Questions for Richard Florida, one month late

1. Why, in these graphs, are we comparing wages minus housing costs to…housing costs? It’s certainly interesting that greater real estate prices are so positively correlated with white-collar wages that those workers end up with greater take-home income in high-housing-cost metros, even after subtracting those housing costs. But wouldn’t the better comparison – if your question is whether the concentration of college degree holders in certain metro areas is good for non-college degree holders in those same metros – be after-housing-cost wages for non-college degree holders versus the percentage of white-collar workers in the labor pool? Maybe the results would be the same; but it would be nice to see.

2. Even better, given that metro areas with high housing costs tend to be older cities with solid public transit systems, what do those graphs look like if you chart wages minus housing costs and minus transportation costs against the percentage of white-collar workers in the labor pool? As the Center for Neighborhood Technology has shown, including transportation costs in the “structural costs” of a given metro area gives a very different picture of the burden on low- and moderate-income families than looking at housing alone. (Of course, the tendency of elite cities to be transit-friendly isn’t necessarily inherent to the phenomenon of talent clustering – except that much of this conversation is about using urbanism to attract college-educated workers. Given that, it seems relevant whether the current urbanist model of lower transportation costs and higher housing costs does, on net, hurt blue-collar discretionary income.)

3. This is outside the immediate scope of your project, maybe, but how do these effects vary by metropolitan area? What is the relationship between talent clustering and blue-collar well-being, on the one hand, and restrictive zoning (which has been shown to artificially raise real estate prices), or economic segregation? Are there extremes where, even according to your original models, an increase in white-collar workers is good, economically, for blue-collar workers – say, in a very poor, tax-base-thin city like Detroit?

Answers, hopefully to come!

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2 thoughts on “Questions for Richard Florida, one month late

  1. Some related notions that may interest you:

    The spectre haunting San Francisco

    Apr 16th 2014, 13:42 by Ryan Avent

    http://www.economist.com/blogs/freeexchange/2014/04/housing-markets

    He nails it, that most of the excessively high cost of housing in SF is economic rent created by growth constraints. This has definite unintended consequences that flow right through the economy and society.

    And see:

    http://techcrunch.com/2014/04/14/sf-housing/

    San Francisco’s city economist, Ted Egan, argues that the tech industry and its spillover effects have been responsible for virtually all of the city’s job growth since 2010. Still, the multiplier effect in San Francisco at slightly more than 2 jobs created for every single tech job, is much lower than the 5-to-1 ratio UC Berkeley economist Enrico Moretti calculated nationwide. Housing costs dampen the spillovers since people end up spending so much more on rent and mortgages.

    And see this earlier posting by Ryan Avent:

    http://www.economist.com/blogs/freeexchange/2012/05/tech-booms

    Note the links to other items too.

    Bottom line: when housing and urban land is more expensive, even tech industries growth is constrained, and the “trickle down” spin-off lower-paying jobs from tech industries are far less. Every tech industry that opens in Texas or NC creates several more spin-off jobs than a new one in Silicon Valley. This is because housing costs are mostly sucked out of the local economy’s discretionary spending, to boost incomes in places like Manhattan.

    Have you noted that Richard Florida has more recently expressed regret that “trickle-down urbanism” obviously does not work?

    http://www.urbanophile.com/2013/02/03/is-urbanism-the-new-trickle-down-economics/

    http://www.thedailybeast.com/articles/2013/03/20/richard-florida-concedes-the-limits-of-the-creative-class.html

    There is a very interesting academic book chapter by Prof. Philip Morrison entitled “The Distributional Consequences of the Creative City”, which really should be more accessible and well-known. It is in D. Andersson, C. Mellander & A. Andersson (Eds.), Handbook of Creative Cities, Oxford University Press.

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