One disconnect in the American economy these days involves the thousands of high-paying jobs in cities such as New York, Boston, Seattle and San Francisco without workers to fill them. One culprit: housing shortages caused by zoning and other restrictions that make it impossible, or too expensive, for workers to move to these cities to take those jobs.
According to one widely cited study, this housing shortage has reduced economic output by 9 percent, costing the average American household $6,700 in forgone income.
The “zoning is strangling the economy” story has caught the attention of conservatives who dislike regulation, liberals who care about affordable housing, and environmentalists who want everyone to live in walkable cities. Not surprisingly, it has also been embraced by the technology sector, where most of the unfilled jobs are found, as well as by construction and real estate industries eager to build and sell more housing.
There’s even a nascent political movement — YIMBYism, as in “Yes In My Back Yard-ism” — which in California is on the verge of winning approval for a law allowing the state to override local design and environmental reviews in communities that fail to meet state-set housing production goals.
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We need to ask ourselves whether the better strategy wouldn’t be to move the jobs to workers rather than move the workers to the jobs.
That seems to be the approach taken by one of the country’s most successful companies, Amazon.com, which announced it would spend $5 billion to create a second, “equal” headquarters campus somewhere other than its home base in Seattle.
Rather than wait for Seattle to solve its housing and congestion problems, Jeffrey Bezos, Amazon's chief executive (and the owner of The Washington Post) decided to help create another Seattle someplace where his company’s spectacular growth can be more easily and inexpensively accommodated.
The economic argument for moving the workers to the jobs is that workers are more productive and innovative in companies located in cities dense with people and other companies. Some of the benefits from “agglomeration” have to do with the ease with which companies can find a wider range of competing suppliers. Also the ease with which companies and skilled workers can find each other.
“Land-use controls that limit the growth of such successful cities means that Americans increasingly live in places that make it easy to build, not in places with higher levels of productivity,” writes Ed Glaeser, the Harvard University economist.
For me, however, the idea that everyone should move to super cities is misguided on several levels.
This hardly seems like a strategy for increasing economic output and productivity. Rather, it looks like a strategy for an economy based on imperfect competition and unproductive bidding wars that generates higher incomes and even higher prices — in short, a recipe for inflation.
Another false assumption is that no matter how large a metropolitan area is, making it larger and denser will always make it more productive.
For starters, the denser it is, the more expensive it becomes to build housing. Construction costs inevitably rise as buildings get taller, parking garages go deeper, and more activity needs to be displaced during construction. These higher costs eat into whatever productivity gains might accrue otherwise.
More significant, however, are the cost and difficulty of adding infrastructure to handle all those new residents.
And it's not just New York. San Francisco, Boston, Los Angeles, Seattle — those highly productive cities held out as candidates for further densification — all suffer the same double gridlock: the transportation gridlock that comes from having too many people and too little infrastructure, and the political gridlock that results as voters balk at the astronomical cost and inconvenience needed to solve the transportation gridlock.
Techies fantasize that self-driving (or flying!) cars will be the answer, while the crunchy granola crowd looks to Uber and bike lanes. But the millions of people who actually live in these places have a hard time imagining how they could absorb the additional residents, even if there were homes for them to live in.
There is an alternative, of course, to making highly productive dense cities even denser: Create more of them.
In fact, as Amazon’s HQ2 announcement demonstrates, it’s already happening. And it should tell you something that in Seattle, the reaction to Amazon’s announcement was a mixture of concern and relief.
“It gives us a little breathing room to build good mass transit, ensure affordable housing and open up pathways into higher education for the future workforce,” Lisa Herbold, a member of Seattle’s left-leaning city council, told the Seattle Times.
I have no doubt that our biggest and most productive cities can and should build more housing — in particular, more affordable middle- and working-class housing for the people who already live there.