One Way to Increase Incomes

I’ve written in the past that Provo has a low median income compared to similar cities, as well as a high poverty rate. I’m not an economist, so these problems seem like the hardest, if most important, to fix.

Yesterday however, Slate’s Matthew Yglesias tackled this issue, framing it in terms of scarcity:

[…] if we’re wondering about the jobs of the future and whether the typical person in 2052 will be able to afford a visit to the doctor this turns out to be basically a question about how many doctors there will be, not what kinds of jobs people have. Insofar as doctors are scarce, lots of people won’t get to see the doctor. By contrast, if doctors are plentiful then a decent society shouldn’t have a difficult time organizing things so that people can see the doctor. […] It used to be that doctors made house calls, but they’re too scarce now for any reasonable person to pay for that.

In other words, if there are a lot of doctors they become cheaper. And if something is cheaper, wages don’t need to be as high to afford it.

Income in a city goes up when people earn more, as well as when things begin to cost less.

Yglesias goes on to mention that technological advances — a computer that can do the work of a doctor, for example — could make medical care less scarce and cause a de facto raise for everyone.

So what does this mean for cities with comparatively low median incomes?

Most obviously it provides a way to “increase” salaries without directly tackling wages. But Yglesias also connects this idea to housing:

By the same token relaxing anti-density regulations would not only increase numerator wages by improving productivity and agglomeration, it would increase wages on the denominator side by reducing the cost of housing in desirable locations.

Yglesias is saying in that quote that increasing housing density would do two things: increase actual wages (the “numerator”), and allow people to save money on housing by making it more common and affordable (the “denominator”).

Fixing anti-density issues is a recurring theme on this blog, but Yglesias’ post is great because it directly connects that agenda with the biggest problem in a city like Provo. It just remains to be seen if city governments — in Provo and elsewhere — will force themselves to buck the trend and do what is obviously most beneficial.

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3 Comments

Filed under Development, economics

3 responses to “One Way to Increase Incomes

  1. Nice idea, but unfortunately density is so attractive it tends to be bid up (or rather proximity to amenities/the-action: isolated density isn’t attractive). Sprawl is cheaper because of transport costs and poor quality of life.

    (NB sprawl is distinct from rural / proximate to nature of course: towns with small footprints – and so near nature – can be compact and attractive too)

    Offering a mix of housing types is an important nuance: 1 bed, 2 bed, 3 bed 4 bed; free-standing (laneway house, up to mansion) duplex and apartment/rowhouse for all sizes. That might get you *relatively* lower housing costs in amenity rich areas.

    The only other policy recommendation is to make everywhere awesome. If all the ‘urbanised’, ‘de-natured’ land that humans have built on so far, was built on nicely (transit-serviced neighborhood centers, etc. etc.) instead of full of stroads, setbacks and surface parking, then it would probably be cheaper to live in.

    I recommend saying compact instead of dense. The latter tends to conjour up images of 5th-Element highrises and squalor; the former more like main street Rhode Island.

    Local governments should definitely focus on helping incomes rise, and daily costs go down. These are both helped by compactness: more local customers, a more lively main street; and more walkable/bikeable/transit-serviceable. Heck, even shared walls and squat midrise shapes help with heating bills.

  2. I would say raising wealth would be easier than income and a better long term solution. Income in and of itself is raising what someone gets paid for whatever line of work they are in. As was mentioned in the article that could go up when demand is high or down when supply is high. Taking someone who works in a service industry or manufacturing job for $12/hr and expecting them to be making $20 in x amount of years may never happen.

    The density approach, albeit a vague one, could increase ones wealth. Call it density, compactness, mixed-use, or traditional neighborhood design, the purpose is to put people closer to all basic necessities.

    According to AAA, the average cost of vehicle ownership is $8,946. By not having a vehicle or driving, one could see an increase of “wealth” by $4.30/hr (if looking at a work week 40hrs – 52wks). So instead of spending your hard earned money on something that may not be really necessary that $12/hr now goes a lot further.

    Couple that with a wide range of housing options in “close proximity” to amenities and you have raised the quality of life. It may not be bottom line dollars per hour, which isn’t as sexy, but I believe it leads to a better end result.

  3. Pingback: A Compact Core is Better | (pro(vo)cation)

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