $$$ could be made after costs of development?
With 40k workers in Seattle, there'll be a lot of Amazon-aligned third parties. Construction, restaurants, etc.
Amazon wound up doing what they threatened anyways, even though Seattle gave up and rescinded the tax. I do wonder how those protesters feel about that after the fact.
Still smug and self righteous, plenty of them are anti-amazon in any other discussion and we're just happy to take their support on this. A significant percentage believed the head tax would be too expensive for small businesses (aka didn't even know who would have to pay it).
> (aka didn't even know who would have to pay it).
Small business people aren't stupid. It's sad you think they are. I can assure you that the small business people--the shop owners and house cleaners and barbers and contractors -- knew who had to pay it and who weren't.
You'd be surprised to learn that some people like things to be fair even if they aren't directly involved in a transaction or agreement.
If you attended the public hearings (or read coverage thereof), you'd know that many of the people testifying against it didn't understand that they were not subject to it.
That's not what I heard and read at all. There were reports that each side was accusing the other side of spreading "misinformation" about it. But that doesn't mean people testifying didn't understand. Do you think anyone who disagrees with you does it because he lacks the mental capacity to "understand" things as well as you do?
No. They argued that small businesses would have to pay it and could not afford this cost. Some of them even tried to suggest that it would be a reasonable idea if it would only apply to larger businesses.
Also, you don't have to be stupid to not know that, just uninformed. I suppose it depends on the definition of stupidity.
Well, show me were people were saying that. Small business people who served large employers were correctly saying it affected them, and they knew the reasons.
Mass protests? No, there were not mass protests. There was mass spending by amazon to lobby against it. You’re just either misinformed, lying, or astroturfing.
When I interviewed there, one of the interviewers took me to a window and pointed out all of the different buildings amazon either owned outright or had office space in. It was impressive, at least to realize just how big Amazon actually is.
I don't know that it's healthy for one company to dominate so much space, either from the company's perspective or a city's. At that point, with workers already being remote from each other (blocks or miles apart) it would seem to make more sense to me to focus on getting the company shifted to full remote work for anyone not needed in a data, phone or product center.
There are certain things that I miss about working in an office, but I don't know that I'll ever take another job that isn't remote again.
TBF, I'm sure groups aren't randomly scattered around the place. Still, as companies grow, there is a natural distribution of workers that you really can't overcome, especially if you want to keep people if they switch roles and don't want to relocate.
Is natural disaster resilience a factor in geodistributing your white collar workers?
Everyone knows that the SF Bay Area will get bad earthquakes, and some accounts of the Cascadian subduction zone suggest that much of the Pacific Northwest coastal area (including Seattle) has a worse fate looming: https://www.newyorker.com/magazine/2015/07/20/the-really-big...
The more I read about Amazon's expansion plans the more I believe that they never intended to place a substantial office in NYC, or at least had already abandoned the idea before the opposition to it even grew. It really doesn't seem like we lost anything we were actually going to get.
hello, long time seattle tech person here - this article is a bit slanted and doesn't tell the whole story. i for one, however, hope amz stops building in seattle and starts in earnest elsewhere. it is has become a nuisance of a company that the city is becoming too dependent on. it's not healthy for our local economy, and i would love to see the am-holes spread out and infect other cities.
> But in recent years, as Seattle’s citizens begin taking Amazon to task for its role in driving urban inequality, and city leaders push to account for this cost with higher taxes
What the hell? Maybe also mention as house prices rise so even Amazon employees are complaining about how hard it is to buy a house, and rents go up so that even Amazon employees start to think twice, and the number of local potential hires shrinks...(devs in Seattle who don't currently work for Amazon but would like to do so, as opposed to those have already quit or would never touch it)
But no, of course these aspects, the fundamentals of "can I hire people to work here and how much will I have to pay them", are not relevant.
Yeah, you should see the composition of the Seattle City Council to understand why Bezos is backing away slowly. Basically all Democrat, with an activist Socialist mixed in and controlling the conversation (she was the one who pushed for "head tax", and continues to do so even after it was repealed). That's great for business, I'm sure.
From the tone of the article and what I would expect to see from some of the comments here eventually, you would think that Seattle united in fighting its corporate fascist oppressors by taxing it fairly to cover the problems the capitalist class creates and in response, Amazon is moving far and away from the scene of the crime; both straw structured arguments are patently false.
