Housing is anything from a third to 50% of the average UK earners take home income. Median house price to median income ratios are at historically high levels[0], and rents are now also rising[1]
Either wages need to rise or house prices need to fall.
[0] If you look at somewhere mundane like Essex the median 'affordability ratio', as measured by the Office of National Statistics ( https://tinyurl.com/x5jatcx8 ), was 4.5 in 2000 but is now north of 10. And yes, low interest rates help with monthly affordability but house prices have gone up ~4 fold in the last 20 years while the multiple of your income banks will lend has not, and peoples capacity to save a deposit that is 4x bigger has not.
Old ladies in multi-million dollar homes is largely a myth. Sure, there are some of them. But it's absurd to think this is anywhere near the majority. Short Term rentals make up <2% of the market (almost everywhere beside vacation towns) - and they are not a major cause of problems (outside of vacation towns). Multi-million dollar homes are <1% of the market (basically everywhere). Old ladies living in these homes is a fraction of the total homes.
These are just excuses. These aren't real problems.
The real problem is artificially low interest rates, artificial scarcity caused by NIMBYism, low downpayments (backed by Fannie & Freddie), tax breaks for home owners but not for renters, high income taxes, low property taxes, etc...
The vast majority of homeowners are just everyday regular homeowners, almost twice as many as everyday regular landlords. Little old ladies and short term rental operators make up <3% of the market. You can only blame them for much.
We see this time and again. Blame everyone else but the common man. Mobs are naturally susceptible to act in their own self interest and what we see today is a natural consequence of housing as an investment and your biggest asset.
Nimbys are simply protecting an investment. In a captalistic society we have to change the incentives to drive action.
Allow renters vote on local zoning regulation. Hell, remove stringent zoning regulations in general. At the same time, put limitations on what HOAs and local.commitees are allowed to impose.
Remove the exorbidant costs/regulations towards building multi family homes. This has been driving the rise 'premium condos' because affordable housing isnt affordable to build.
Impose larger taxes on rent collected on 3rd+ homes. Impose large taxes on vacant properties. Start gently discouraging additional housing as an investment.
Lastly, I strongly support sensible gentrification. Give long term renters first dibs and zero-additional-cost pathways to home ownership.But after that, gentrify and gentrify heavily. A revitalization of innercities is the easiest way to solve the housing problem in our current political climate. (For those who complain that condos arent suburban single family homes.....thats how we got here in the first place)
I've come to believe flipping is a major problem, at least in my locale. A $300K house gets $50K of "improvements", then the investors needs $100K profit after commissions are covered and so we're in the $500K range for the next buyer and very little value was added. It's often the proverbial "lipstick on a pig" house after the renovations.
There's little to no regulations on flippers. They can be DIY people that have never swung a hammer or people that cut every corner possible to squeeze out every cent of profit. Often, buyers of flipped properties are doing major repairs in the first 2 years as things behind the walls was not done correctly. It's a very common tale of people completely renovating their newly renovated bathrooms and kitchens (yes, the most expensive rooms in your house) because the flippers did not take the time to properly waterproof behind the tiles. Or they did not properly mortar the tiles for adhesion and they are now popping up.
> I've come to believe flipping is a major problem, at least in my locale. A $300K house gets $50K of "improvements", then the investors needs $100K profit after commissions are covered and so we're in the $500K range for the next buyer and very little value was added.
That's not quite how it works though. How much the investor spent in changes is not relevant. What matters is how much the next buyer values those changes.
If the investor bought the place for 300K and spent 50K on giant pink flamingo statues all over the yard, the next buyer will likely offer less than 300K.
Only if they spent 50K on improvements that the next buyer feels are worth it an increase the value, then they'll offer more. But in that case, value actually was added.
> What matters is how much the next buyer values those changes.
The next buyer usually feels like the home is over priced. Because it is. They know it is, but they lack optionality because a majority of the active MLS listings are flipped homes. Think of it as they are forcing the next buyer to pay as much as they can possibly afford. Sure, low interest helps the "afford more" but it doesn't mean they are comfortable or happy spending that amount. It doesn't mean they necessarily value it either. They may have been happy with the original condition at $300K but they never saw that option. It was an off market transaction.
> Only if they spent 50K on improvements that the next buyer feels are worth it an increase the value, then they'll offer more. But in that case, value actually was added.
Sure they feel $50K was added. But not another $100K of profit for the flipper who only held the property for 8 weeks before re-listing it. The $100K, 20% of the new "value", is completely intangible and not real. This is supposed to be real estate after all.
> What matters is how much the next buyer values those changes.
Flipping doesn't really exist when appreciation is low. Remember how no one was flipping houses in 2010? And then in 2012, suddenly everyone in their mom started flipping houses again?
It only makes sense when asset appreciation is high. You'll find that most of the "value added" is simply them holding the house for 6 months and capturing appreciation (on leverage).
Why then is holding cost such a major concern of every flipper? Each market is different, maybe you've seen that level of unadultered appreciation, but I never have and I live in pretty high growth place my entire life.
In my opinion, the "value added" is more correlated with what new construction on the similar land would cost. As lumber prices went up last year, existing homes went up too because the cost of building became higher. Essentially, a flipper wants you to feel like you have a new home at a discount and you'll pay the optimal amount for it.
How is that the flipper's fault? Ultimately, a regular home owner is buying the finished product.
If they are willing to pay more for better housing, what's the problem?
Of course, they're not willing to "pay more". Interest rates get lowered, and they can keep the same payment and buy more house.
The reason flipping is attractive is because Central Banks push up house prices - which flippers capture on leverage. If it weren't for house prices artificially appreciating so much (by constantly lower interest rates) - there wouldn't be any profits to be made flipping houses. Transaction costs are too high.
