Comment by mechagodzilla | Hacker News Reader

Comment by mechagodzilla | Hacker News Reader

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There are a lot of 'deliberate' policy decisions which both depress low-skilled workers' wages, and lead to higher property prices. On the wage side, good examples are that:

1) the minimum wage doesn't get increased with inflation

2) many jobs require a higher degree (which takes capital to pay for), or effectively require working for free via internships (which requires capital or someone else subsidizing you)

3) many higher paying jobs preclude you from working there if you have a criminal history (which is very disproportionately likely to be true for some demographics than others, in many cases just due to disparate enforcement), which effectively suppresses wages for many millions of people.

On the housing side, any policy that restricts the building of new housing in order to limit supply (and there are a lot of them) will drive up housing prices. This includes things like minimum lot sizes, enforced parking requirements, etc. It's pretty much universally accepted in the US for local politicians to talk about 'protecting home values', which usually has a subtext of [by keeping poor people out of our town]. This is probably the _most_ common policy topic in my well-off suburban community - every proposal for multi-family housing gets fought tooth and nail, it's virtually impossible to build more than 1-bedroom apartments 'lest our schools become overcrowded [by poor people]', etc.

> which usually has a subtext of [by keeping poor people out of our town]

It took me a long time to grasp this because I simply refused to believe that people think this way. Just think about what "character of the neighborhood" really means.

It may sound like it is about architecture and preserving history but the character of a neighborhood isn't made up by that alone, the biggest factor in the character of the neighborhood are the people living in it and therefore preserving it requires keeping certain people out. It really is a code word for classism.

> 1) the minimum wage doesn't get increased with inflation

Sure it does. It's pretty much unchanged since 1980 (in a sawtooth, they build up some pressure due to inflation and then it jumps up due to legislation).

1960-1980 looks to average around 20% higher.

It's funny how these charts differ.

https://www.pewresearch.org/fact-tank/2017/01/04/5-facts-abo...

https://image.cnbcfm.com/api/v1/image/103807392-min-wage-inf...

A strong argument can be made that minimum wage should track GDP, not inflation.

The important thing here is that it’s not indexed to inflation, it’s occasionally increased by legislation, so for most of the ~decade between bills, wages are decreasing in purchasing power for those people. I think you can make a much stronger case that it should track productivity than that it should track GDP, as the latter increases just by virtue of a growing population.

Minimum wage is indexed to inflation some places, such as the most populous state, California. (Minimum wage is actually currently increasing by $1/year, which is substantially more than inflation, and will start being indexed to inflation in 2024 when the minimum hits $15/hr)

It’s not only a supply issue these days. Even areas that have basically unlimited land and building in Texas have prices going up massively. How do you explain that?

Building supplies have grown at an insane rate. A lot of builders went out of business because of 2008. It is still a supply issue, just not a land supply issue.

That's a short term problem, it may last 5 years for all I know but it will get solved eventually. Zoning on the other hand is something that will stay for decades and it gets worse over time.

Single family homes cannot meet demand, period.

I'm actually sort-of familiar with this, as I have family that lives all around there.

1) Prices have gone up, but not nearly as much as places where supply is much more constrained (i.e. the bay area or NYC metro area).

2) Even if there is 'unlimited land', the land closest to the city centers where most of the employment is located is still limited. A cheaper house 3 hours away from your job doesn't help someone all that much.

3) Texas absolutely has lots of policies that do things like limit housing density. Many of the huge suburban tracts being developed have home owner's associations that enforce a variety of policies like the ones discussed earlier (enforce uniformity in terms of lot size, minimum house size, parking, etc), as well as limiting your ability to do things like rent or subdivide your property

4) You just need the population to be increasing faster than the housing supply to have a 'supply issue'. This last year has both seen a lot of raw material supply issues (and labor issues) due to the pandemic, and a lot of people also trying to relocate (also due to the pandemic). Sometimes temporary housing prices increases are unavoidable while supply and demand adjust, but long term policy decisions can definitely limit supply and force prices higher.

Another commenter also pointed out that low federal interest rates generally promote asset price inflation (as buyers are frequently bidding based on their ability to carry a 30-year monthly mortgage payment, so lower interest rates can almost directly increase home values when people are bidding against each other).

Lumbar as a whole has minimally doubled during the last year[1]. A lot of people are moving to Texas, which raises demand, which raises prices. There is also a current lumbar shortage, which makes house building unpredictable when you have to plan 1+ years out.

You don't just go from 0 to a house. There is usually about a year of designing/planning which have to be approved and meet national and local code, numerous inspections, approvals and permits before ground is broken. Most people who move buy an existing house because they want to move "now." Out of all of the places you've lived, how many did you have custom built vs moving into an existing structure?

Prices are rising pretty quick in Arizona and Idaho as well. Idaho was the quickest growing state in 2020[2]. Those are also hotbeds of people moving to them. Most are trying to escape California, Chicago and NY. CA and NY lost population and even recently had their US House seats reduced as a result[3].

[1] https://fortune.com/2021/04/27/lumber-prices-are-up-232-and-...

[2] https://www.kxly.com/idaho-leads-country-with-amount-of-peop...

[3] https://www.usatoday.com/in-depth/news/politics/elections/20...

For future reference, “lumber” is wood and “lumbar” has to do with your lower back (e.g. “lumbar pain”)

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