> Adding to the challenge is Vermont’s housing shortage. [Name of large Vermont company desperate for blue-collar workers] has contracted with a local college to use unoccupied dormitories to house temporary workers brought in from other states and — on guest-worker visas — from other countries.
THIS. If your goal is to have actual workers, for sub-$250K/year jobs - then maybe that is in conflict with your other goal, of fast-track gentrification via ever-upward housing costs?
[Added details] From a quick check on Zillow:
> Vermont Key Takeaways
> Typical Home Values: $384,155
> 1-year Value Change: +5.8%
> (Data through October 31, 2023)
...so if $New_To_Vermont_Worker somehow manages to snag a no-major-work needed home for a mere $250K, and wipes out their savings to put 20% down...then the interest alone on their 30-year mortgage (at current rates) will be $16K/year. Add insurance, property taxes, utilities, repairs... Pretty obvious why young workers aren't flocking to Vermont.
Even with some really optimistic assumptions...just the $16K/year interest will soak up $8/hour of after-tax income from a full-time job. So "sounds really good" hourly wages really aren't - unless you're gonna live in your mom's basement or something.
It's not like Vermont is lacking in space for new construction, so it's turtles all the way down with a shortage of construction workers as well.
In this case I don't even know if it's purely the economics of the housing bubble being prohibitive, or rather the societal aspiration to get in on the housing bubble that does it. A sibling commenter acted as if $16k/yr in interest was no big deal. And I guess it's not if one mentally accounts for it as a cost to be carried while the "investment" line goes up-right ("stonks!"). But if the housing bubble ever gets reformed in the slightest, very few places in Vermont are going to be appreciating like that. So that's $2400/mo rent mostly just going down the drain for a depreciating asset? I'd say that deal only makes sense for people planning to retire in that same house.
Housing will end up like daycare or long term care: too expensive for the free market, only widely available with policy and government economic support. We under built for too long and as structural demographics squeezes the participation rate, labor costs will exceed what affordable housing can tolerate due to the median wage. A labor light cone if you will.
Existing home inventory in the aggregate has a labor cost profile built into them that no longer exists.
I'm generally predisposed against looking at government for quick fixes. But I can't not think similar to you on housing. The government has already been dumping trillions of dollars into the housing bubble over the past several decades mainly just bidding up existing stock, putting us here. (the greatest trick Nixonite/Reaganite looters ever pulled was convincing us money "loaned" into the financial industry is distinct from "government spending")
Rather than the disastrous approach of goal-blind subsidized mortgages, that government money needs to be directed to projects that accomplish deliberate policy goals. What VT would seem to need here is low-frills, semi-shared style housing for younger people that haven't really chosen a path in life but will be attracted by the low rent. The market just can't build something like that in VT - if nobody comes, it will be worth nothing. Whereas building the same thing outside Los Angeles will practically guarantee popularity (despite the permit pain), or even just a few hundred miles south as part of the Northeast Megalopolis will be a much surer thing (although more sprawling beige boxes on overwrought postage stamp lawns is still a surer bet, and predictability is the main need of leveraged money)
Also, I feel like there's an analog to your comment about wages in general. General wages were held down so long by MBA cogification, over-management, classism, govt inflation treadmill, etc that now labor in general is too expensive for the free market. Nobody knows how much say working in a chocolate factory should actually pay. And if you're interested in chocolate, you'll probably be more successful starting a website drop shipping someone else's chocolate with your own branding...
There's a question I've had in the back of my mind for a long time now that I think just came out into the open reading your comment. There seems to be a common sentiment that we've under built. What does that mean? Does it mean less houses per family or less square footage per person or some other measure? Because I often see large, mostly-unoccupied houses when I go on vacation somewhere scenic, and it makes me wonder how large of an effect that that sort of thing might have on the market.
> The causes of the housing supply crisis are widely understood. After the Great Recession, new home construction dropped like a stone. Fewer new homes were built in the 10 years ended 2018 than in any decade since the 1960s. By 2019, a good estimate of the shortage of housing units for sale or rent was 3.8 million. The pandemic-induced materials and labor shortage exacerbated the trend, however, as evidenced by the surge in rents and home prices in 2021.
Still, I wonder how much square footage of housing was built; not just units. I'm under the impression that the average house built in the 10's era is larger than one built half a century before which could mean that more housing is being built (by area or volume) and yet fewer units are available. I guess I'm one of those anti-consumerist, people-should-live-in-modest-housing malcontents, but I grew up in a family of four in a small house, and we got by no problem.
