This housing crisis is going on for long time. I was wondering why don't these tech giants build housing complex for their employees.
It would definitely solve a lot of issues, including controlled and balanced housing cost for the employees, group/public transport, and above all a vibrant community.
Where you see a "vibrant community" I see an inexistent work-life balance and gaited communities. It would be a real life echo chamber, SV is already enough of a bubble as it is I doubt they'd need a FacebookVille or a GoogleVille.
Facebook is looking into paying its employees in scrip, and now they should also be indebted to the company town?
I get what you're saying, and I want to agree, but it smacks of the old Company Town that I grew up in, and the current FIFO/DIDO living conditions of remote Australian mining towns.
It is bad enough that so many FAANG employees are in trouble with immigration if they lose their jobs. The fear of losing one's home would be a pretty powerful force in labor relations.
Yes, it would be a good to build more housing, and it would be convenient to reserve some of that housing for your workers, and it would be a perk to subsidize that housing for your workers, but we'd have to wrap some serious regulations around them that would likely make Company Housing devolve pretty quickly.
The housing crisis isn't because nobody wants to build housing, but because housing is difficult to build legally. The big tech companies face exactly the same problem that everyone else faces (actually: even more so since a "company town" is unpopular for other reasons).
Its quite daunting that the employees find it easier to compel facebook to increase their salaries, maybe 10%, than to complain on city hall that puts the rules that made their rent 300% of what they were.
At ~500k/unit, neither municipal nor state government can afford to build public housing in any meaningful quantity. We just had a huge electoral battle over a measure that raises taxes for only a few thousand units (Prop C). Millions of them would be required. Rent control expansion is both popular and technically doable, but would require repealing Costa-Hawkins, which survived this year's challenge.
You will never see a left-leaning activist group representing the working class in California support a "let the market work" sort of policy like more for-profit development permits. Those ideas - public housing, rent control, increased supply - are pretty much the policy levers, and none are going to happen at scale within this set of voter preferences.
> You will never see a left-leaning activist group representing the working class in California support a market-based solution like permitting more for-profit development. If that ever happens, it will be despite these workers' objections.
That's like, literally, the entire platform of the YIMBY movement. These groups are by and large left-leaning, and activist groups. They generally support more market rate or affordable (or both!) housing. Basically any development.
YIMBY sits pretty far to the right as Bay Area politics go, and is primarily tech workers fighting against the DSA, tenants union, and other working-class coalitions.
>You will never see a left-leaning activist group representing the working class in California advocate for a market-based solution like permitting more for-profit development.
Is that really true? Elsewhere I have seen left-leaning activists advocate for higher density for-profit development housing so long as it is zoned to force developers to target all income groups in some manner, not just the most short term profitable ones. Is it really so different in California? You don't have to have a completely free market to have market based solution, after all. Which is a good thing as you're unlikely to ever see a truly free market there.
What we typically see is fighting to maximize price-controlled units as a percentage of development while still minimizing overall development. A small, 100% affordable project preferred over a large, 20% affordable project, even if the latter yields more affordable homes.
If you believe that market-rate units accelerate gentrification, this even makes sense, as the more market-rate units you have, the more affordable units you'll need. The first priority is to minimize disruption to existing communities; BMR units are just a way of partially mitigating it when it does happen. Hence "we can't build our way out the housing crisis."
"De-commodify housing" is a lot sexier than "find the optimal BMR percentage requirement."
> The best thing a city like SF could do is abolish its sales taxes. That increases the salary of everyone and particularly low-wage workers.
Not those, including inevitably low-wage workers, whose jobs are cut to balance the budget with lower revenue, including those cut as second- and higher-order effects.
Rebating the sales/use taxes of low wage workers (or simply the first $X for those also paying SF income tax), possibly making this revenue neutral by alos raising sales tax rates, would be more focussed.
SF city has a budget of 9billion dollars ~ and 329,700 households. That gives you a whooping 27,300 dollars of spending per household. They would have to send a bill to every household for 2270 every month to cover their raw expenditures.
I have a huge amount of sympathy for these people. Clearly something is going wrong and they shouldn't be the ones dealing with it. That said...
> "When a company is trying to pay you the same rate that they pay in other cities, we can’t accept that." [said a line cook]
If it works for other cities, the problem clearly isn't the rate of pay. The problem is probably local politics of housing. Demands like that are not completely reasonable.
> If it works for other cities, the problem clearly isn't the rate of pay.
Ok. So if they earned 5 dollars a day, it would be ok because it works for cities in third world countries? I think it's obvious that the local cost of living is always a relevant factor in pay.
The US has a federal minimum wage of $7.25/hr. This isn't a comparison with the 3rd world, this is a comparison with civilised, livable and comfortable lifestyles in other US cities.
It is obvious that the cost of living is a relevant factor. The question is why are the costs of living higher in California than elsewhere? It isn't because rich people exist. It is because California doesn't have enough houses for the marginal house-hunter.