Flippers have capital (or the ability to be extensively leveraged) and they can quickly gobble up the unimproved inventory such that there is very little "unimproved" inventory available for regular homebuyers. They even spam people with unsolicited offers and try to buy unimproved houses before they hit the market at all!
The time that flippers spend "improving" a house is time that the house isn't on the market at all for a potential resident.
Don't think of flippers as individual actors on small scales repairing and reselling a house here or there, think of companies that literally buy whole neighborhoods (hundreds of houses) and rent some of them out while they tear down or "improve" the rest. They can afford to keep the rental price high and/or let it sit vacant because the real money will be in the eventual sale.
You're right that they "gain" partly from inflation, but that's only one piece of the puzzle. It's a combination of large operations (and a large number of smaller operations) that essentially act as a cartel that effectively limits the supply of available homes for purchase.
I don’t think it’s anyone’s “fault” but it does contribute to the affordability issue. It’s basically introducing a middle man into the industry that needs his own markup. It’s capitalism in it’s purest form. But also a form that has detrimental consequences to average people wanting to purchase a home. And, that’s where I start to believe it’s a form of malicious compliance to accept it as status quo.
However, the quality of work topic is a major issue and extremely common. It raises the cost of ownership going forward.
How is this different from the middle man at the grocery store who makes pre-made salads and sandwiches and soups, so that you don't have to?
People want to buy "nice" houses. But too many houses for sale need a lot of work done for them still. Enter flippers to make the market.
The average person does not want to buy a house and renovate it for a year while living in it so that they can save $30k. Most people don't have the skills, time, risk appetite, or desire. Let alone all 4. With 2.75% 30-year fixed rates, it's only a savings of $120/m.
I feel like your stance is coming from a place of theory, like you're pointing out econ 101 and theory of supply and demand. From that perspective, you're correct. Flippers are filling a need/void in the market. I get all of that. What's out of whack is the flippers profit and how much market penetration they have and how they are not actually improving properties. Sure they look nice, but behind the walls they actually screwed a lot up in the process of making it "nice." Things that will cause major issues down the road. If this was known, the "value" calculation turns into a risk calculation very quick. (Home inspections are mostly a joke by the way).
If capital is so cheap, why is there no convenient vehicle that allows the buyer to buy an ugly home and hire a contractor to fix it up before moving in? (Construction loans are a joke). The $300K house with $50K fixes now cost $350K which is the value that was added. The flipper added $100K of fake value. I don't see that as real value just because some sucker came and paid it. People overpay for houses even in hot markets, all, the, time. People are motivated by all kinds of things. They have time constraints, moving for a job, kids starting school, etc, etc and sometimes they just pay what they have to to get what they want. It doesn't mean it's right and having so much of people's income going towards a mortgage isn't good for anyone except the flipper. So while I understand they play a part of today's real estate industry construct, I feel like we'd collectively be better off without them.
When flipping reaches a high level of market penetration (eg. a majority of listings are flipped homes) it gets more perverse. The pricing is completely made up, borderline or outright collusion is taking place, and the prices do not reflect value. Housing is a need, so somebody is paying the price and thus meeting your definition of "value add" but it's not real.
> How is this different from the middle man at the grocery store who makes pre-made salads and sandwiches and soups, so that you don't have to?
It's not. But his prices likely reflect something reasonable. And if not, I have infinite optionality. Without optionality, it turns into the ballpark where a hotdog cost $15
> Flippers are filling a need/void in the market. I get all of that. What's out of whack is the flippers profit and how much market penetration they have and how they are not actually improving properties. Sure they look nice, but behind the walls they actually screwed a lot up in the process of making it "nice."
How is this different than Mercedes and BMW vs Honda and Toyota?
It's not like people are only allowed to pay more for things that you think are actually worth more.
People regularly spend lots of money on what many people consider waste. Why shouldn't they be allowed to do it on housing? New construction is just as rife with this problem, I think.
Houses are built with a ridiculous set of boxes that need to be checked by buyers. They are not built to be actual livable houses. They're built to be sold.
> How is that the flipper's fault? Ultimately, a regular home owner is buying the finished product.
The flipper is just making money via arbitrage. The 'profit' they make is simply: (holding cost + holding risk) * time + value of improvements + cost of hassle of renovating
Where do you get stats for short-term rentals? Anecdotally, our last landlady illegally evicted us, converted the house to an airbnb, and then bought the next-door house from the long-time owner to make it an airbnb as well. Not in a vacation town, just downtown in a second-tier city. It seems like a pretty common trend in our neighborhood, I'm wondering if short-term rentals are clustered in dense, walkable areas and the stats are skewed by exurban owner-occupied homes that are 30 minutes drive to everywhere.
It shows that AirBNBs do push up rents - but even in desirable parts of Boston with a lot of AirBNBs - it's /only/ responsible for a 0.4% increase.
Keep in mind that rents have been increasing by >4% per year for 20 years in Boston. A .4% increase is 10% of that. General inflation is /at least/ 50% of it. The other ~40% is coming from elsewhere.
Unless AirBNBs make up a substantial portion of new sales - it is hard to blame them for the majority of price increases.
Just to be clear, I wasn't suggesting the old ladies were at fault. I was suggesting that the people who would suffer the immediate negatives and/or thrive on drama and/or need to sabotage all government intervention would use that as a propagands point to stop any regulations.
No - but the problem is the same. You have 5% downpayments (instead of 3.5% in the US), and mortgage-backed securities.
