I found this to be many words with little information. It largely boils down to "when Amazon increases wages, other employers follow suit, to varying extents."
There was almost nothing about the myriad of other effects, including things like inflation, effects on already higher wage earners, effects on automation, and more.
They touched on the increase in unemployment from competitors, but that was it.
Rent goes up because of supply and demand. If a rich person moves into an area with a housing shortage, they will displace poor renters and rent will go up. But the problem is the housing shortage, a consequence of many years of terrible housing policy.
And if people now earn more money they can pay more money to rent a house they want. This would force the people that are already renting there to also pay more, which they can afford because they now earn more money too.
It seems feasible to me that landlords could eat up most of that wage increase.
Exactly. Actually fairly self-evident when you think about it. Rent doesn’t go up because costs go up, it goes up because people’s ability to pay does.
Consider how widely available high-speed broadband through Starlink might change some of these things once that makes living in the interior of the country more desirable. I think we may end up seeing a sort of reverse of the industrial revolution's migration pattern over the coming decades.
Totally possible! I hope we actually see small walkable enclaves throughout the country. Like the little mountain resort towns, but kept afloat by residents rather than tourism. Jobs are a big part of the equation with living in a city, but definitely not the only one. Food, arts, other cultural artifacts that people who live in cities care about are harder to move across the web for sure.
If you assume that minimum waged employees would spend 100% of their raise on rent then landlords would swallow the surplus but more likely the workers would spread it around. They do have other costs.
I havent seen a study that connects the two. A quick google suggests a fair number of business-centric publications spreading FUD about it though.
> the researchers present evidence that minimum wage changes led area restaurants to raise prices, change menu items, obtain lower rents in the high wage areas and, in some cases, caused eateries to shut down.
I wonder if the units made empty by closures may have reduced price pressure on the ones that survived.
America is 3,531,905.403 square miles large, and the majority of us choose to live in under 100,000 of it. Maybe that too also contributes to these issues. You may fashion yourself to be virtuous enough to not charge more when you so easily can, but we shouldn't assume everyone will be.
Have you considered that people are more productive when they are working together? This higher productivity is what allows for rent to be high (the land is more productive), but that does not necessarily imply that the increased productivity should go into the hands of people who merely hold land and are not themselves producing anything on it.
It also does not imply the owners of that land - that had to take a risk in allocating their funds to acquire it - do not deserve to benefit from it (given they also very likely pay taxes on that ownership, which is true in the vast majority of the US; and property taxes are a very important government funding source in the US).
"Producing something on it" is a wholly subjective standard. I can just as well proclaim the opposite, that not producing anything on it is the standard that should determine ownership.
> It also does not imply the owners of that land - that had to take a risk in allocating their funds to acquire it - do not deserve to benefit from it (given they also very likely pay taxes on that ownership, which is true in the vast majority of the US; and property taxes are a very important government funding source in the US).
the georgist's view is that the landowner does little to contribute to the area being nice/successful, but reap all the benefits.
> Take now... some hard-headed business man, who has no theories, but knows how to make money. Say to him: "Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any higher?" He will tell you, "No!" "Will the wages of the common labor be any higher...?" He will tell you, "No the wages of common labor will not be any higher..." "What, then, will be higher?" "Rent, the value of land. Go, get yourself a piece of ground, and hold possession."
> [...] without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be an almshouse.
Is it a choice that a liberal homosexual doesn't want to live in Tennessee but moves to New York or California?
Unless there's a Khmer rouge regime in America that forces the intellectuals to move to the countryside at gun point most of the country will remain empty.
The "we" is everyone who wants to build dense, multi-unit housing based on their own assessments of how it will perform, but can't because of single-family zoning laws.
Expensive housing in many areas is a result of laws that keep would-be developers from increasing the supply, fueled by the toxic NIMBY mindset.
How have your property taxes and/or insurance changed during that period?
I have a rental (family living in it) where the insurance has changed a few percent in the last 5 years but the property taxes are up 5x. Yes, 5x in 5 years between the rate and appreciation.
What started as a small net loss is getting bigger and bigger so I hope you're not in the same boat.
Property taxes have gone up, about double what they were. I just lose more money on my rentals, and to top it off I pay for private school, so don’t even get the benefit :/
I propose that all landlords start offering two lease agreements. One that is let’s say $2000/month, and another that is $1600/month plus whatever property taxes are, which happen to be $300/month currently.
