IT'S THE HOUSING STUPID

PAUL KRUGMAN, N.Y. TIMES

Gov. Rick Perry of Texas is running for president again. What are his chances? Will he once again become a punch line? I have absolutely no idea. This isn’t a horse-race column.

What I’d like to do, instead, is take advantage of Mr. Perry’s ambitions to talk about one of my favorite subjects: interregional differences in economic and population growth.

 

You see, while Mr. Perry’s hard-line stances and religiosity may be selling points for the Republican Party’s base, his national appeal, if any, will have to rest on claims that he knows how to create prosperity. And it’s true that Texas has had faster job growth than the rest of the country. So have other Sunbelt states with conservative governments. The question, however, is why.

The answer from the right is, of course, that it’s all about avoiding regulations that interfere with business and keeping taxes on rich people low, thereby encouraging job creators to do their thing. But it turns out that there are big problems with this story, quite aside from the habit economists pushing this line have of getting their facts wrong.

 

To see the problems, let’s tell a tale of three cities.

 

One of these cities is the place those of us who live in its orbit tend to call simply “the city.” And, these days, it’s a place that’s doing pretty well on a number of fronts. But despite the inflow of immigrants and hipsters, enough people are still moving out of greater New York — a metropolitan area that, according to the Census, extends into Pennsylvania on one side and Connecticut on the other — that its overall population rose less than 5 percent between 2000 and 2012. Over the same period, greater Atlanta’s population grew almost 27 percent, and greater Houston’s grew almost 30 percent. America’s center of gravity is shifting south and west. But why?

Is it, as people like Mr. Perry assert, because pro-business, pro-wealthy policies like those he favors mean opportunity for everyone? If that were the case, we’d expect all those job opportunities to cause rising wages in the Sunbelt, wages that attract ambitious people away from moribund blue states.

 

It turns out, however, that wages in the places within the United States attracting the most migrants are typically lower than in the places those migrants come from, suggesting that the places Americans are leaving actually have higher productivity and more job opportunities than the places they’re going. The average job in greater Houston pays 12 percent less than the average job in greater New York; the average job in greater Atlanta pays 22 percent less.

So why are people moving to these relatively low-wage areas? Because living there is cheaper, basically because of housing. According to the Bureau of Economic Analysis, rents (including the equivalent rent involved in buying a house) in metropolitan New York are about 60 percent higher than in Houston, 70 percent higher than in Atlanta.

 

In other words, what the facts really suggest is that Americans are being pushed out of the Northeast (and, more recently, California) by high housing costs rather than pulled out by superior economic performance in the Sunbelt.

But why are housing prices in New York or California so high? Population density and geography are part of the answer. For example, Los Angeles, which pioneered the kind of sprawl now epitomized by Atlanta, has run out of room and become a surprisingly dense metropolis. However, as Harvard’s Edward Glaeser and others have emphasized, high housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs and other policies constrict housing on both coasts; meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low.

So conservative complaints about excess regulation and intrusive government aren’t entirely wrong, but the secret of Sunbelt growth isn’t being nice to corporations and the 1 percent; it’s not getting in the way of middle- and working-class housing supply.

 

And this, in turn, means that the growth of the Sunbelt isn’t the kind of success story conservatives would have us believe. Yes, Americans are moving to places like Texas, but, in a fundamental sense, they’re moving the wrong way, leaving local economies where their productivity is high for destinations where it’s lower. And the way to make the country richer is to encourage them to move back, by making housing in dense, high-wage metropolitan areas more affordable.

 

 

So Rick Perry doesn’t know the secrets of job creation, or even of regional growth. It would be great to see the real key — affordable housing — become a national issue. But I don’t think Democrats are willing to nominate Mayor Bill de Blasio for president just yet.

De Blasio Makes Push for Affordable Units in His $41 Billion Housing Plan

Mayor Bill de Blasio presented his housing plan in Brooklyn on Monday. Credit Ozier Muhammad/The New York Times        

N.Y. TIMES

Mayor Bill de Blasio’s housing plan is so big that it took not one but two media events, in Brooklyn and the Bronx, to unveil it on Monday, in which the mayor and local pols exulted over the plan’s breadth and ambition. Yet if Mr. de Blasio really is going to keep his campaign promise and end New York’s crisis of inequality and housing unaffordability, he is going to have to go big.
And this plan is what big looks like.

It’s a $41 billion effort to build or preserve 200,000 affordable units in all five boroughs, over 10 years, for the benefit of half a million New Yorkers — 120,000 apartments preserved and 80,000 newly built — using everything from energy retrofitting (to keep landlord’s costs and rents down) to new housing and building codes to a thorough cataloging of neighborhoods and underused spaces where development opportunities await.

Its most striking feature is its eager embrace of adding height and density to neighborhoods beyond Manhattan, through mandatory inclusionary zoning, the stick-plus-carrot that requires builders in newly rezoned areas to set aside a percentage of units as forever affordable. New York has a voluntary plan that has produced about 4,500 affordable units in the last 25 years, which is pretty good but not the scale Mr. de Blasio wants. The plan also emphasizes losing no more ground on existing affordable units. It seeks to identify neighborhoods vulnerable to gentrification, to “lock in” affordable rents before it’s too late and to prod landlords to keep rents down.