From my understanding, it appears there is NOT a government agency backing them, though. I don't think the 3.5% downpayment market be very big in the US if not for Fannie and Freddie (it basically doesn't exist outside of conventional loans Fannie & Freddie will buy).
I don't know how big the market is in the UK - maybe it's not much of an issue?
I'd love to hear from someone who knows more about this part of the UK market.
I don't think the 3.5% down payment market is very big.
>Between July 2019 and June 2020, the average down payment for a home amounted to 12% of the home value. In the first three months of 2021, 48% of home buyers made a down payment of at least 20% of the home value. 21% of home buyers in that same period made an all-cash purchase. [1]
It sounds like 69% are >= 20% down or all cash. I don't think enabling lower income access to housing is hurting our housing market at all.
A 3% increase in vacancy rate caused a ~10% decrease in apartment pricing in NYC [1].
Housing is very much at the margin and a small increase/decrease of demand will have an outsized effect on price. However, I'm not going to argue that everybody poorer than me shouldn't have access to a house just so I can get one at a cheaper price ...
> However, I'm not going to argue that everybody poorer than me shouldn't have access to a house just so I can get one at a cheaper price ...
What's wrong with renting? Why are poor people entitled to home ownership when most of the young middle class isn't? Why can't they rent?
There would be no problem with rent if home-ownership wasn't a massive handout from the government by guaranteeing that home prices appreciate more than interest rates. This is extremely unfair to poor people as it is currently - because they can't get in line to get massive amounts of free money. Best they can get is SNAP.
Meanwhile, your local millionaire is getting >$20k per year in asset subsidization.
I don't think that even more manipulation is the solution to the problem. If the government could get out of the business of pumping up house prices while keeping benefits like SNAP, that would go a long way toward fixing inequality.
There is/was a UK government "Help to Buy" scheme aimed at people who can only afford a 5% deposit, where the gov basically took part of the equity and then charged you rent on the portion you don't own. Never seemed like a good idea to me; just skews purchases to more expensive areas (ie London) and leaves the taxpayer with an even bigger share of the risk in the event of a house price crash. The only upside is political - the government gets to say they are helping first-time buyers.
> "Wage rises without solving the housing issue is only going to raise house prices further."
House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. And, of course, supply/demand fundamentals (ie: population change vs. number of housing units in an area).
I wasn't making a claim about what impacted house prices the most.
If I was, then I'd say a system where the government basically gives you free money/tax breaks if you buy a home, is the root cause behind the things you mentioned which then drives house prices.
The point is, without fixing that issue, you can't solve it by wage rises.
People who don't even want homes are buying them, either as outright investments that they can sit on for years, or as something they also live in, but need to treat as an investment, rather than a home.
Home prices could be linked to wages through renting. I have often seen mortgage loan monthly payment compared to monthly rent as a reason a buy instead of renting.
What is this mythical 'housing issue' we hear so much about. A housing shortage? I dont see that, if you want a house, you walk into one of the estate agents, they are every second shop on the high street, and you give them money and they give you a house.
'But I want a 12 bedroom house on Park Lane with a 50 foot garden for 100k.' Yes there are issues there.
So my solutions to the problem you dont thik exists would probably make that house more expensive, because the value of the land underneath it is the main driver of price increases, and the person who owns the home does little to drive that, but reaps all the benefit.
This distorts the market and forces people into buying property. If someone could just rent for a few years then they probably would, and then we could write laws that support rrenters and owning and renting buildings would just be a boring business.
Instead, people do the sums and realise they are rewarded for buying that property and getting the free money as the area is developed. So we are all nudged into buying property and then we get laws that benefit people with property.
If there was a land value tax, then people living in low density homes in amazing locations in cities would be taxed out and high density homes would be built in their place. These would likely still be expensive, but by splitting the tax among several people, would be able to afford the land tax.
The result of the tax you are suggesting almost already exists. As the 5 floor town house gets to a price tag of 10mil the owner realises that it is easier to find 5 people who will pay 2mil for a 1 floor appartment than one person who wants a 10mil house.
This works for a while, but we are now at a point where 100's of prime location studio appartments are built and the price tag is the best part of $1mil. Here we hit the mismatch of affordability and function - if you have a mil for a property, you probably dont want a studio appartment. If you do want a studio appartment in central city, you probably only have 1/2 the money you need (if you are lucky).
The only real function of a land tax would be to depreciate the present value of the land by the future libaility of those taxes. In theory this just changes the cash flows, but also might have a dampening effect on growth which would be desireable / undesirable.
For many people, 100% of the available properties in that estate agent's window are too expensive, not just the 12 bedroom places. These people will probably never be able to buy anywhere useful, and they are not renting the places in the window either. They rely on a less formally advertised market of lower price rentals.
Then there are the people for whom a maxed out mortgage would only just cover the bottom rung prices if they could get such a mortgage, but they can't so they have to rent, perversely at a monthly price higher than the mortgage would be. They don't gain equity for their payments, which harms their financial and housing security later in life, and limits their access to other credit. They don't know what they will do at retirement when they can no longer afford the rent, which is currently 50% of their income.
Then there are a few people who can afford the not-bottom prices. These people mostly already have a home, and are a minority.
For the first two groups, renting is their only option, and renting in some countries sucks for many reasons. Insecurity, no location stability (random evictions are common and new options limited), no equity, regular home inspections, often not even allowed to decorate, no home improvements (solar, windows, kitchen etc).
Treat it as "have (access to)", because that's obviously what was meant.
I think it's not really about not enough money, because if everyone at the bottom had more money, prices at the bottom would increase to compensate, ensuring it stays just out of reach for many, and just at the edge of achievable for others.
