Analysis: Growth Control and Inequality

On Sunday, the New York Times published an article, “How Anti-Growth Sentiment, Reflected in Zoning Laws, Thwarts Equality.”  The article is a reminder that, while Davis has more extreme policies, it is not alone in this regard.

The article starts with Boulder, the home of the University of Colorado, with a booming local economy, noting that “a lot of people want to move here” and those “who already live in Boulder would prefer that the newcomers settle somewhere else.”

While Davis may have a struggling local economy, the same could be written about here.  Particularly, “All of Boulder’s charms are under threat” notes problems with traffic and parking.

Writes the Times, “These days, you can find a Steve Pomerance in cities across the country — people who moved somewhere before it exploded and now worry that growth is killing the place they love.”

But the bottom line: “But a growing body of economic literature suggests that anti-growth sentiment, when multiplied across countless unheralded local development battles, is a major factor in creating a stagnant and less equal American economy.”

It continues, “Unlike past decades, when people of different socioeconomic backgrounds tended to move to similar areas, today, less-skilled workers often go where jobs are scarcer but housing is cheap, instead of heading to places with the most promising job opportunities, according to research by Daniel Shoag, a professor of public policy at Harvard, and Peter Ganong, also of Harvard.”

The article continues, “One reason they’re not migrating to places with better job prospects is that rich cities like San Francisco and Seattle have gotten so expensive that working-class people cannot afford to move there. Even if they could, there would not be much point, since whatever they gained in pay would be swallowed up by rent.”

What we see in Davis is that people increasingly commute into town to work at the university and then out-commute to their homes where housing is cheaper and more plentiful.

Boulder faces the same problem as Davis, maybe worse. “In Boulder, for instance, the median home price has risen 60 percent over the last five years, to $648,200. Today, someone who makes the typical Boulder salary would have to put about 40 percent of their monthly income toward payments on a new mortgage or about half toward rent, according to Zillow.”

“We’ve switched from a world where everybody educated and uneducated was moving from poorer parts of the country to the richer parts of the country,” said Professor Shoag, “to a world where the higher-educated people move to San Francisco and lower educated people move to Vegas.”

“Zoning restrictions have been around for decades but really took off during the 1960s, when the combination of inner-city race riots and ‘white flight’ from cities led to heavily zoned suburbs,” the article continues.  “They have gotten more restrictive over time, contributing to a jump in home prices that has been a bonanza for anyone who bought early in places like Boulder, San Francisco and New York City. But for latecomers, the cost of renting an apartment or buying a home has become prohibitive.”

Governor Jerry Brown in May proposed a way to “force local governments to approve any urban housing development provided the project matches the underlying zoning and a certain percentage of homes are set aside for the poor.”

As an LA Times editorial put it, “Gov. Jerry Brown’s solution to California’s affordable housing crisis is to build, build, build, and not let local politics get in the way. Earlier this month, the governor introduced a bill under which proposed urban housing developments that meet local zoning requirements and reserve some portion of their units for low-income residents would be exempted from any additional environmental or local government review. The governor’s theory is that neighborhood opponents and other parochial interests have consistently blocked or downsized badly needed development projects, leading to a housing crisis in which California’s major cities are increasingly unaffordable for most of its residents. As a result, the state, home to 12% of the nation’s population, has 21% of the nation’s homeless.”

As the NY Times put it: “To most people, zoning and land-use regulations might conjure up little more than images of late-night City Council meetings full of gadflies and minutiae. But these laws go a long way toward determining some fundamental aspects of life: what American neighborhoods look like, who gets to live where and what schools their children attend.

“And when zoning laws get out of hand, economists say, the damage to the American economy and society can be profound. Studies have shown that laws aimed at things like ‘maintaining neighborhood character’ or limiting how many unrelated people can live together in the same house contribute to racial segregation and deeper class disparities. They also exacerbate inequality by restricting the housing supply in places where demand is greatest.

“The lost opportunities for development may theoretically reduce the output of the United States economy by as much as $1.5 trillion a year, according to estimates in a recent paper by the economists Chang-Tai Hsieh and Enrico Moretti. Regardless of the actual gains in dollars that could be achieved if zoning laws were significantly cut back, the research on land-use restrictions highlights some of the consequences of giving local communities too much control over who is allowed to live there.”

“You don’t want rules made entirely for people that have something, at the expense of people who don’t,” said Jason Furman, chairman of the White House Council of Economic Advisers.

Governor Brown has offered the biggest solution with a law that would “speed up housing development by making it harder for cities to saddle developers with open-ended design, permit and environmental reviews.”

However, “Mr. Brown’s proposal has inflamed local politicians, environmentalists and community groups, who see it as state overreach into how they regulate development. But it has drawn broad support from developers, not surprisingly, as well as a number of business leaders, including many from the technology industry.”

How would this law affect Davis and its vaunted Measure R?  That is a question for another day.  What is interesting, however, is that while Davis’ growth control measures are clearly more extreme than other communities, the problems faced by Davis are far from unique.  Unlike Davis, Boulder has a robust economy. Davis is not only becoming more expensive, but its local economy, aside from the university, is quite limited and may get more limited.

—David M. Greenwald reporting