Mr. de Blasio, at a newly renovated building of affordable apartments in the Bronx, Credit Michael Appleton for The New York Times        

The questions the 116-page plan raises would fill another book. What would the city look and feel like if builders built extra high and extra dense? What strains would this place on schools and subways? (Those dreaded words, decaying infrastructure, are a real impediment to major rebuilding.) What if builders reacted to mandatory inclusionary zoning by not building at all?

What would public-housing campuses be like if their open spaces were filled in? The city’s Housing Authority has a lot of “underused” land, but any development must preserve quality spaces and tenants’ dignity. And, at a time when the federal housing commitment is withered, New York needs all the outside help it can get. That means more support from Albany, through tax-subsidy programs and capital dollars, which is always a challenge.

Much of the plan’s appeal lies in its commitment to helping people at the lowest incomes, and its understanding that part of the solution lies in tackling homelessness, fostering economic development (making homes affordable by raising people’s wages) and engaging the community. Mr. de Blasio wants new units to be available to more households with extremely low incomes — under about $25,000 a year for a family of four — that he feels have been left out of qualifying for apartments in the past. Mr. de Blasio knows that housing is not pre-K; it’s an issue that divides neighbors from developers and from one another. One New Yorker’s dream neighborhood is another’s gentrified nightmare.

While rezoning and expediting construction are under the city’s purview, the state government controls subsidy programs and rent regulations for about a million rent-regulated apartments in the city.

And affordable housing can be just as contentious, pitting the concerns of residents and developers against those of affordable housing advocates. A coalition of affordable housing advocates is lobbying for setting aside as much as 50 percent of all units in new residential projects for low- and moderate-income residents.

Mr. de Blasio’s administration has not learned — or simply rejects — the political value of underpromising. From the pledge of billions of undefined health care savings in its newly struck deal with the teachers’ union, to its plan to reduce traffic deaths (in a city of eight million) to zero, it has spun the dial on expectations well past 11.

But there is no arguing that the city faces a crisis of affordability. Rents have gone up nearly 40 percent in the last 20 years, while renters’ wages have risen less than 15 percent. More rent-regulated apartments are lost to deregulation than new ones are built. Mr. de Blasio, should he win a second term, has embarked on a mission to last his entire mayoralty, and then some. The all-important details have yet to be filled in, but the mayor has locked himself in with a hard and fast number: 200,000 or bust.

Despite Critics, de Blasio Finds Success in Pursuit of Liberal Agenda

N.Y. TIMES

On the surface, these are rocky days for Mayor Bill de Blasio, whose infant tenure has endured impasse in Albany, speeding police escorts, and poll numbers that have rapidly diminished.

But in fits and starts, Mr. de Blasio has steadily found ways to impose his uncompromising liberalism onto New York, exploiting the powers of his office to further an agenda that allies say is far more consequential than day-to-day squabbles and scandals.

Stymied by Gov. Andrew M. Cuomo and state lawmakers on his tax-the-rich plan, Mr. de Blasio used a compliant City Council to enact a bill expanding the ability of workers to take paid days off when they or a family member falls ill. He signed the bill into law on Thursday with the flick of a commemorative pen — no approval from Albany required.

A $1.5 billion waterfront project in Brooklyn will include more affordable housing. Credit Ángel Franco/The New York Times

 Keenly aware of his leverage over the city’s real estate industry, Mr. de Blasio has extracted concessions on affordable housing and workers’ wages from major developers accustomed to V.I.P. treatment from his predecessor, Michael R. Bloomberg, who preferred hand-holding, not arm-twisting.

And the mayor has moved aggressively to settle longstanding lawsuits over racial inequities in the Fire and Police Departments that Mr. Bloomberg had vigorously fought.

Now, Mr. de Blasio is set to unveil his next unilateral steps: At his order, the city’s legal team will abandon its efforts, begun under Mr. Bloomberg, to block two pieces of legislation that guarantee higher pay for workers on development projects where the city provides large subsidies or is a major tenant.

The city will drop its challenge to one, the so-called living wage law, on Friday. Later, officials said, the administration plans to quit fighting against the “prevailing wage” law — even though the Bloomberg administration had, so far, been successful in blocking it in court.

 In flexing the powers of his office, Mr. de Blasio has displayed a tactical agility and aggressive style that he has struggled at times to project publicly.

Significant positions in his government, like buildings commissioner, remain unfilled, and the mayor’s unforced errors, such as calling police officials about the arrest of a political supporter, have prompted concern about his readiness for the job.

Aides and allies of the mayor insist that New Yorkers, who in a recent poll gave Mr. de Blasio a mediocre approval rating of 45 percent, will ultimately focus on his efforts to raise wages and make the city more affordable.

Mayor Bill de Blasio in February. Forty-five percent of poll respondents approve of his performance, down from 53 percent two months ago. Credit Michael Appleton for The New York Times

 Eager to reframe his administration as fulfilling campaign promises, not fumbling them, the mayor’s team began talks in the past few days with Related, one of the city’s most politically powerful developers, about including more affordable apartments at its giant Hudson Yards project on the Far West Side, which is receiving major tax breaks.

It is highly unusual to renegotiate a development project already approved by the city, and it was virtually unthinkable in the Bloomberg era. But officials at Related, who are embarking on a long-term relationship with the new mayor, agreed to increase the number of affordable units.

Even more strikingly, the developer agreed to give up a long-fought-for exemption from paying higher wages to some building workers at Hudson Yards.

It was a sign that, poor poll numbers aside, Mr. de Blasio is unequivocally the new boss in town — and that the business community is facing a stark reality: Where government money touches something, it comes with liberal strings attached.