This is all so dumb that it feels like it must be a troll. You don’t need a TV to watch your local TV news. They have this newfangled thing called a website and they are also on twitter. Or try your local newspaper’s website, which will obviously cover live weather events. Sigh.
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For example, Prop 13 in CA caps property tax increases on primary residences, which keeps people in their homes longer than they would otherwise stay, which in turn reduces the for sale inventory.
Another example is Trump's Tax Act, which capped "SALT" deductions (State and Local/Property Taxes). This impacts housing prices relative to rents because you can't deduct the full amount of your property tax in high value states like California.
Many of those charts can be explained simply by demographics. Baby boomers entering the workforce (esp. the sharp growth in women workers) and starting families represented a huge transition. The OPEC shocks were also very important over the following several years.
There is a great deal of research (eg., see Enrico Moretti and Ed Glaeser) that documents that you’re statement isn’t accurate. There are very strong network effects of educated cities, and unless you believe all future post-COVID network will be over Zoom or Slack (which feels rather dystopian), then post-COVID cities will do just fine.
In fact, you could argue that what will suffer is living close to suburban office nodes in order to save commute times. Even more young people may choose to live in cities if they can avoid the schlep out to their suburban office (think Google bused from SF to Mountain View, but where you only need to take them for big meetings in the office rather than every day).
> There are very strong network effects of educated cities.
According to the research you mentioned[1], the "network effect" you mentioned raises wages moderately for uneducated people and a little for educated people. But still nowhere near enough to account for the astronomical rent prices in a city.
They also show that educated cities grow faster than uneducated cities, but don't make a comparison to smaller towns and suburbs.
I see no reason why cities are objectively better. They are convenient for some segment of the population, and they are very unenjoyable for some segment of the population.
The business network effect is mostly beneficial to the companies, not to the employees. The employees are simply attracted because of the better employment opportunities.
Most of it is centralization. Google is in the bay area so everyone must go there if they want a job. Now apply this to a hundred different companies. Now that major city is absolutely essential if you want a high salary.
Rent prices are just a matter of greed. Cities make themselves business friendly to bring in more taxes but do not pay attention of how to house workers. If they wanted to prevent gentrification they'd start by kicking out companies, not the people that have lived there for decades. The reality is that all this bullshit is about making money. Land owners want a higher ROI so kicking out companies is a no go but building more housing is a no go too.
A lot of research looks like this looks to be deciding on car less way of life and collect facts only to prove that. Seems most people look for ulterior motive in case of oil and tobacco companies research while everything else is obviously right 'science'.
If there were no difference, what would be the motivation to fire in CA and hire elsewhere? I guess office rent is a factor, but that's probably small compared to salaries.
Nothing compared to salaries for engineers. Office space averages $17k a year a head, and it’s probably higher in area like CA and NYC where land is expensive.
Wow, 17k per head outside the valley and nyc? Seems exceasive, its the first time i har of this figure. Any idea how much that would be in california/nyc?
Office space is both cheap and shockingly expensive. It’s cheap because it’s usually a few dollars a square foot, often as low as $1-2. It’s expensive because you need a lot of square feet, plus room for expansion. Your average employee needs 100-150ft in order to not feel cramped, including personal and communal space.
Keep in mind that office prices are going to vary wildly based on location. High rises in the downtown with good access to public transit are going to cost a lot more than an office park that’s just barely within city limits. So these averages per city are going to hide huge standards of deviation.
When I was doing some budgeting in London, England several years ago, I found that the monthly rent for a small apartment was similar to the the cost of a desk in the office, so 17k per head sounds about right to me in large urban areas.
> 17k per head sounds about right to me in large urban areas.
I don't know about the US, but in France, in large urban areas like Lyon or Toulouse, you can easily find office space for 100 to 200 €/m²/year. Which means, translated in $, that $17k per year would grant you 75 to 150 m² (800 to 1600 sq. ft.).
That would be a very very nice office, far from the shoulder-to-shoulder openspace model, even if you add other expenses than pure rent :-)
There are some American cities where prices are similar. The data is old, but Dallas was about $10k cheaper per head than NYC was in 2015.
Of course, in America rents in NYC and SF are going to drive up the averages by a lot, with companies like FB and Google willing to pay huge amounts for prime real estate and luxury build outs.
So the interesting question for you is: how much are rents in Paris, and how does that affect the averages of France as a whole?
they can cut their pay and their employees could still be better off since they are going to be expaning in Austin where there is not state income tax.
Also, the company will be able to save more money since everything is cheaper from taxes to real estate in other states compared to California.