Paying the marginal buyer more isn't going to create more houses. If there wasn't a place for them to rent before, there still won't be when you pay them more. If it were possible to create more houses, the current prices would already be making it happen.
You've moved the goal posts a bit, but regardless:
> The US has a federal minimum wage of $7.25/hr. This isn't a comparison with the 3rd world, this is a comparison with civilised, livable and comfortable lifestyles in other US cities.
There is no where in this country where $7.25 is a liveable, comfortable wage. It is the lowest amount legally allowed. And very few work for that wage - and very few of them are independent adults. See [1]. Nowhere in the United States can a minimum wage worker (or even close to it) affording the average 2 br apartment (say, if they had kids); and there are only a few places in the country where someone working 40 hrs / week on minimum wage can afford a 1 br apartment [2].
> It is obvious that the cost of living is a relevant factor. The question is why are the costs of living higher in California than elsewhere? It isn't because rich people exist. It is because California doesn't have enough houses for the marginal house-hunter.
I hope the above mentioned points make it clear that this is not a problem just in California, but nationwide. Which means wages are insufficient nationwide and cost of living is too high nationwide.
> Paying the marginal buyer more isn't going to create more houses. If there wasn't a place for them to rent before, there still won't be when you pay them more. If it were possible to create more houses, the current prices would already be making it happen.
I'm going to assume you're arguing in good faith here and respectfully disagree. The problem isn't that there aren't homes for them to buy or rent; the problem is that those homes and rentals are at too high a price. At $20/hr maybe they can afford to live in .5% of available rental units; and at $30/hr maybe they could afford 5%. That's a tenfold increase in potential living spaces, without those living spaces becoming more affordable.
Yes, the other issues in the bay area exist, with the NIMBYism and such. But these problems still exist nationwide. There are a few potential ways for government to help solve this issue. The main ways (hopefully I didn't miss any obvious ones) are: increase minimum wage or average wages via law or other influence; increase taxes on home ownership, especially for non-residents; introduce rent control laws; provide incentives for and remove obstruction from building new construction, especially high density construction.
Today, in SF, you have more power in wage negotiations than local housing politics. It's reasonable to work towards what appears to be the more likely solution to your problem.
Increasing wages will not help as they will be captured by rising rents. I hate to get all Georgist here, but landowners are not creating economic value. In fact, by supporting zoning laws they are vastly worse than landowners historically. They are leaching off the productivity of the city. The moustache-twirling villains are not the business owners nor even the corporations, it is the land owners who created nothing yet receive most the value these workers generate. Just because this is a tyranny of a majority who owns, this does not make their yoke any less evil.
From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
But almost no common law jurisdiction has escaped the zoning-law trap, save for Texas. So I don't see it getting better any time soon.
At this point I fully support the "nuclear option" against NIMBYs: the state needs to step in and override local zoning. Local zoning boards have proven themselves to be self-interested obstructionists who are only interested in bleeding cities dry by restricting supply to profit off real estate inflation. My ears are pretty much closed to any appeal otherwise. NIMBYs can go to hell.
"It is those other rich people's fault." While the specifics of what you wrote are certainly true, it's the capitalists that are the problem. It is a class of people. High earners, for example executives of corporations, are oftentimes the same people as the property owners.
Yeesh, what an ugly, simple-minded way to look at the world. Why on earth would you intentionally switch the blame to a more general, less accurate group? "Let's not blame criminals for crime when we can just blame the residents of this neighborhood, which oftentimes are the same people as the criminals".
Increasing wages obviously would help. The other workers at Facebook (i.e., these people’s coworkers) who make six figures are able to live comfortably.
I agree with you that our economic model for housing and land ownership needs to change though.
It might help short term, but I don't think its obvious it would work long term. The idea is that it wouldn't solve the structural problem.
The structural problem is that nothing prevents landowners from charging whatever the market will tolerate and so sucking all plausible value out of the people paying the rents -- even to the degree that renters are forced to work so much they do nothing else and should expect a shorter life. Since there's no structural impediment to doing so, if you pay the renters more, the landowners will take the value...at least eventually.
Markets are a brilliant tool. We have to decide on the society we want, and use markets to shape it. Very few scenarios that make any sense would allow markets to function w/o purposeful shape.
I think managing a queue might be a better way to preserve everyone's dignity than letting raw market forces work it out. Either that or I think you'll end up paying engineers to make $50 sandwiches, which doesn't seem like it would generate maximal economic value for the parties involved.
It's "supply and demand" where the suppliers lobby city government to increase demand (by allowing new office space) while decreasing supply (by banning new housing development). Any idiot can make money if the government will literally let him walk into a town meeting and say, "Yes I'd like you to increase the value of my particular asset portfolio by force of law kthanxbye."
It might help the Facebook workers, but it will hurt everyone else with a low wage job. The fundamental problem is that there are more jobs in SV than housing units, and you can’t build more housing units. The solutions are:
1: Some people work two jobs but only occupy one housing unit
2: Put more workers into each housing unit
3: New transport infrastructure to allow people to live farther away
It's not the land owners at all. It's the legislators who restrict zoning. You may argue that the land owners "push" for legislation, but ultimately it's the choices of our Elected Officials.