Then tenants might think twice before voting for higher property taxes since it will directly affect their rent instead of indirectly.
Probably. Though the last time that happened I didn’t. The family had less income, so while I was losing more money now due to property taxes, my income had gone up so it was kind of a wash.
Becoming a landlord means more buyers for the same houses, thus pushing the housing prices instead, possibly taking them off the market for other's that want to own their own.
There will always be those who have and those who do not, the weak and the strong, the poor and the rich.
The question is, will those with power (money, connections, education) use it to gain more for themselves or to lift up the poor.
The idea that a homeless person’s problem is just, that they can’t afford rent or a mortgage is absurd, and would just prove that you’ve only ever dealt with homeless people at an abstract level.
this is an example of "price stickiness." People selling goods tend to let the price stay at whatever level it's currently at longer than is strictly rational. Because prices tend to be sticky, wage-driven inflation tends to result in real gains for wage-earners.
Correct, because nothing lasts forever in this fallen world. That said: the amount of time spent in a state of wage-driven inflation -- setting up the situation where temporary moments of price stickiness result in increases of effective demand that in turn hot up the economy as a whole -- is the thing we want to maximize.
Totally! We can also go ahead and tax away all the gains captured by landlords on the unimproved value of their land (definitionally price movement that is not due to them).
I am a landlord! Breaking the cycle is a farce: why do you think it’s a cycle? It’s self-reinforcing and resilient to small changes (like a few landlords here and there delaying rent increases for a few years).
Well have you charged less than market rate for rent? I had a place for 10 years that I was charging about 60% market rate on because the lady was old and lived off social security. I had negative cash flow on it.
My other rental has a negative cash flow as well.
I make good money so I can afford it.
If every single person who complained about the plight of the poor actually physically went and helped the poor, their plight would be less, instead you do nothing and go vote for the politicians to do something.
You wanna talk about a farce, how about this one - the politicians care about the poor.
Talking to immigrant Uber drivers in SF, ironically they hate the government there and it reminds them of the corrupt ones in their own country, the one the “caring progressives” keep voting for.
You blew right past "It’s self-reinforcing and resilient to small changes". The two underlying problems here are zoning policy and macroeconomic policy (ZIRP), both only changeable through politics. Directly helping other individuals doesn't stop the overall trickle-up economy from doing its thing of skimming wealth upwards. Yes, you personally can alleviate some other individuals' suffering by not turning the screws as hard, and I agree that you should where you can. But it's foolish to think that the systematic problem could be solved by everyone just choosing to go against the gradient.
Also I presume when you say "negative cash flow" you are leaving out the bit about your equity increasing due to mortgage payments and bubble inflation. So you can get off your performative high horse as well - you aren't describing a charity project, but rather an illiquid savings account.
I’m a landlord too and this sounds suspiciously like an excuse for bad behavior. You can make a big difference in peoples lives by not being a greedy a*hole. Delaying rent increases for a few years can have huge positive impacts on individual lives.
No it won’t change the system but a bad system shouldn’t be used to justify personal bad behavior.
You don’t have any information whatsoever about my personal behavior.
Even if I hypothetically did raise rent with the market, I don’t find it compelling to say doing so is “bad” behavior. This is what a market is, and prices are very important for allocating resources. “If you’re a landlord, don’t raise rent” is not a society-level solution, let’s not waste too much time on it :)
Yep! And here in reality, the question cannot be, “how do we eliminate basic human instincts like greed,” and instead, “how do we direct our instincts toward positive outcomes?”
It’s a violation of basic logic to allow greedy people to just indefinitely claim stake of something they had no part in creating (land) so they can indefinitely reap rewards from activity on that land which they have no part in (rent).
I don't think it's as obvious or causal as you imply. If every wage increase resulted in a corresponding increase in rent to force people back into poverty it would never make sense to increase minimum wage, or even wages at all.
But that's not the case is it? Wages stagnate, increase or decrease all the time without changes in rent. Rent goes up without changes in wages all the time.
Sure, a local across the board increase in wages might drive up demand and might cause some portion of rent increase, but it's also just as likely to drive up housing prices as people get out of the rental market.
Throwing up your hands and saying "we can't pay them more because landlords will take it all" is disingenuous.
Could you explain? I would assume that only a part of the increase in wages would go to rent. I live in Norway where the minimum salary is high. Rents are too but the average person has to spent less time working to pay for housing.