I'm not against injections of money, I think it's a good idea. But I don't expect it would solve the housing affordability problem, unfortunately.
I'd be tackling housing prices. I think wages (in AU, at least) already render many small businesses unviable.
Historically in Australia, it's seemed like houses have doubled in price every 10 years. More recently, it's seemed like every 5 years. A house I bought 10 years ago would now be 2.5* that as land value alone. A building I bought has apparently doubled in value in five years.
The government has absolutely no desire to do that. Their voter base is predominantly home owners who think of their house as an asset that should only go up in value.
I agree. Also, High streets don't have to 'die' due to excessive rent either, the government could hike taxes on vacant stores 1000% then make possession orders on unpaid premises after 18 months. Then the gov can nationalise shop rents according to reasonable incomes.
How does that tax not just passed onto the occupant? When I was renting I was basically paying all my landlords costs for the property + profit on top. If there’s not enough units available or if the landlord class acts as a cartel in pricing then every cost is going to the occupant
The tax incidence depends on the elasticities of demand and supply. Since the supply of land is, for practical purposes, perfectly inelastic, land value tax cannot be effectively passed onto the tenant.
I'd love for council tax to be scrapped, but I'd prefer it to be replaced by a risen in income tax, with money dished out by Central government to local councils.
Inflation will make any increase in wages meaningless. It will also further drive investment into housing to escape the free falling cash.
The answer is no lockdowns, no bailouts, and no quantitative money printing to oblivion.
Let the everything bubble pop and start over with sound first principles. We will get there, but not before politicians make it worse and delay the inevitable defaults.
- Boris Johnson (the British Prime Minister) sold his London family home in 2019 for £3.75M after having rented it out for £2000/week (just under 4x the national average income) while living in his Government provided accommodation in his role as Foreign Secretary (2016-2018).[0]
- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales.
- A few days ago the Government raised National Insurance (which is an income tax) on all workers to pay for social care while protecting property wealth with a contribution cap.
Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow.
I'm in the top 2% of earners by income in the UK and I'm still completely priced out of wrt to buying a modest family home (or flat) a humane, commutable distance of central London. Price/Income ratios are too high even for me because I'm competing with my peers. It's a supply problem, and a problem of foreign investment and bad incentive schemes.
There is housing available within commuting distance - I bought a 2 bedroom flat walking distance from a station with a 35 minute link to Kings Cross for under 200k. People seem to think they have some sort of God-given right to live in central London. If you want to buy a property you may need to make some sacrifices in that department. Yes the town I live in is pretty shite, and I have to train to work or to see friends on the weekend but I own my home.
Define 'commutable distance', because to me that means 30-40 minutes door to door.
Hitchin is 33 minutes to Kings Cross on Thameslink and I could definitely do my commute from Hitchin station in ~50 minutes, which is roughly 10 minutes more than it takes me from Zone 3, door to door, now.
If you look around on RightMove, 2 bed flats going near Hitchin station (Purwell) are ~£335K and a 20 minute walk away, so my commute would be up to 70 minutes.
Then factor in that you're dropping £5K/year for a season ticket (roughly the equivalent to adding ~£100K to your mortgage at current interest rates), giving up a lot socially, still don't have a garden, still have a pokey little flat, is it worth it?
I respect your life choices, but it's not for me.
> People seem to think they have some sort of God-given right to live in central London.
I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible.
In any case, I don't want to get too personal. My partner works all over London also so being in London makes sense for us. I also respect that this is a nationwide issue affecting a lot of people worse off than me.
>I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible.
Ok but if you're barely in the top 2% that would sound like you'd afford the worst in London - is it the worst you're going for or are you expecting to be the quality of what you'd get other places?
Obviously I don't know if you're barely or not, just since you said top 2% and not top 1% it might be you are just at the edge.
>I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top ...
If they are all in the top, then you are in the bottom 11% of londoners.
We’re talking about where all the people who work at costa and pret live more than the top 2% earners. I guess they all need to commute in from the outskirts to make the rich people’s coffee.
Luton? I think some parts of London are more reachable from affordable places than others and that requirements do change when you have a family (more space and you may not need the best school but you don't want a terrible one). We live further up the Thameslink line and we get a lot of people moving here from London after having children, but it is a long commute.
I lived in Luton for a year and commuted in to London. Yes, it is certainly more affordable; but only because the NHS covers the cost of dealing with your stab wounds.
For non-UK people: yes of course I'm joking, however Luton is the home of both a large immigrant population and the "English Defence League", the closest thing we have to the KKK.
> Yes only the elite, who speculate prices beyond the reach of normies, should be allowed to live where they want.
It is not even a case of living where you want to, nor is it a case of supporting a particular lifestyle. It is a question of quality of life. If your commute is 30 minutes door-to-door, you are losing an hour a day. That hour could be better put to use to improving your skills, working paid hours, taking care of your personal well-being, or leisure. It is also worth noting that most people measure commute time as time in transit with a private vehicle, this incurs additional costs (meaning working additional hours) and the only way to get around it involves a significant tradeoff for time.
There are many people who do not want to live an elitist lifestyle and would be happy to live somewhere other than where the elites live. What they don't want to endure is a quantitative and qualitative diminishing in their quality of life.
>- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales.
Something that is hard to understand is how taxes influence the price of homes and land. People have a fixed budget. The rule of thumb is that they will spend at most 30% of their income on housing. Popular cities usually have an inrush of educated people getting high paying jobs. The existing residents see their % rise beyond 30% as a result but the rule of thumb still applies.
When you have a fixed budget then adding more taxes won't lead to spending more, it means the government siphons money off the purchase of the home. That money cannot be used to purchase homes. When people talk about how taxes make housing expensive they are dead wrong.