> landowners are not creating economic value. ... They are leaching off the productivity of the city.
I think this is the nub of it. Whilst increasing rents might look good in the context of an economist's "perfect" model, the reality sucks ass for actual human beings trying to make a living and have a decent quality of life. And I cannot overstate the importance of the latter.
I don't pretend to know what the answer is here, particularly not in the context of a US economic and legal milieu (I'm from the UK), but it certainly seems like there's a strong disparity in power between landlords and tenants (possibly fostered by the legislative environment) that needs to be addressed.
In an economist’s perfect model, land owners could sell their land to developers or build apartments on it themselves. Supply and demand would keep prices from rising.
In practice, regulations and zoning stifle the operation of the “perfect” economic model and you get what we see now.
If I were to buy a house there I would probably make no money renting for efficient market reasons. The bank would probably absorb all the money I could make into interest, after all why wouldn't they? The only people who are benefitting are the previous landowners, who saw the appreciation.
A) So what should these landowners be doing according to you besides jumping off of a bridge? Are you against private property. Or did just exactly the set of evil people happen to be also be exactly the set of people who wanted to buy property
B) So what should we do, a Mao style repossession from everyone who bought land totally fairly according to the legal system they bought it in?
C) You honestly believe they are mustache twirling villains don't you?
A) We are in an incentive trap. It sucks for property owners, but government subsidizing them with zoning laws needs to stop. If they are leveraged and lose all their money I don't care. They used the state to steal their rents and capital appreciation from the productive people, workers and business owners. From a Georgist prospective, aside from removing the indirect subsidization from zoning laws, I think land value should be taxed: https://en.wikipedia.org/wiki/Land_value_tax
B) See this portion of my comment: From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
C) Not really. Just responding to incentives. Like all of us.
> So what should these landowners be doing according to you besides jumping off of a bridge?
The landowners should be powerless to stop other landowners building high(er) density housing. This is how most of the economy works - all industrial activities face grumpy opposition from someone, so the legal system takes a fairly protective stance on behalf of industry.
Most economic activity happens to the annoyance of someone who is suffering minor negative externalities (very minor, eg, the view isn't as good because there is a factory in it now). The issue that is being gone to is that landlords band together to form a sort-of guild that restricts what other landlords can do.
GP was quite clear that zoning laws were the core issue. If one or two landlords were allowed to band together to build an ultra-dense block of units in a high demand suburb then housing would become plentiful. This sort of thing is the most effective way of solving a housing problem.
So basically, in answer to your (A), landlords could support laws that allow landlords to more easily (and, critically, unilaterally in the face of opposition from other landlords) build the sort of housing people want.
The real problem is that there is not enough housing that people want. I do not see how taxes, rent controls, minimum wage laws and other measures that do not address the fundamental problem of there not being enough quality housing can solve the problem.
You either:
1. Build more housing. But where? Ask about any specific project, and people are usually against it.
2. Redistribute existing housing. E.g. does everyone that lives in London really need to be in London? By definition, it will be a painful solution for some and require the use of force. Making existing neighborhoods nicer to make them more attractive for a particular demographic also fall into this category.
3. Spread people/jobs/businesses around more. This includes encouraging remote working practices where possible (but this will not help the kitchen staff). Perhaps turn currently depressed areas into some forms of free(r) economic zones, where taxes are lower and there is no requirement for planning permission?
4. Get better transport links. If trains were fast, went on time, were reliable and comfortable, more people would take the option of commuting and they would commute further out.
I have a theory that as we build more apartments vs condos and home ownership goes down we will have more of these issues. Home ownership seems like a hedge to live in a city you enjoy long term. I could see in the future a Comcast of the world coming in and consolidating apartments under one banner for efficiency and rent becoming a much worse problem.
What I cannot tell is how much of this is me just being pessimistic. I know it would take a long time and a lot of capital to own enough to make a large dent in housing.
But it's not just NIMBYs that are against the building, it is "the general public" to the point where new housing developments are nearly political suicide. People both want new housing, but don't want highrise buildings changing the skyline (or don't want to live in them), want to preserve the look of the city (which includes keeping some awful looking buildings), do not want to build on any green spaces, etc.
> Increasing wages will not help as they will be captured by rising rents.
That isn't as true at the low end. When there are a bunch of people making $200k-$300k, and a bunch of people making $20k-$30k, increasing wages for the former isn't going to cause as much rent competition since the latter already dwarfs buying power in the market.
Reducing income disparity is effective in the longer term by just making everyone a bit more equal in their buying power.
There are knock down effects, so even if they aren't exactly competing for the same housing, pressure at the top easily works its way to the bottom. The low and high end markets are very much intertwined.
This is a simplistic analysis of the situation with some misconceptions.