Yes, the housing construction metrics are not exactly comparable over time because constructing the tiny 1k sq ft or less houses on postage stamp lots probably became illegal in most of the US many years ago.
You're correct about the square footage, but it would be incorrect to assume that because we were able to build X million units of size Y that we could have built 2X million units of size Y/2.
It is cheaper per square foot to build a larger house and many people like to live in big houses, so new construction has grown in footprint.
Many people value efficiency only when doing so is necessary for them to afford energy and maintenance costs.
I've been very curious to watch New England states in how they deal with the aging and decreasing population alongside expensive housing while at the same time having great school and university systems.
Clearly a very educated population who would be in a good position to make wise med/long-term decisions.
So I was excited by this article but by the end:
> Mr. Chu’s message has resonated with business leaders and state officials, but it has been a tougher sell with the population as a whole. A recent poll found that a plurality — but not a majority — of Vermonters supported increasing the population.
Maybe I misunderstood something but can't any two people just kind of increase the population anytime they want, like there doesn't need to be any vote or anything you can just do it, and it's usually not all that bad either.
It's amazing the efforts companies and businesses will go to to avoid understanding the effects of housing on labor supply. Shitty roads in a town without even decent cellphone coverage -- so basically forget amenities like internet -- and a housing shortage on top of that? You're supposed to come work at Cabot and live in a college dorm? All those wage increases the companies whinge about are often passthroughs to landlords.
Not only will it cut down on migration it will increase emigration as young people look for a place they can afford, as happens in Vermont and Long Island among other places.
This is a person openly framing the question of whether or not to let other people become our neighbors as a question of whether or not those people are "valuable" and "strategic" enough "resources."
US culture is nearing the end game of marketizing all relationships. Pretty soon we will bring back brideprice and slavery. After all, it's good for the "economy" (as defined by the profits of an artisanal chocolate factory in rural Vermont).
My wife and I spent a week in New England and were enchanted with New Hampshire and Vermont. We gave zillow a quick look, had a hearty guffaw, and crossed that off the list of possibilities.
According to the labor market experts too often heard from here on HN, there is no such thing as a labor shortage. It’s simply a pay shortage. The reductio ad absurdum response to this is all we need to do to maximize human happiness is reduce the population to a single person and increase their salary to $25T/yr.
Labor shortages are real, especially in fields like elderly health care. There’s a demographic, spatial, and training component to the problem as well. Even if there are sufficient people, they may not be in the correct location, have the right skill sets, or at the right phase in their career. Immigration is one way we can address this problem, by increasing immigration of people from younger, lower wage countries to older, higher wage countries like the United States. This will increase average living standards, an admirable humanistic goal we should all be supporting.
When the price for the labor is so low for decades (as evidenced by the wage stagnation in so many fields, usually ones with physical labor), disincentivizing any young people from pursuing them, then the problem is pay shortage.
It is still more attractive to look for a 8-5 Mon to Fri desk job.
We have less workers - but less workers need less products, so it should balance itself somehow, which it probably does, just on a bigger scale.
Suppose we automate a lot, and need less workers. In the future we'll either have less people overall - which brings its own issues - or we have more people, which would wonder where are those jobs they can fill. Of course the answer is, those additional jobs will need to be created - but will it actually be a solution? What if jobs are different - and while some produce essential, low-Maslow-level product, those who occupy higher levels may find themselves always chasing somebody to convince him to buy their non-essential product. How _that_ will balance out?
Seems like an interesting question to economists here.
39 comments
[ 2.8 ms ] story [ 80.7 ms ] threadTHIS. If your goal is to have actual workers, for sub-$250K/year jobs - then maybe that is in conflict with your other goal, of fast-track gentrification via ever-upward housing costs?
[Added details] From a quick check on Zillow:
> Vermont Key Takeaways
> Typical Home Values: $384,155
> 1-year Value Change: +5.8%
> (Data through October 31, 2023)
...so if $New_To_Vermont_Worker somehow manages to snag a no-major-work needed home for a mere $250K, and wipes out their savings to put 20% down...then the interest alone on their 30-year mortgage (at current rates) will be $16K/year. Add insurance, property taxes, utilities, repairs... Pretty obvious why young workers aren't flocking to Vermont.
