Fast metro growth predicts lower incomes, and why that's a good thingHouston Tomorrow recently featured a story about a study claiming that faster urban growth leads to lower incomes and higher poverty and unemployment. I find the whole assertion deeply flawed, as does UH professor Peter Bishop in his comment.
Here's what's happening:
- A city gets to the point it's difficult to add new housing to meet demand. It might be because of regulations, geography, or transportation limitations (or probably all three), but regardless, the effect is the same. In the U.S., this is the case in cities like NYC, LA, SF, Boston, and others.
- Of course, if new housing is hard to add, then growth must slow.
- Since housing supply is now constrained, prices go up, sometimes way, way up.
- Poorer people can no longer afford to live in the city. Lower incomes move out (or are generally displaced as their neighborhoods gentrify). Unemployed move out (or just don't come in in the first place looking for new work).
- Voila, the average income in the city increases as the poor and unemployed move out. Note that their situation didn't get any better (in fact, it probably got worse), but they're just no longer counted in that city's statistics.
The reality is that high growth cities are opportunity cities, and people move there (inc. poor and unemployed people) to take advantage of those opportunities (inc. affordable housing) so they can improve their and their family's lot in life. Doesn't that seem like a better model? In fact, in this economy, wouldn't you think that should be the model for all our cities?