Landowners supply land, one of the key inputs to the economy. It is part of the capital behind almost all economic activity. Trying running a business - or even living - without using at least some real estate. This is a very fundamental economic misconception.
Landowners don’t support zoning restrictions on their own land. And while many support zoning restrictions generally so do non-landowners (see surveys on the issue). Plus landowners are a minority of voters in the areas with the most restrictive zoning like SF and NYC.
Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
IMHO the core problem is granting local politicians strong powers over zoning because they can gain both support and contributions (legal & illegal) by manipulation zoning. Their powers need to be limited by strong property rights (like in some parts of TX).
A secondary issue in economic and financial illiteracy. There are so many misconceptions about this issue that people often act against their own interests.
Unfortunately I have to agree it is unlikely to get better soon but there are some hopeful developments.
"Landowners supply land, one of the key inputs to the economy."
Landowners don't supply land. That land is there whether these owners exist or not, and regardless of what they do or don't do.
Now, there is a system built up around denying access to land to anyone who doesn't own it or has the owner's permission, but that's a far cry from actually supplying land.
Contrast this to a baker who bakes bread. Without him that bread would not exist, so he actually does provide a service of supplying bread. Not so with the landowner, who creates nothing and whose ownership is a legal fiction.
Physics dictate that only one factory/office/home/bakery can occupy a particular location. So without the particular land for that particular bakery the bread wouldn’t exist either. People get all confused about basic economics, particularly real estate economics.
In most ways land is no different than other physical inputs in that they are “exclusive”. You can’t use the same wheat in two different loaves of bread are the same time either. And the same baker can’t work in two different bakeries at the same time.
The key thing that makes land different from other economic inputs is that it is immobile. This has many interesting implications but doesn’t make land useless or require a particular ownership system.
Sure you could imagine a different world with different legal system but that wouldn’t change the fact that land is needed for almost every economic activity and is thus valuable. So whoever decides who get to use (i.e. supplies) that land - let’s call them the landowner - is adding value to that economic activity.
Similar discussions around intangible assets are even more confusing.
"So whoever decides who get to use (i.e. supplies) that land - let's call them the landowner - is adding value to that economic activity."
The ones who decide what to do with land need not be their owner. See the practice of eminent domain, public lands, and non-capitalist economic systems.
Allowing the concentration of ownership in to a relatively few hands at the expense of the many has been an absolute disaster for the overwhelming majority of the population.
See the other reply for the Georgist critique of land ownership.
>Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
I think you will find the majority of people who vote in municipal elections are home owners. The policy would cause zoning restrictions to increase their tax bill. Very quickly, I think we would find zoning laws would change. The real reason this policy is naive is it would be very difficult to actually get an accurate estimate of the counterfactual price.
Many restaurant owners in the bay area are annoyed at Google and Facebook, because they keep on hiring away their line cooks and other staff with higher pay and better benefits.
I suppose this article is on the front page because it bashes tech companies though.
The parent is saying that if you're going to fight for labor you should probably start with the local restaurants, because they're the biggest problem. If that doesn't fit the "stick it to the big corp" thing then I guess things might be more complicated than that.
Another way of looking at the issue is - we can also make a lot of progress if we set certain standards for those companies that are clearly able to pay more.
This is a legitimate question and I'm not sure why you were downvoted. I don't have any sources, I only have first hand accounts of owners and people who have switched to tech companies.
However, you can compare the average wage of a line cook by looking at job listings and compare that to what was listed in the article posting, $23 an hour.
It can simultaneously be the case that restaurant workers are underpaid and that the jobs at Facebook/Google are better paid. These workers may have improved their pay but still not be making enough to make ends meet.
Also, in many (but certainly not all) restaurants tips are shared with back of house staff.
> Many restaurant owners in the bay area are annoyed at Google and Facebook, because they keep on hiring away their line cooks and other staff with higher pay and better benefits.
To be fair, and this is certainly the case in the UK for all but the 0.1% of absolute best restaurants, this is not a terribly high bar for Google and Facebook to stagger over.
Restaurant pay is, by and large (and even in restaurants that serve good food), not good at all.
On an economical level, what's a better solution? Facebook paying their kitchen staff more (than the current $23/hr), or SF taking steps to lower its cost of living so that "one job should be enough" to get by on minimum wage (currently $15/hr)? Or something else?
I hope these people manage to get better pay. I hope the same thing happens all across the Bay Area in all service jobs, and I hope the pressure trickles up until the tech employees feel the squeeze of $25 burritos, plus even worse rents as the people making their lunches can afford to live in the city and compete for housing. Then I hope people either stop accepting tech jobs in the Bay Area, or companies decide it's a losing proposition to set up shop in a place where you have to pay $250k a year to a new grad.
We've got better communications and networks than any time in history. Why do software companies, which consume no raw materials and produce no physical product (both good reasons for setting up in a port city), all need to cluster in half a dozen spots? Think how much more runway you could get out of your seed funding if you set up shop in Missoula or Albuquerque, where you can rent a whole house for $1500/mo, can hire from the local university, and have beautiful outdoor recreation within a 15 minute drive?
