How Housing Regulation Increases Class Segregation

Virginia Postrel has a sharp column at Bloomberg today. Here's an excerpt:

The states with the highest incomes also used to have the fastest-growing populations, as Americans moved to the places where they could earn the most money. Over time, that movement narrowed geographic income differences. In 1940, per-capita income in Connecticut was more than four times that in Mississippi. By 1980, Connecticut was still much richer, but the difference was only 76 percent. In the two decades after World War II, [Daniel] Shoag and [Peter] Ganong find, migration explains about a third of the convergence of average incomes across states.

But migration patterns changed after 1980. "Instead of moving to rich places, like San Francisco or New York or Boston, the population growth is happening in mid-range places like Phoenix or Florida," Shoag says. Lower-skilled people, defined as those with less than 16 years of education, are actually moving away from high-income states.

The problem isn't that they can't find "good-paying" jobs. Even people without college degrees still make more in high-income states. But that money buys less than it would elsewhere. The high cost of housing more than eats up the extra earnings a mechanic, medical-billing clerk or hairdresser can make in a place such as New York or Los Angeles....

As I have argued elsewhere, there are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation. Both create cities that people find desirable to live in, but they attract different sorts of residents.

You should read the rest of the article, which describes the relevant research, considers the consequences of such social sorting, and raises the possibility that "the best-educated, most-affluent, most politically influential Americans...see segregation as a feature, not a bug."

Related: "Where Incomes Are High and Prices Are Low."

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  • John Thacker||

    She links in the article to the paper and its excellent visualization.

    This is a huge deal for not just class segregation, but also inequality (both interstate and individual). The paper also manages to rule out the hypothesis that high skill aggregation is because of demand-side effects, instead of housing supply effects.

    The kicker is that it's Texas (and some other states) doing the most to reduce inequality, as I mentioned the other day to Tony (in a poorly phrased comment that caused people to take objection.)

  • Archduke PantsFan||

    Anyone want to confirm if things were better when she was editor here?

  • T||

    I still have to drive home, so no.

  • Red Rocks Rockin||

    raises the possibility that "the best-educated, most-affluent, most politically influential Americans...see segregation as a feature, not a bug."

    Why should this be a surprise? Very few "diverse" communities actually exist, whether it's along class or ethnic lines. Boulder's a high-cost-of living liberal whiteopia--anyone really think they'd appreciate an influx of Mexicans from Longmont or blacks from east Denver, despite the residents politics being radically different from the more conservative town of Broomfield just down US 36?

  • Todd||

    The problem is the blatant hypocrisy. If you want segregation, and aren't engaged in redlining or housing covenants, that's OK. The government can't (and shouldn't) do too much to people who self-segregate. But if you're doing the same thing as people you despite, STFU.

  • Heroic Mulatto||

    While I don't agree with housing regulation, what's wrong with class segregation, per se? I want to live near people of the same class as they will tend to share my values and interests. Furthermore, living in a group of people with roughly the same income level lessens the chance that one of them will walk by my house, become envious of what I have, and then seek to take my 'stuff'.

  • ||

    Furthermore, living in a group of people with roughly the same income level lessens the chance that one of them will walk by my house, become envious of what I have, and then seek to take my 'stuff'.

    And your address is....?

  • DingHooo||

    Wow I never even thought about it liek that that dude. Makes sense man.

    www.Full-Anon.tk

  • Spoonman.||

    Nice Krugman punch at the end.

  • Todd||

    Interesting article. I wonder if this pattern is a part of a low-key segregation plot, especially by people who live in densely-populated areas where sheer distance can't easily separate people. I've always found it amazing that many liberal Whites talk about those prejudiced folk in flyover country, yet their lifestyles are just as segregated. The only difference is that their favorite minorities tend to be non-traditional.

  • T||

    Are POA and land-use covenants, in part, designed to facilitate this kind of class sorting? You have restrictions about thing slike putting aluminum foil on your windows, in part, because that's what trashy peiople do. Yeah, it's about maintaining property values, but maintaining property values is also based on using your house and landscaping as signifiers for the appropriate class values. Trashy people don't maintain their yards, so we force you to maintain your yard so as not to seem declasse.

  • 16th amendment||

    Doesn't Postrel herself live in LA?

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