In this case I don't even know if it's purely the economics of the housing bubble being prohibitive, or rather the societal aspiration to get in on the housing bubble that does it. A sibling commenter acted as if $16k/yr in interest was no big deal. And I guess it's not if one mentally accounts for it as a cost to be carried while the "investment" line goes up-right ("stonks!"). But if the housing bubble ever gets reformed in the slightest, very few places in Vermont are going to be appreciating like that. So that's $2400/mo rent mostly just going down the drain for a depreciating asset? I'd say that deal only makes sense for people planning to retire in that same house.
Existing home inventory in the aggregate has a labor cost profile built into them that no longer exists.
Rather than the disastrous approach of goal-blind subsidized mortgages, that government money needs to be directed to projects that accomplish deliberate policy goals. What VT would seem to need here is low-frills, semi-shared style housing for younger people that haven't really chosen a path in life but will be attracted by the low rent. The market just can't build something like that in VT - if nobody comes, it will be worth nothing. Whereas building the same thing outside Los Angeles will practically guarantee popularity (despite the permit pain), or even just a few hundred miles south as part of the Northeast Megalopolis will be a much surer thing (although more sprawling beige boxes on overwrought postage stamp lawns is still a surer bet, and predictability is the main need of leveraged money)
Also, I feel like there's an analog to your comment about wages in general. General wages were held down so long by MBA cogification, over-management, classism, govt inflation treadmill, etc that now labor in general is too expensive for the free market. Nobody knows how much say working in a chocolate factory should actually pay. And if you're interested in chocolate, you'll probably be more successful starting a website drop shipping someone else's chocolate with your own branding...
https://news.ycombinator.com/item?id=38117223
https://www.fanniemae.com/media/45106/display
> The causes of the housing supply crisis are widely understood. After the Great Recession, new home construction dropped like a stone. Fewer new homes were built in the 10 years ended 2018 than in any decade since the 1960s. By 2019, a good estimate of the shortage of housing units for sale or rent was 3.8 million. The pandemic-induced materials and labor shortage exacerbated the trend, however, as evidenced by the surge in rents and home prices in 2021.
It is cheaper per square foot to build a larger house and many people like to live in big houses, so new construction has grown in footprint.
Many people value efficiency only when doing so is necessary for them to afford energy and maintenance costs.
Houses can be built that take minimal labor to construct and maintain. We lived in them for most of human history.
True. OTOH, actually going to war pushes uber-strong emotional buttons in a lot of people.
Vs. moving to Vermont, and taking an hourly job in the Packing & Shipping Dept. of a big cheese factory - maybe not so much.
Clearly a very educated population who would be in a good position to make wise med/long-term decisions.
So I was excited by this article but by the end:
> Mr. Chu’s message has resonated with business leaders and state officials, but it has been a tougher sell with the population as a whole. A recent poll found that a plurality — but not a majority — of Vermonters supported increasing the population.
Well, that's the problem I guess.
“x% of Vermonters supported changes in government policies to incentivize people to move to or give birth in Vermont”.
US culture is nearing the end game of marketizing all relationships. Pretty soon we will bring back brideprice and slavery. After all, it's good for the "economy" (as defined by the profits of an artisanal chocolate factory in rural Vermont).
People can viewed both as people and as resources, simultaneously.
It is trivial to observe that a community consisting solely of octogenarians and nonagenarians does not have the “resources” to sustain itself.
...fair's fair in supply and demand. Oh, NY times, never mind.
Also, if you manage to buy, getting labor to work on anything requires a year lead time and a good attitude.
Labor shortages are real, especially in fields like elderly health care. There’s a demographic, spatial, and training component to the problem as well. Even if there are sufficient people, they may not be in the correct location, have the right skill sets, or at the right phase in their career. Immigration is one way we can address this problem, by increasing immigration of people from younger, lower wage countries to older, higher wage countries like the United States. This will increase average living standards, an admirable humanistic goal we should all be supporting.
It is still more attractive to look for a 8-5 Mon to Fri desk job.
Suppose we automate a lot, and need less workers. In the future we'll either have less people overall - which brings its own issues - or we have more people, which would wonder where are those jobs they can fill. Of course the answer is, those additional jobs will need to be created - but will it actually be a solution? What if jobs are different - and while some produce essential, low-Maslow-level product, those who occupy higher levels may find themselves always chasing somebody to convince him to buy their non-essential product. How _that_ will balance out?
Seems like an interesting question to economists here.