They've tried and found it very unsuccessful, unless they buil the entire batch-infrastructure.
But companies will definitely start opening more and more satelite offices everywhere. The same salary for the same company in SF or Seattle yields 2-3k a month more for a software employee, and housing costs 1/2. Eventually the table turns and then SF won't be able to do anything about it.
Missoula or Albuquerque are nice places to live in. But, the supply of talent is very limited and not so diverse. In the Bay Area, you have so much talent concentrated that its easy to get people iff you pay the right amount of money(which is pretty high)
The fastest and most effective way to increase the pay for all low wage workers is to abolish sales taxes. This implies no cost for companies and increased income for all citizens. The city only needs to reduce its spending 25% to achieve that. Considering it already has one of the highest and most inefficient government expenditure rates in the world, its easily achievable with very little fiscal discipline.
The truth is that the only way to increase wages is to protest or to quit their jobs en masse so I support these workers protesting. The problem with low-skilled jobs is that there's probably someone waiting to take their job at $23/hr, but that's how the system works and unfortunately low-skilled jobs don't have a tremendous amount of value. This is the counter argument to allowing illegal immigrants - they are more willing to take these low-skilled jobs and to suppress wages much longer.
The answer of course is to distribute. Silicon Valley has an echochamber problem already, maybe it's time for these companies to spread out/move their HQs across the US. There's plenty of room.
What's so special about the bay area? Surely if FAANG move somewhere else their employees will follow.
Toyota moved their headquarters from LA to Dallas a couple years ago, and they retained 2/3's of their HQ employees in the move. FAANG isn't exactly the same but it's the closest example I could find of a recent large scale move from California.
If there is a point where the tech industry starts to grow less and be more stable, you'll probably see some companies trying to make the move. But right now it'd be too disruptive to potentially lose 1/3 of your HQ employees in a move and screw up any growth plans you had.
I've recently reached a personal finance threshold where I'm making a substantial return e.g. enough to live on on a relatively "low risk" mix of index funds/stock investments. It made me realize that being in a position where your money is "working" for you is really the starkest difference between the rich and the poor.
I was kind of shocked when I saw the $23/hr, because that's a pretty high wage for a line cook. Like I could not imagine anywhere else except for maybe NYC where a line cook would protest with that rate.
According to the MIT Living Wage Calculator, he would be able to support himself on that but it'd be difficult if he had any dependents. http://livingwage.mit.edu/metros/41860
The bay area Housing situation is hopelessly screwed up. There's no way in we're going to be able to undo 50 years of political insanity and build enough housing for everyone in just a few years. It's time we accept that hiring in the bay area is no longer feasible. Right now, this isn't Facebook's problem. As long as there's still desperate people to hire, then they'll always be able to hire more.
We (the people that work for these companies and the voters within the city) need to take a stand, and start lobbying these companies to get out of the bay area. Or at the very least, we need to start asking for much higher salaries. 600k to 800k needs to be the norm to live in palo alto to afford an average house (2.5M - 3.5M).
Personally, I don't think people are going to be able to do it. There's such a vast oversupply of labor, that the employers have a much stronger bargaining position.
There's still many other cities with plenty of tech people to hire. i don't see why all tech companies have to be in the 1 place where local voters don't want any residential growth.
Employment has inelastic demand, people will work for anything to survive because they have to. It’s that or get your way into disability, which an increasing number of people do.
Isnt this the common situation in most of Bay Area for service workers? Im in no way associated to Facebook, but I think its a bit unfair to call them out just to make the headline sensational. They're just another tenant in the Bay Area.
Instead of creating a useless currency, Facebook should of allied itself with 20 other tech companies and created a brand new city, in the middle of nowhere. One that was built from the ground up to be sustainable and affordable where everyone can walk or scoot to work. A city unhindered by zoning or burdensome regulations. Then connect it to some of the existing cities with high speed trains or helicopter buses. It would be a win win situation for everyone involved.
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[ 3.2 ms ] story [ 167 ms ] threadBut I agree, you could replace FB with almost any company down there.
Shit, I'd be willing to bet that line cook at FB pays quite a bit more than fast food, etc.
It's also popular to pick on FB these days.
It would definitely solve a lot of issues, including controlled and balanced housing cost for the employees, group/public transport, and above all a vibrant community.
Is it a permit issue? Or something else?
Where you see a "vibrant community" I see an inexistent work-life balance and gaited communities. It would be a real life echo chamber, SV is already enough of a bubble as it is I doubt they'd need a FacebookVille or a GoogleVille.
https://www.mercurynews.com/2019/02/08/facebook-unveils-new-...
https://www.citylab.com/equity/2019/06/google-affordable-hou...
I get what you're saying, and I want to agree, but it smacks of the old Company Town that I grew up in, and the current FIFO/DIDO living conditions of remote Australian mining towns.