Taxation does not change your budget. When the government drops taxes on housing what happens is that a bigger chunk of the budget is being used for actually purchasing housing rather than paying taxes. This means house prices will rise and you will not be better or worse off than before. However, the rise in home prices fuels speculation. People buy houses expecting that they go up. The reduction in taxes created a gap and speculators simply insert themselves in that gap and take their profits.
The problem isn't the speculation in itself but rather the expectation that housing will always go up. It's not only investors that want to make money. Homeowners see an opportunity to create a big gap by voting for restrictive zoning or making new construction a legal minefield. The real problems begin when even grandma and her dog are speculating.
If property taxes were raised to 100% annually of the cost of the home, the price of the house would instantly drop to somewhere near the annual rent cost. "Buying" the house would end up being close to a security deposit. It goes without saying though, that 100% annually is not a good number. It would disincentivize building, which is something we really need right now.
The right number is a Land Value Tax such that the cost of the property equals the cost of the building. So if you have two properties, one in downtown SF, and one in the middle of Montana, and each are the exact same house, but the Montana house sells for $200k and the SF house sells for $1M, really it's the land in SF selling for $800k. So that SF market price should move to $200k. To do so we need to tax the property at increasing rates(per sqft of land) until they match. When we tax enough, the new price will reach its improvement value.
In the short term this will have devastating effects on the Net Worth of individuals who took out loans or otherwise bet their income on owning a home, so I advocate for a one time tax break(that for exceptional cases like the elderly would be transferable for straight cash upon sale of the property) equivalent to the drop in market value of the home. So in the SF case, they would get a $800k tax credit.
Once this system is in place being a NIMBY will no longer be a profitable stance, and will instead cost that area money in taxes. As it will no longer be a perverse incentive, the population will mostly switch to becoming YIMBY's, and advocate for better Zoning rules and to ease up on silly restrictions. The tax money can be spent on high value improvements to the area that will boost everyone's quality of life, and if none are found, can be simply given back equally to all.
Once this system in place and the tax credits have been used up, we can even go further and get rid of income taxes, sales taxes, corporate taxes, and capital gains taxes. The value of the land tax will be enough to replace all of them. All from a tax that because land is at a fixed supply, is completely non-distortionary and results in no dead weight loss.
Housing can either be an investment or affordable long-term, it can not be both.
> Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow.
It's a bad mad, especially considering how much the Tories have relied on there being homeowners. Their whole thing is that that group is the sensible middle, who work for a living, but also appreciate that suppliers of capital have limits.
Odder still to not protect flat owners with cladding (I'm not one, FWIW). Higher-density housing is happening, and you've just told your next cohort of supporters to a) never invest in this asset class, we will render it worthless, b) never vote for us either, even as homeowners we won't support you.
The answer is to control the housing market and stop it being used an investment against inflation. Force people to invest in industry against inflation - not rent-seeking in housing, or cryptocurrency pyramid schemes.
Only allow resident citizens to own the one property they live in, and have the government handle rentals like the old council housing / Folkhemmet homes.
I met a Cuban a few years back that said the same. His parents worked their butts off and owned two homes. They got divorced to keep them both, but they were never separated only legally.
I think the political will here is kind of weak...the voters who own housing dont want their asset to decrease in value and wont vote for politicians who want to force investment into industry, versus the renters who do.
If some combination of pensions/social security allowed people to live a comfortable, safe retirement with some guarantee of food, shelter, and medical care, then they'd be less worried about the one asset they own worth more than five figures.
Probably not in the UK, as the house-owning population are much older and tend to vote Conservative (the current governing party).
Young people are already screwed, and unless they all show up to vote in marginal constituences (unlikely) then they'll continue to get screwed, unfortunately.
> Only allow resident citizens to own the one property they live in, and have the government handle rentals like the old council housing / Folkhemmet homes.
How can you say you "own" something if you're not allowed to sell or rent it to anyone you want?
Step 2 just isn't happening, at nowhere near the levels necessary.
Instead people are investing in housing as a "store of value" against inflation, maybe not even renting it out and just hoping it appreciates. This is driving prices sky-high.
Meanwhile local politicians and boomers support NIMBYism and oppose all housing developments, leading to a massive shortage in housing. Landlords love this as it increases the value of their properties, and developers don't care as they can sell the fewer houses they build for greater profit.
Whilst at the same time national leaders support mass immigration leading to a huge increase in demand.
Overall this rewards property owners and hurts working people and the economy (when people can't easily move to economically active areas, and have less disposable income). Ultimately harming social mobility and destroying faith in capitalism and private property as a whole (it becomes to resemble feudalism, destroying the idea that you can work hard and have a good life).
I am a landlord, I specifically bought a property that is zoned for more units so I can build more housing when I have money again in the future. My dad is a landlord, he is actively building. More units mean more money. You can support a larger population. As a former renter I want more units too. I hated paying 38k / year for a mediocre apartment in SF Bay.
>Meanwhile local politicians and boomers support NIMBYism and oppose all housing developments
This is 100% the issue. Build more housing. Allow smaller units and efficiencies for lower income residents. Get rid of some of the bureaucracy around building, so much of it is just implicit NIMBYism.
> Meanwhile local politicians and boomers support NIMBYism and oppose all housing developments
This is the problem - artificially constrained supply. Fix this and the lower prices will follow. Fix other things and you’ll just create further distortions and frustrations later on
Making more houses won't solve the problem - there will just be more houses to rent out at vastly inflated prices.