Do you think the hours a person needs to work to pay for housing would stay the same if the wage increase?
Roughly yes. How are we still working 40hrs/week just to put a roof over our head and feed our families when we are equipped with technologies that have exponentially increased the productive output of each individual?
The answer is that land has gotten more expensive, so everything on it has gotten more expensive. The solution is not to avoid wage increases, as this “FUD” accusation assumes, but to raise wages and tax the daylights out of landowners (like myself) so society can recoup the benefits of its productivity!
> How are we still working 40hrs/week just to put a roof over our head and feed our families
Most tech workers earn far more than is necessary for just this.
But we also want nice cars, nice vacations, going out to restaurants and buy nice toys. That's what keeps most of us working that much.
(just a nitpick, but we don't have a general minimum salary / minstelønn in Norway. Unions however, have managed to establish rules binding everyone in certain industries to some minimum)
To add to that: About half the Norwegian workforce is unionised (which is the lowest of the Nordic countries, but higher than all other non-Nordic countries in the OECD than Belgium), and something like 3/4 of all workers are covered by sectoral agreements (tariffavtaler), which is why there's not much demand for minimum wage laws.
I think it's more about distribution than straight supply. That distribution is largely constrained by employer location (job availability). Lots of cheap housing in Appalachia since manufacturing, coal, and steel has left. There just aren't many jobs, and employers don't want to move there to change that (vicious cycle).
Yes, but because prices (including rents) are sticky -- it takes a while for them to adjust upwards to soak up the additional effective demand produced by increased wages. So long as wages are what's driving inflation, working people tend to reap the benefit. Workers only fall behind when prices grow faster than inflation, as in, for example, the oil shock back in the 1970s.
Even the small capitalist class benefits from the heated-up economy, because the increase in wages results in money being siphoned up from the pre-existing stockpiles of the wealthy, which is where money tends to fall when left to its own devices. When money gets siphoned out of stockpiles and up to people who have to spend it to live, the rise in effective demand makes it valuable to invest in providing more supply, instead of just sitting on the money and collecting interest.
The one major downside to wage-driven inflation is that it hits people living on fixed incomes in the shorts, since it makes pensions and government-provided supports less valuable. This is not a reason to support a heated-up, wage-driven-inflation-powered economy -- it's a reason to support government measures to increase funding for the elderly and disabled in order to match the new value of money.
Fortunately, when there's wage-driven inflation there's enough effective demand in the economy to produce enough supply to provide enough taxation headroom to offset the effects of wage-driven inflation on people with fixed incomes.
That is not how this works. First off prices increasing is the result of inflation not inflation itself. Inflation is an increase in money supply. Wages increasing is part of the process of inflation working its way through the economy.
Increasing the number of dollars floating around does not give more tax headroom. Taxes are strictly a percentage of the quantity of dollars pie. Making the pie bigger means everybody gets a bigger piece and everything increases in cost to match. Wages that do not increase result in the earner getting a smaller piece of the pie. So, the cost of labor increases as people refuse to work for an amount that doesn't pay the bills anymore. But, the percentage of the slices are exactly the same after the lag period of 12-18 months. The lag period is how long it takes an increase in money supply(inflation) to be reflected in the markets of goods and labor.
Of course! So all the skyrocketing rents across the country have been caused by all the minimum wage increases! Like when that last increase in the federal minimum happened… when was that again?
My solution: All rental contracts are illegal unless they include a 1% ownership transfer per year. That way if you rent for 25 years you own 25% of the property.
But does rent go up because the tenants have more money, it did it go up because the cost of everything goes up?
When wages increase, the costs of the landlord also goes up. Repairs costs increase, labor in the front office, and the landlord's personal costs increase.
I'm claiming the opposite. Wage increases yield rent increases. Evidence: Where is rent high? Whoa! Right there were wages are high.
What happens when you add a high-paying employer to a region (e.g. Amazon HQ2)? Whoa! Rent goes up and prices the people who live there out.
Obviously the reverse is not true. Increasing rent would not make more capital available for wages, it just puts enterprise out of business and individuals out of their homes.
I do not agree. It is very few words (maybe one page's worth?) with high information density. There is no rumination or explication whatsoever. It would be very difficult to make this article any shorter without removing information.
There was almost nothing about the myriad of other effects, including things like inflation, effects on already higher wage earners, effects on automation, and more.
They touched on the increase in unemployment from competitors, but that was it.