It is bad enough that so many FAANG employees are in trouble with immigration if they lose their jobs. The fear of losing one's home would be a pretty powerful force in labor relations.
Yes, it would be a good to build more housing, and it would be convenient to reserve some of that housing for your workers, and it would be a perk to subsidize that housing for your workers, but we'd have to wrap some serious regulations around them that would likely make Company Housing devolve pretty quickly.
You will never see a left-leaning activist group representing the working class in California support a "let the market work" sort of policy like more for-profit development permits. Those ideas - public housing, rent control, increased supply - are pretty much the policy levers, and none are going to happen at scale within this set of voter preferences.
That's like, literally, the entire platform of the YIMBY movement. These groups are by and large left-leaning, and activist groups. They generally support more market rate or affordable (or both!) housing. Basically any development.
Is that really true? Elsewhere I have seen left-leaning activists advocate for higher density for-profit development housing so long as it is zoned to force developers to target all income groups in some manner, not just the most short term profitable ones. Is it really so different in California? You don't have to have a completely free market to have market based solution, after all. Which is a good thing as you're unlikely to ever see a truly free market there.
If you believe that market-rate units accelerate gentrification, this even makes sense, as the more market-rate units you have, the more affordable units you'll need. The first priority is to minimize disruption to existing communities; BMR units are just a way of partially mitigating it when it does happen. Hence "we can't build our way out the housing crisis."
"De-commodify housing" is a lot sexier than "find the optimal BMR percentage requirement."
Not those, including inevitably low-wage workers, whose jobs are cut to balance the budget with lower revenue, including those cut as second- and higher-order effects.
Rebating the sales/use taxes of low wage workers (or simply the first $X for those also paying SF income tax), possibly making this revenue neutral by alos raising sales tax rates, would be more focussed.
It is the city that has to tighten their 9billion a year belt.
The minimum civil service full-time pay rate currently for the City and County of San Francisco [0] is a biweekly $1,320, which is $34,320 annually.
Per HUD, for a single person household in SF:
- $33,850 is extra low income
- $56,450 is very low income
- $90,450 is low income
So, yes, low wage workers work for the city (even before considering second order impacts like workers for city contracting firms, etc.)
> The city pays very handsomely (400k police, 100k poop patrol, etc).
[citation needed]
[0] http://sfdhr.org/sites/default/files/documents/Classificatio...
https://transparentcalifornia.com/salaries/search/?q=police&...
https://www.businessinsider.com/san-francisco-poop-patrol-em...
SF city has a budget of 9billion dollars ~ and 329,700 households. That gives you a whooping 27,300 dollars of spending per household. They would have to send a bill to every household for 2270 every month to cover their raw expenditures.
Who is the landlord now?
What does that mean?
If you're recommending rent control I suggest you learn more about it. It is universally condemned by economists. Rent control does not work.
> "When a company is trying to pay you the same rate that they pay in other cities, we can’t accept that." [said a line cook]
If it works for other cities, the problem clearly isn't the rate of pay. The problem is probably local politics of housing. Demands like that are not completely reasonable.
Ok. So if they earned 5 dollars a day, it would be ok because it works for cities in third world countries? I think it's obvious that the local cost of living is always a relevant factor in pay.
It is obvious that the cost of living is a relevant factor. The question is why are the costs of living higher in California than elsewhere? It isn't because rich people exist. It is because California doesn't have enough houses for the marginal house-hunter.
Paying the marginal buyer more isn't going to create more houses. If there wasn't a place for them to rent before, there still won't be when you pay them more. If it were possible to create more houses, the current prices would already be making it happen.
> The US has a federal minimum wage of $7.25/hr. This isn't a comparison with the 3rd world, this is a comparison with civilised, livable and comfortable lifestyles in other US cities.
There is no where in this country where $7.25 is a liveable, comfortable wage. It is the lowest amount legally allowed. And very few work for that wage - and very few of them are independent adults. See [1]. Nowhere in the United States can a minimum wage worker (or even close to it) affording the average 2 br apartment (say, if they had kids); and there are only a few places in the country where someone working 40 hrs / week on minimum wage can afford a 1 br apartment [2].
> It is obvious that the cost of living is a relevant factor. The question is why are the costs of living higher in California than elsewhere? It isn't because rich people exist. It is because California doesn't have enough houses for the marginal house-hunter.
I hope the above mentioned points make it clear that this is not a problem just in California, but nationwide. Which means wages are insufficient nationwide and cost of living is too high nationwide.
> Paying the marginal buyer more isn't going to create more houses. If there wasn't a place for them to rent before, there still won't be when you pay them more. If it were possible to create more houses, the current prices would already be making it happen.
I'm going to assume you're arguing in good faith here and respectfully disagree. The problem isn't that there aren't homes for them to buy or rent; the problem is that those homes and rentals are at too high a price. At $20/hr maybe they can afford to live in .5% of available rental units; and at $30/hr maybe they could afford 5%. That's a tenfold increase in potential living spaces, without those living spaces becoming more affordable.