Renting houses simply shouldn't be such a profitable endeavor. There have been stories posted where hotels snap up apartment units for AirBNB because those make more money than hotel rooms. That should never be the case.
In the world of 20 years ago, I would agree with you. Renting simply wasn't profitable enough to be a problem back then.
However, in today's world where AirBNB is unbelievably profitable, more houses than ever can be put up for rent at extreme prices. It heavily restricts the housing supply in a way that wasn't possible before AirBNB came around.
AirBnB does throw a spanner in the works of the rental market.
But I don’t think there’s either an infinite pool of AirBnB demand or that every landlord is willing to put up with running an AirBnB regardless of profit (doing AirBnB is more a business than a passive investment).
Maybe limiting AirBnB in residential zones will contribute to the solution, but neither limiting the capital flow into housing nor limiting the number of new units built will ever work.
> The answer is to control the housing market and stop it being used an investment against inflation. Force people to invest in industry against inflation - not rent-seeking in housing
This.
Every boomer thinks he's a genius investor for simply blocking all residential development and looking at the price of his house go up. The government knows it and wants to keep the votes coming in so they prop up real estate as much as they can. Notice the same parties will simultaneously try to push some sort of virtue signaling (pro-diversity or whatever) to the younger demographics at the same time. They can't afford to pander to them via housing policy so they have to find something else...
This isn't creating any kind of value, nor innovation. Apple, Google and Facebook, like it or not, created a tremendous amount of wealth for the country. Housing didn't.
Agreed. 20 years of lower and lower interest rates, meaning higher and higher mortgage amounts have driven up prices into oblivion. Either these prices are inflated away or there is a collapse. There's not much else you can, UK housing market is so far from market reality that it's a joke.
And ironically the more you create policies like lower deposit amounts for younger people, or subsidised mortgage payments, the more you drive up house prices making these policies hurt the next generation of young people more.
Perfect example of government intervention making things worse creating more government intervention etc etc
>Agreed. 20 years of lower and lower interest rates, meaning higher and higher mortgage amounts have driven up prices into oblivion.
The falling of interest is purely market driven. There is no government intervention there. Interest rates have been falling for a long time, far longer than 20 years and the reason is pretty simple. There are people out there who do not spend their money. The interest rate simply moderates between saving and investment. If saving is going up relative to investment then the interest rate must drop.
You say higher and higher mortgage amounts have driven up prices but if you spend $360k what is wrong with getting a $360k house out of it in the end? What's so good about paying interest?
> The interest rate simply moderates between saving and investment.
For businesses perhaps, but this doesn't happen much at the personal level. Most people will save in cash, rather than invest, even if interest rates are zero or negative. Most people are risk adverse.
> While the annual ISA tally showed high levels of saving, most of the money went into cash ISAs, which offer low rates of interest and could leave savers vulnerable to rising inflation.
> Some 300,000 new subscriptions went to stocks and shares ISAs, compared with 1.2M new subscriptions for cash accounts.
So that's only ~20% of savers investing in to stocks in the most tax efficient way possible in the UK, even when the Bank of England base rate is at 0.1%
Depends on what you mean by "government intervention".
The phrase is usually used to stop people fixing problems like this, which are the kind of collective action problem that only government action can solve.
The government intervention you mention is actually just the voters with property using their vote to protect their wealth. And that worked exactly as intended.
That sounds a lot like if we just do what we have been doing for the last couple hundred years it will all work out. But we have a couple hundred years of evidence of who it works out for and who it does not.
Standards of living have increased the most at the bottom of society.
- Labourers used to work seven days a week (12 hour days), then six, now five times eight is standard, with some exceptions.
- Workplace safety have gone from a laughable concept to the first priority.
- 100% of Western populations can read and write. This used to be a rich-person thing
- How many poor kids have you seen lately with their faces covered in coal dust from the mines?
- There are thousands of other examples. Poor people today live longer and better in many important ways than rich people even a hundred years ago, never mind a "couple hundred years."
> Standards of living have increased the most at the bottom of society.
Ah yes, conflating 150 years of history like the 60's and the 2010's were comparable in a stable stream of progress.
Remember even further, when we were forced to dress in animal furs and sleep in grottos? How amazing progress we made since then... I wonder why the serfs are complaining.
Tried to do what? You claimed workplace safety was the absolute first priority when we have reams of evidence of Amazon not thinking so and they’re at least trying to do business in the US unlike Apple and others who simply move their human rights abuses offshore.
This sort of comment will get you banned on HN, regardless of how wrong someone else is or you feel they are. If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here (all of them—you must have broken at least half a dozen here), we'd appreciate it.
It's why I'm contemplating moving from the South West to the North East. I work remotely, so it doesn't matter much where I am. Rental costs in the North East are dramatically lower than where I am now (a location that attracts Londoners wanting a place in the country, significantly increasing house prices).
I did exactly that this year - went from £1050/mo for a 2-bedroom flat in the south to £375/mo for a 2-bedroom house with a back yard, in the North East.
You can get anything you need delivered these days, including groceries, and I’m within walking distance of a train station if I need to head to an airport or go anywhere bigger.
I was looking at rental prices in County Durham and Northumberland, largely because that's where I lived when I was a young kid. My partner was initially convinced they were some sort of scam because houses are so much cheaper than we are paying down south. We could rent a three-bedroom detached with a decent chunk of land for less than we pay now for a two-bedroom end terrace with no garden.
Oh the house prices. I’ve gone from looking at £250+K houses and thinking I’ll never be able to afford one on my own to “I’m buying a house in the next 12 months”. £5K deposit (not even joking), a 3 year mortgage (which will end up costing about the same as my rent down south) and I’ll be set.