There has always been a vocal minority in Seattle that has bemoaned any kind of growth and change in the city, and the recent cause that they latched on was all of disruptions Amazon was claimed to be at fault for, or how the "tech bros" ruined the city. These were probably the same people who hated that the Microsoft of a decade or two prior washed the city over with a tech scene, they probably complained that Boeing made noisy jets for the military industrial complex and those "av bros" were destroying neighborhoods with hundred and hundreds of months of established character. This is a west coast city that I have lived most of my life in and around, it has always been changing and growing, and I along with my wife, friends, and family, love it for the opportunities and ever evolving landscape.
Then there is the argument that Amazon is taking its toys and going to play ball elsewhere, used as proof that somehow Amazon wasn't going to work with the city to begin with. Amazon is probably at the top of the current curve of growth, and some of their recent announcements in jobs and locations show somewhat of a diminished drive to expand. Additionally, to pick up and leave, or to leave the region all together is pretty expensive and disruptive to operations. Bellevue is right across the lake. It offers a city government that wants to grow as fast as possible and as dense as possible, and willing to work with anyone. The recent announcement that the local transit authority was on schedule with the light rail expansion in Bellevue lines up with Amazon and a few other companies looking to expand in the city. Bellevue is looking to be a great place to be "in Seattle" without having to be in Seattle.
>Is its pivot to smaller communities a way to avoid messy politics?
I feel very confident there will still be "messy politics", but I think the tactical situation may be more favorable to Amazon in these cases.
>Last year, Seattle’s city council proposed a per-employee head tax on the city’s largest businesses, intended to raise $75 million for homelessness and affordable housing initiatives.
Even an introductory course in economics will equip someone to find a profusion of problems with this tax. Because taxes affect transactions, not entities, employees at large companies suffer relative to those at smaller companies. There is a perverse incentive for companies near the threshold to manipulate headcounts via subcontractors. And so on.
Companies like Amazon absolutely should pay for the welfare of the less fortunate, but the way there is not through such rash populism. From 1993 to 2016, the Democrats have been the party of sound economic policy, and I would expect better from a blog such as CityLab which presents itself as a promoter of realistic reforms. As Krugman said it:
> America’s two big political parties are very different from each other, and one difference involves the willingness to indulge economic fantasies. [...]
> But is all that about to change? [...]
> ...as the economists warn, fuzzy math from the left would make it impossible to effectively criticize conservative voodoo.
This blog post certainly didn't make me feel very optimistic.
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[ 4.4 ms ] story [ 143 ms ] threadRight. It's Amazon's fault for bringing in high-paying jobs. Definitely has nothing to do with local politics.
Now, with the right mix of upzoning, public housing, rent control, and social services, the threat doesn't have to hurt anyone, but in San Francisco and in Seattle we're not doing remotely near enough to ensure the people on the low end aren't hurt by the prosperity.
Would you rather live in a society where everyone just gets enough to survive, or one where everyone gets enough to survive, half can afford basic consumer goods, and the other half can afford luxury consumer goods?
A significant number of people would genuinely pick the former. Some people really do think the pursuit of equality is just even if it makes everyone worse off.
Take a population where everyone makes $20k per year. Great! It’s equal!
Take another population where half make $30k and half make $50k. Oh no! Inequality!
I’d rather be in the 2nd population.
The folks making $30k in the second population may now be spending a bunch more in childcare and hours more on their commutes, because they've been priced out of the city and now have travel from further away.
As an example: https://www.nytimes.com/2017/08/17/business/economy/san-fran...
Pricing people is not an inevitable consequence of population growth, it's the consequence of an older generation of haves deciding that younger and less wealthy people do not deserve housing in a city.
Which, given that it seems to happen pretty much everywhere, must be factored into decision making.
"Wouldn't it be nice if humans didn't act like humans" is the sort of dreamy optimism that kills Communism.
You can have high inequality without prices rising - it’s a separate problem.
I don’t think inequality is inherently evil, but it’s critical that we prioritize increasing the supply of all essential goods and services (housing, medical care, education) to create prosperity for everyone and prevent the have-nots from suffering. Via inequality, we can reward people for creating prosperity, but it’s important that this excess wealth only bids up the price of luxuries like yachts and art, not basic needs.
In my experience, the people that support these housing policies are the kind that would rather everyone have $20k instead of $30k/$50k. Opposition to building denser housing is generally more prevalent with "progressives". At least judging from my experience in San Francisco.
There's nothing environmentalist about low density sprawl.
Same with Rose Pak. Sure she maybe owned property, but she didn’t derive her power from it.