Yes, the other issues in the bay area exist, with the NIMBYism and such. But these problems still exist nationwide. There are a few potential ways for government to help solve this issue. The main ways (hopefully I didn't miss any obvious ones) are: increase minimum wage or average wages via law or other influence; increase taxes on home ownership, especially for non-residents; introduce rent control laws; provide incentives for and remove obstruction from building new construction, especially high density construction.
1. https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm 2. https://www.citylab.com/equity/2019/06/affordable-housing-mi...
From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
But almost no common law jurisdiction has escaped the zoning-law trap, save for Texas. So I don't see it getting better any time soon.
https://en.wikipedia.org/wiki/Law_of_rent
At this point I fully support the "nuclear option" against NIMBYs: the state needs to step in and override local zoning. Local zoning boards have proven themselves to be self-interested obstructionists who are only interested in bleeding cities dry by restricting supply to profit off real estate inflation. My ears are pretty much closed to any appeal otherwise. NIMBYs can go to hell.
I agree with you that our economic model for housing and land ownership needs to change though.
The structural problem is that nothing prevents landowners from charging whatever the market will tolerate and so sucking all plausible value out of the people paying the rents -- even to the degree that renters are forced to work so much they do nothing else and should expect a shorter life. Since there's no structural impediment to doing so, if you pay the renters more, the landowners will take the value...at least eventually.
I think managing a queue might be a better way to preserve everyone's dignity than letting raw market forces work it out. Either that or I think you'll end up paying engineers to make $50 sandwiches, which doesn't seem like it would generate maximal economic value for the parties involved.
1: Some people work two jobs but only occupy one housing unit
2: Put more workers into each housing unit
3: New transport infrastructure to allow people to live farther away
4: Reduce the number of jobs
5: Somehow convince cities to build more housing
Easy enough to say, from where you sit.
Your salary is again -- what multiple of theirs, exactly?
I think this is the nub of it. Whilst increasing rents might look good in the context of an economist's "perfect" model, the reality sucks ass for actual human beings trying to make a living and have a decent quality of life. And I cannot overstate the importance of the latter.
I don't pretend to know what the answer is here, particularly not in the context of a US economic and legal milieu (I'm from the UK), but it certainly seems like there's a strong disparity in power between landlords and tenants (possibly fostered by the legislative environment) that needs to be addressed.
In practice, regulations and zoning stifle the operation of the “perfect” economic model and you get what we see now.
If by 'Texas' you mean 'Houston', then yes. AFAIK most if not all other major TX cities have more traditional zoning laws.
A) So what should these landowners be doing according to you besides jumping off of a bridge? Are you against private property. Or did just exactly the set of evil people happen to be also be exactly the set of people who wanted to buy property
B) So what should we do, a Mao style repossession from everyone who bought land totally fairly according to the legal system they bought it in?
C) You honestly believe they are mustache twirling villains don't you?
B) See this portion of my comment: From a policy perspective, I like federal land-value taxes that tax based on the counterfactual value of the land absent zoning restrictions, which would internalize the costs of zoning on landowners.
C) Not really. Just responding to incentives. Like all of us.
The landowners should be powerless to stop other landowners building high(er) density housing. This is how most of the economy works - all industrial activities face grumpy opposition from someone, so the legal system takes a fairly protective stance on behalf of industry.
Most economic activity happens to the annoyance of someone who is suffering minor negative externalities (very minor, eg, the view isn't as good because there is a factory in it now). The issue that is being gone to is that landlords band together to form a sort-of guild that restricts what other landlords can do.
GP was quite clear that zoning laws were the core issue. If one or two landlords were allowed to band together to build an ultra-dense block of units in a high demand suburb then housing would become plentiful. This sort of thing is the most effective way of solving a housing problem.
So basically, in answer to your (A), landlords could support laws that allow landlords to more easily (and, critically, unilaterally in the face of opposition from other landlords) build the sort of housing people want.
You either:
1. Build more housing. But where? Ask about any specific project, and people are usually against it.
2. Redistribute existing housing. E.g. does everyone that lives in London really need to be in London? By definition, it will be a painful solution for some and require the use of force. Making existing neighborhoods nicer to make them more attractive for a particular demographic also fall into this category.
3. Spread people/jobs/businesses around more. This includes encouraging remote working practices where possible (but this will not help the kitchen staff). Perhaps turn currently depressed areas into some forms of free(r) economic zones, where taxes are lower and there is no requirement for planning permission?
4. Get better transport links. If trains were fast, went on time, were reliable and comfortable, more people would take the option of commuting and they would commute further out.
What I cannot tell is how much of this is me just being pessimistic. I know it would take a long time and a lot of capital to own enough to make a large dent in housing.
That isn't as true at the low end. When there are a bunch of people making $200k-$300k, and a bunch of people making $20k-$30k, increasing wages for the former isn't going to cause as much rent competition since the latter already dwarfs buying power in the market.