I looked at Durham as well, and when it comes to buying, if I spot a good one there, that’s where I’ll go for sure.
The town I live in is nice, quiet, the people are super friendly, there’s literally no downside if you’re a remote worker.
These places aren’t a scam, they just don’t have high paying jobs available, but that isn’t a problem if you come with your own job.
Even if your next job requires you to move somewhere else, you’ll still have had 12-24 months (or however long) of cheap living, and you get to save all that money.
For me at least, between rent, bills, and not having access to the same expensive habits as in a big city (Uber Eats and ease of going out), means that this year I stand to save about £20K compared to the previous year. Even if it was just rent+council tax I’d still be saving about £10K.
That makes a huge difference, especially when the move itself was only about £2K (moving company and a few other bits). Even if I had to move again next year I’d still be coming out ahead.
Obviously it’s not for everyone but the savings are too big to dismiss something like this, in my opinion.
This is way too much. We just finished paying off our current house and our payment was around 14% of our net. We are high earners in a low CoL area so the house is really nice, but wasn't very expensive. I can't imagine being "house poor" after this.
Access to cheap loans is partly what's driving the prices up. I think a better solution would be to enact legislation that penalizes the use of residential real estate for capital gains or profit in general, including serial landlords and AirBnBs.
If you permanently reduce immigration, including deporting unauthorised migrants, you can achieve both of those things.
Given the cost of land and building, we should consider Western nations 'full' and only allow immigration 'swaps' from other highly developed countries.
1.) You cannot have a nation of college degree high skilled workers. At least until robots and AI are widespread. Being rich is a lot less fun when you cannot spend it anywhere, because none of those places have a staff.
2.) Since people aren't having kids, and we love to saddle the future with liabilities, someone has to fill that void.
All the hot shot AI inventory management software in the world is useless without grunts actually executing it's guidance on the ground.
2) Fertility is heavily influenced by the availability of housing. Without immigration, house prices will fall and wages will rise, providing a boost to fertility until the population equalises.
With mass immigration you shortcut that, and simply end up replacing the original population, probably with negative overall effects if the incoming population is not genetically (average IQ, predisposition to violence) or culturally (respect for women etc.) aligned.
You do realize intra-country migration has the same effect right? In the US, the majority of counties are losing population, because people are moving to cities.
You're advocating for internal passports and residency permits:
You'll be downvoted, but it would be interesting to set a quota based on how attractive other countries are. IE, the UK can only allow in 2X the number of immigrants from country Y if country Y allowed in 1X immigrant in the past year.
Until they raise their wages, which is the entire point. Wages have been kept artificially low in the west because of migration for decades and it’s coming to a head.
No place on Earth is remotely close to being "full", and the economy isn't a zero sum game. Migrants aren't different from newborns (and simply people in general) in the way they don't "take away" some fixed pie of jobs and homes, they're how new jobs become needed and new homes get built (cf. https://en.wikipedia.org/wiki/Lump_of_labour_fallacy).
When a few companies or industries can’t find enough labor, the solution is simple: Raise wages to attract a larger percentage of the labor pool.
When every company and industry is struggling to hire, raising wages is still necessary but it no longer fixes the bigger problem. Those higher wages aren’t producing more labor, they’re just convincing employees with jobs to switch to other jobs. Switching jobs creates a vacancy in the old position. One job opening filled, one job opening created. Net zero.
The pandemic shook a lot of people out of the labor market. Everything from people who were on the verge of retirement anyway to people who were forced to stay home with the kids because schools and daycares were closed. Until labor market participation returns to pre-pandemic levels, the labor shortages will continue.
Employees win in the short term as companies have no choice but to raise wages to fill positions. The flip side is that inflation will certainly follow as rising wages give people more money to spend (demand up) while labor shortages drive supply down. Demand up, supply down means prices go up.
Which ironically could be the impetus that gives people who left the labor market no choice but to return to work: When everything is getting more expensive, people may have no choice but to return to the labor market to earn enough to support their families. It’s going to be interesting to see this settle.
It isn't net zero people can join and leave the labor participation pool, which has been decreasing for awhile now[0]. Higher wages could convince people to join the labor market.
Many companies don't have sufficient margins to raise wages. Hopefully this isn't confused as me endorsing subpar wages, simply that those business can't be sustained or will just endlessly be looking for someone willing to work for cheap because hiring someone for more will actually cost them money. They may be better of turning away some customers vs. hiring someone for a higher wage to support more demand.
Many of the businesses pleading poverty have execs making millions a year - funny how there is never any issue awarding huge bonuses for the top brass, but the cupboard is always bare for employees.
Seriously if we stopped letting a dew parasites at the top leech all the money out of businesses we wouldn't have this problem. We have entire C Suites getting overpaid while the people who do the actual work can't even afford to live where they work.
> Many companies don't have sufficient margins to raise wages.
Not too sure how you came to that conclusion. Profit margins for many companies in the UK seem to have actually gone up [1]. You probably assume that companies are subject to perfect competition. That might be true for small businesses but is not really the case for large firms [2]. Some large firms practically are the market and can get away with employing few people for low wages. It's similar to a monopoly that is incentivised to sell few goods at high prices.
One effect of inflation is to reshuffle the economy toward bigger, higher-margin firms. The companies without sufficient margins to raise wages will simply go bankrupt. This reduces competition in their industry, which gives surviving firms more power to raise prices and pay those higher wages.
Higher wages also serves the purpose of allocating scarce labor to the most valuable businesses. Low value businesses will go out of business leaving the workers for the higher value businesses.