That's not a fair description of the criticism. Amazon isn't "bad" for providing people high-paying jobs, Amazon is bad for dumping the financial pollution from their high-paying jobs in downtown Seattle. Those are not the same thing.
It's possible to recognize that high wages for employees are great, but to also to recognize that these high-wage earners drive the cost of living up for all nearby residents, and since those residents can't also work for Amazon they have no recourse.
Most cities would kill for this so-called "financial pollution".
They absolutely do. Higher income folks can outbid and outpay for all basic essential services, driving the price of those services higher.
Compare the cost of daycare in Seattle, for example, to the equivalent cost in say Michigan.
> Unwillingness to accommodate growing populations
Seattle is #1 in urban housing construction, nationwide. https://www.seattletimes.com/business/real-estate/seattle-to... This isn't California, blaming lack of housing construction is not a valid argument.
> Most cities would kill for this so-called "financial pollution".
Their governments would, true. Most of their residents would not, because they'd have to bear the cost of the higher income residents. (See how most people's reaction to the Amazon HQ2 search was, "please not here")
By why does bidding have to happen in the first place? Because there isn't enough supply. If increase of supply matches increase of demand, the price doesn't go up. Cities like Seattle have built a lot of housing but there's still more to be done. Seattle only built one unit of housing for every 3 jobs added. At least it's not as bad as San Francisco where only one unit of housing has been added for every 6 jobs.
> Their governments would, true. Most of their residents would not, because they'd have to bear the cost of the higher income residents. (See how most people's reaction to the Amazon HQ2 search was, "please not here")
Er, no, most people really did want Amazon to move there. New York is the exception not the norm, probably because the fallacious belief that well paying jobs causes costs to rise is generally more prevalent among so-called progressives (which disproportionately live in liberal cities).
No, Seattle proves that even if you get everybody with a pulse building apartment buildings, you still can't build enough supply to soak up the excess capital.
For example: Why is there a shortage of daycare in Seattle? There's no shortage of space for it. https://www.seattletimes.com/business/developers-struggle-to... There's no shortage of demand for daycare - https://www.seattletimes.com/seattle-news/you-should-get-on-... . And all those Amazon employees are flush with cash.
"Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash.
It turns out that situations can be more complicated than "ECON 101: everything is just supply vs demand". I'm using daycare as an example above, but you can repeat this for lots of things (healthcare, housing, transportation, etc). This is how high income earners can "break" an economy with higher cost of living, despite not doing anything wrong themselves. And this isn't a hypothetical situation, this is how the problem is actually playing out today, across most mid-sized to major cities in the US nationwide.
But the point is, there's still a shortage. It's not the mere fact that wealthy people exist that is causing the cost of daycare to go up. It's the fact that there isn't enough daycare. If the demand for daycare went up and the supply didn't change then daycare would have gotten more expensive with or without Amazon.
> "Daycare centers will just pay more for labor, to hire more people" you say. "This money will trickle down to everyone that way" -- except it doesn't work that way - https://www.foxbusiness.com/personal-finance/broken-economic.... . Just because Amazon people can afford high rates, doesn't mean everyone can. So daycare becomes broken for everyone, despite the "benefits" of the extra cash.
Sure wealthy people may be the only ones they can afford scarce goods and services, but wealthy people don't directly cause through scarcity. Scarcity is caused by lack of supply relative to demand. A sudden influx of residents increases demand, but this is fixed by increasing supply.
I'm really confused at why you're using this as an example of how the rules of supply and demand don't apply. This is a perfect example of of how supply and demand functions: demand for daycare increases, but supply doesn't grow to meet it. The price goes up. Exactly as what we would expect based on the rules of supply and demand.
So, by your logic, demand for daycare workers should rise, supply hasn't grown to meet demand, so the wages for daycare workers should spike up. Exactly what you would "expect".
Except it hasn't. Daycare wages are effectively flat. (In real world dollars, they're actually dropping, once you factor in CoL/inflation).
If "everything is just basic supply and demand", how do you explain all the instances like this where supply and demand are fundamentally broken.
https://www.king5.com/article/news/local/parents-struggling-...
You're changing topics. In the previous comment you were talking about the price of daycare, now you're talking about the wages of daycare workers. Those are two different markets. Perhaps there's plenty of people willing to work as daycare workers, but there aren't enough daycare centers being opened because of restrictive permitting processes. So the supply of daycare workers is still high (and thus, wages don't go up) but the supply of daycare centers is insufficient.