Reducing income disparity is effective in the longer term by just making everyone a bit more equal in their buying power.
Landowners supply land, one of the key inputs to the economy. It is part of the capital behind almost all economic activity. Trying running a business - or even living - without using at least some real estate. This is a very fundamental economic misconception.
Landowners don’t support zoning restrictions on their own land. And while many support zoning restrictions generally so do non-landowners (see surveys on the issue). Plus landowners are a minority of voters in the areas with the most restrictive zoning like SF and NYC.
Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
IMHO the core problem is granting local politicians strong powers over zoning because they can gain both support and contributions (legal & illegal) by manipulation zoning. Their powers need to be limited by strong property rights (like in some parts of TX).
A secondary issue in economic and financial illiteracy. There are so many misconceptions about this issue that people often act against their own interests.
Unfortunately I have to agree it is unlikely to get better soon but there are some hopeful developments.
Landowners don't supply land. That land is there whether these owners exist or not, and regardless of what they do or don't do.
Now, there is a system built up around denying access to land to anyone who doesn't own it or has the owner's permission, but that's a far cry from actually supplying land.
Contrast this to a baker who bakes bread. Without him that bread would not exist, so he actually does provide a service of supplying bread. Not so with the landowner, who creates nothing and whose ownership is a legal fiction.
In most ways land is no different than other physical inputs in that they are “exclusive”. You can’t use the same wheat in two different loaves of bread are the same time either. And the same baker can’t work in two different bakeries at the same time.
The key thing that makes land different from other economic inputs is that it is immobile. This has many interesting implications but doesn’t make land useless or require a particular ownership system.
Sure you could imagine a different world with different legal system but that wouldn’t change the fact that land is needed for almost every economic activity and is thus valuable. So whoever decides who get to use (i.e. supplies) that land - let’s call them the landowner - is adding value to that economic activity.
Similar discussions around intangible assets are even more confusing.
The ones who decide what to do with land need not be their owner. See the practice of eminent domain, public lands, and non-capitalist economic systems.
Allowing the concentration of ownership in to a relatively few hands at the expense of the many has been an absolute disaster for the overwhelming majority of the population.
>Taxing landowners as if they control their own zoning would distort incentives in bizarre ways. They are already bearing the costs of not being able to fully develop their property. (A negative tax might make more sense!?)
I think you will find the majority of people who vote in municipal elections are home owners. The policy would cause zoning restrictions to increase their tax bill. Very quickly, I think we would find zoning laws would change. The real reason this policy is naive is it would be very difficult to actually get an accurate estimate of the counterfactual price.
I suppose this article is on the front page because it bashes tech companies though.
That the tech industry's pay levels are, ergo, no problem at all?
However, you can compare the average wage of a line cook by looking at job listings and compare that to what was listed in the article posting, $23 an hour.
Also, in many (but certainly not all) restaurants tips are shared with back of house staff.
To be fair, and this is certainly the case in the UK for all but the 0.1% of absolute best restaurants, this is not a terribly high bar for Google and Facebook to stagger over.
Restaurant pay is, by and large (and even in restaurants that serve good food), not good at all.
This is not a blueprint for the rest of the US. I hope voters take notice.
http://www.ktvu.com/news/sf-city-leaders-push-to-ban-company...
We've got better communications and networks than any time in history. Why do software companies, which consume no raw materials and produce no physical product (both good reasons for setting up in a port city), all need to cluster in half a dozen spots? Think how much more runway you could get out of your seed funding if you set up shop in Missoula or Albuquerque, where you can rent a whole house for $1500/mo, can hire from the local university, and have beautiful outdoor recreation within a 15 minute drive?
But companies will definitely start opening more and more satelite offices everywhere. The same salary for the same company in SF or Seattle yields 2-3k a month more for a software employee, and housing costs 1/2. Eventually the table turns and then SF won't be able to do anything about it.
Thats an actual political solution.
What's so special about the bay area? Surely if FAANG move somewhere else their employees will follow.
If there is a point where the tech industry starts to grow less and be more stable, you'll probably see some companies trying to make the move. But right now it'd be too disruptive to potentially lose 1/3 of your HQ employees in a move and screw up any growth plans you had.
According to the MIT Living Wage Calculator, he would be able to support himself on that but it'd be difficult if he had any dependents. http://livingwage.mit.edu/metros/41860
We (the people that work for these companies and the voters within the city) need to take a stand, and start lobbying these companies to get out of the bay area. Or at the very least, we need to start asking for much higher salaries. 600k to 800k needs to be the norm to live in palo alto to afford an average house (2.5M - 3.5M).
Personally, I don't think people are going to be able to do it. There's such a vast oversupply of labor, that the employers have a much stronger bargaining position.
There's still many other cities with plenty of tech people to hire. i don't see why all tech companies have to be in the 1 place where local voters don't want any residential growth.
For inspiration, would you please share an example of what you are personally doing?
Why not stop working for them and work somewhere else where you can live comfortably?