A daycare, like any other business has costs associated with rent (which has gone up a LOT) and employees (who are taking care of my kids and should be paid a decent living wage in a rising-cost-of-living environment).
What evidence do you have that they are price gouging rather than simply trying to maintain a working business. Why do you think adding more daycares would significantly change this dynamic?
Are there operational costs that make operating a daycare at lower than $X per child per day unprofitable? Maybe. If it's rent then the discussion shifts to the supply of real estate. If it's wages then it's about the accessibility of labor.
Housing isn't as easy to create as normal products. There's a multi-year lag time to get new housing built. Here in Seattle we just had a number of high-rise luxury apartments open right next to Amazon's HQ within ~6 months of each other. As a result, rents in the area flatlined for a period. It was a good thing.
Those apartments were initially conceived probably ~3-5 years ago. 5 years ago AMZN was a $150B company, now it's worth 6x as much. If you had a time machine and could go back 10 years and look at how fast Amazon would grow in the 2010s, you'd absolutely invest massively in housing. We didn't have one, instead housing prices skyrocketed along with the rise of this one company that dominates our local economy.
> probably because the fallacious belief that well paying jobs causes costs to rise is generally more prevalent among so-called progressives
Are you trying to argue that Amazon's growth has no impact on the cost of living in Seattle? How is this a 'belief' thing? There is a preponderance of evidence that the rise in the tech sector in Seattle has dramatically increased housing prices here.
There are individual cities that have larger populations than the entirety of Washington State that have lower rents than Seattle. Demand does not cause higher prices , lack of supply causes prices.
Like I said in my original comment, if we had known how much was coming down the pike, we'd have started the process of building more housing immediately. We did not (and could not) know, so we're doing the next best thing and building as much as possible right now.
Your argument about individual cities is a red herring. Show me a city that went through a similar level of high wage worker growth in such a short amount of time and somehow managed to build enough housing to keep housing prices flat.
A rapid spike in demand will probably be accompanied with a temporary increase in cost as supply catches up, but it will not result in long-term cost increases unless the supply is constrained. Seattle, San Francisco, Portland, etc. are not dense cities by any means. If apartment buildings are taking 10 years to get built then there is massive mismanagement or onerous regulation going on.
There has been a rise in Seattle restaurant prices, but that was clearly due to the many new burdens placed on them by the city government.
If there's money to be made from increased demand, businesses will appear to satisfy it, resulting in no increase in prices. In other words, prosperity does not cause inflation.
The price rises in Seattle are in real estate, and that's because the government artificially restricts the supply of it.
Not clearly. Much of the Seattle boom had a lot to do with Chinese investment. This recently took a downturn, with new Chinese politics and policies. Investment crashed, along with a bunch of luxury services and businesses (within the last year). Now you have areas that were traditionally high income, fueled by a combination of high-tech, medical, foreign investment, etc and fewer and fewer jobs and opportunities. The areas like Bellevue are struggling to keep expanding the high income standards without collapsing under the low-income needs and with fewer resources to power the bubble. Talking about AMZ is an abstract, since anyone blaming AMZ has a misunderstanding of the economics, for a partisan fairy tale. A high tide caused prices (and taxes) to rise and not all of them have fallen with the economic churn. While some of it is the govt, not all of it, imo.
As someone in Seattle that pays for daycare, that's a terrible example if you're trying to prove your point. Seattle has some of the highest daycare costs in the country, and it's largely because the overhead costs (due to intense bureaucracy) means Seattle's supply of daycare is absolutely terrible for a city of its size.
I think this was only true for other deeply NIMBY cities like NYC and Boston. Other places are desperate for "financial pollution"/"economic opportunities".
The city severely restricts the housing supply; housing costs go up; the people look for a scapegoat; and there is Amazon, handily enough, when the real fault is voters's. (http://cityobservatory.org/homevoters-v-the-growth-machine/).
A real pity: https://jakeseliger.com/2015/09/24/do-millennials-have-a-fut...
Contrast this with San Francisco where people routinely shut down housing construction over frivolous objections.
It's like someone fed a bunch of pictures of apartment complexes into a generative adversarial network and built whatever it output. But kudos to them building in the first place rather than doing the San Francisco shuffle.
I completely agree that the new, large, flat, monolithic buildings are not very visually pleasing, but I wonder if two generations from now people will look back at them longingly. Maybe they won't last that long.
I live in East Village and it's basic five floor brick walk-ups everywhere.
https://twitter.com/alfred_twu/status/1097802322627813376
You either build wide or you build tall. If you can only have a 200x200 feet footprint, then building a 30 story building on that footprint is 5x more efficient than building a 6 story building on that footprint.
I mean if I told you, "hey build apartments. Hopefully that means all the rents will go down." -- isn't that actually a disincentive to build, as not as much $$$ could be made after costs of development?
Amazon wound up doing what they threatened anyways, even though Seattle gave up and rescinded the tax. I do wonder how those protesters feel about that after the fact.
Small business people aren't stupid. It's sad you think they are. I can assure you that the small business people--the shop owners and house cleaners and barbers and contractors -- knew who had to pay it and who weren't.
You'd be surprised to learn that some people like things to be fair even if they aren't directly involved in a transaction or agreement.
See: https://www.theatlantic.com/technology/archive/2018/06/how-a...
I don't know how to be more clear than that.
Also, you don't have to be stupid to not know that, just uninformed. I suppose it depends on the definition of stupidity.
I don't know that it's healthy for one company to dominate so much space, either from the company's perspective or a city's. At that point, with workers already being remote from each other (blocks or miles apart) it would seem to make more sense to me to focus on getting the company shifted to full remote work for anyone not needed in a data, phone or product center.
There are certain things that I miss about working in an office, but I don't know that I'll ever take another job that isn't remote again.
Everyone knows that the SF Bay Area will get bad earthquakes, and some accounts of the Cascadian subduction zone suggest that much of the Pacific Northwest coastal area (including Seattle) has a worse fate looming: https://www.newyorker.com/magazine/2015/07/20/the-really-big...
What the hell? Maybe also mention as house prices rise so even Amazon employees are complaining about how hard it is to buy a house, and rents go up so that even Amazon employees start to think twice, and the number of local potential hires shrinks...(devs in Seattle who don't currently work for Amazon but would like to do so, as opposed to those have already quit or would never touch it)
But no, of course these aspects, the fundamentals of "can I hire people to work here and how much will I have to pay them", are not relevant.
https://www.theringer.com/tech/2018/7/17/17578524/seattle-am...
There has always been a vocal minority in Seattle that has bemoaned any kind of growth and change in the city, and the recent cause that they latched on was all of disruptions Amazon was claimed to be at fault for, or how the "tech bros" ruined the city. These were probably the same people who hated that the Microsoft of a decade or two prior washed the city over with a tech scene, they probably complained that Boeing made noisy jets for the military industrial complex and those "av bros" were destroying neighborhoods with hundred and hundreds of months of established character. This is a west coast city that I have lived most of my life in and around, it has always been changing and growing, and I along with my wife, friends, and family, love it for the opportunities and ever evolving landscape.
Then there is the argument that Amazon is taking its toys and going to play ball elsewhere, used as proof that somehow Amazon wasn't going to work with the city to begin with. Amazon is probably at the top of the current curve of growth, and some of their recent announcements in jobs and locations show somewhat of a diminished drive to expand. Additionally, to pick up and leave, or to leave the region all together is pretty expensive and disruptive to operations. Bellevue is right across the lake. It offers a city government that wants to grow as fast as possible and as dense as possible, and willing to work with anyone. The recent announcement that the local transit authority was on schedule with the light rail expansion in Bellevue lines up with Amazon and a few other companies looking to expand in the city. Bellevue is looking to be a great place to be "in Seattle" without having to be in Seattle.
I feel very confident there will still be "messy politics", but I think the tactical situation may be more favorable to Amazon in these cases.
>Last year, Seattle’s city council proposed a per-employee head tax on the city’s largest businesses, intended to raise $75 million for homelessness and affordable housing initiatives.
Even an introductory course in economics will equip someone to find a profusion of problems with this tax. Because taxes affect transactions, not entities, employees at large companies suffer relative to those at smaller companies. There is a perverse incentive for companies near the threshold to manipulate headcounts via subcontractors. And so on.
Companies like Amazon absolutely should pay for the welfare of the less fortunate, but the way there is not through such rash populism. From 1993 to 2016, the Democrats have been the party of sound economic policy, and I would expect better from a blog such as CityLab which presents itself as a promoter of realistic reforms. As Krugman said it:
https://www.nytimes.com/2016/02/19/opinion/varieties-of-vood...
> America’s two big political parties are very different from each other, and one difference involves the willingness to indulge economic fantasies. [...]
> But is all that about to change? [...]
> ...as the economists warn, fuzzy math from the left would make it impossible to effectively criticize conservative voodoo.
This blog post certainly didn't make me feel very optimistic.