Labor shortages don’t necessarily drive supply down — this is going to lead to a boom in automation. Those automated jobs aren’t coming back. We need to phase in a UBI even if it $1 a month for now.
It’s also a unwillingness to train or risk anything but a perfect fit resume. Imho it might take a little investment but employees you train into what you want are usually a win win for the employee and the business on multiple counts.
Firstly these vacancies cover all jobs. Including seasonal Jobs which were traditionally filled by EU workers. Lots of farms struggling to hire this year. There are also lots of part time roles to fill in around furloughed workers.
In a broader sense, jobs need to be in the same places as the people. The UK housing market is such that moving (even to rent) is very slow and expensive. Commuting in both overcrowded and extortionately expensive. If we want poor people to work in our overpriced cities, we have to subsidise comfortable and fast public transport.
Two hours of childcare for one child costs one hour of minimum wage work. Families with more than one child literally can't afford to work. It's also hard to find childcare! More employers could get involved here but it would be more efficient to make 1yo+ childcare free for 30 hours, means assessed.
So yes, higher pay helps, but there are many things that block people from returning to work.
Not just base rate pay but, also, the motivation to do a low-skilled job isn't just to earn enough money to survive but also to improve one's life over the long term.
It used to be the case you could do a labouring job where there would be regular overtime, often paid at a premium. I had one such job many years ago and could double my regular pay by working a few extra hours each day. Then employers realised instead of paying premium overtime rates they could just hire another person at basic rate.
Not sure what the situation is now but back then it became normal for jobs to advertised at 16 hours a week. In effect, these employers were employing 3 or 4 people where they would previously employ one and they could do this because 16 hours turned out to be the optimum amount someone receiving benefits could work and receive a top-up to get a survivable amount of money each month.
I have a neighbor who is quite happy with what the government pays him while he's not working. I'm sure he could be motivated to work by offering larger salaries, but they'd have to be raised by at least 100% to convince him to go from 0 hours/week to 40 hours/week.
I'm not sure there are 3.277 million people without work who want it.
I'm in Germany, but it's a similar amount (+ rent, internet, utilities, health insurance etc). He has the basics like a cell phone, flat screen and playstation and seems to be content with it.
There will always be people willing to accept the bare minimum. That doesn't have anything to do with the fact that those who do work are still in poverty, with no way out.
Also many have never had a single vacation in their lives. Some just needed the break.
Oh definitely, you can be working and still be poor, but that's a separate issue. I was pointing out that the number of people on unemployment benefits isn't the number of those seeking work, so there's no problem having 3m people vs 1m open jobs that don't get filled. It's an inconvenient truth to many, but it's still the truth.
Getting them back to work would be a great improvement. But I don't think we can make low-skill jobs magically double in value, so there's probably no way, and we'll keep an underclass who are effectively getting UBI and don't contribute.
Yea it's a mess to be sure. Our society is so dirty even if we have UBI rents will magically jump to whatever it is, I'm sure.
It feels like we are all on the Titanic, we see the iceberg coming, but half of us want to steer to avoid it, and half of us want to pretend it isn't there.
But if someone doesn't do something we are all going to sink.
What are these jobs?
Human health and hospitality?
Then they go on and list fruit pickers? And retail stores hiring staff for the Xmas onset?
Are they kidding? These are temporary jobs, probably not previously posted as done underhanded, but now there's no fruit pickers for cheap and they seek more official channels.
And drivers, yes obviously drivers to deliver the aforementioned goods.
Covid, Brexit, good luck finding the fruit pickers.
This is not an economic recovery, this is harvest and Xmas time, nothing fundamental has changed.
As for the housing prices, indeed, as you would say in England, in "the north" , you get double the house for half the price, and even better quality. It's not London though, and there's not too many jobs.
I believe the vacancies are mostly bar staff, carers, farm labour and haulage.
There are a bunch of delusional pub landlords in my city who complain about the lack of staff and claim stuff like "today's youth are entitled and lazy" - but apparently failed to notice local supermarkets literally pay more with fewer hours.
"We advertised locally for 70 fruit-pickers and we had nine applications. On follow-up, only one was still available... in terms of recruiting locally, we failed completely," says Ali Capper, the owner of Stocks Farm in Suckley and chair of British Apples and Pears.
At her orchard, harvest has just started. It must be done quickly and requires many pairs of hands.
Ali had to turn to specialist recruitment firms and has brought in seasonal workers from Poland, Romania, Bulgaria and Russia.
What's a reasonable prediction here? Higher wages and more expensive fruits? A bunch of farms going bust?
I love how all the elite arguments that immigration doesn't reduce wages (which the working class always thought were complete bullshit) were proved to be complete bullshit during the pandemic-related border closures.
Of course, the discussion about what to do about that remains - open borders & keep wages low, or close borders & raise local wages, or close borders & keep wages low & invest in automation - but it's nice to have the discussion honestly, without gaslighting the opposition.
Pretty big red flag was why so many multinational corporations are pro open borders. Corporations rarely take a stance on political issues unless they have a reason to do so.
In the US there is a particularly pro big business conservative wing of the right that is hyper in favor of unlimited low skill immigration. It's totally at odds with the mainstream conservative position on immigration. So why do they hold that position? It's not out of the kindness of their gentle pro-immigration conservative hearts of course. It's because they want the cheap labor to feed to big business and it helps to suppress wages for all the rest of their workers.
If you go back just 15-20 years ago, the Democrats universally understood this fact of labor supply/demand. Large amounts of low skill labor hurt their middle class and lower class labor voters, hurt their wages. And the Democrats used to be against such vast low skill immigration, because they had a large labor vote to protect. You can see this in action by looking at speeches from decades past (including by still prominent Democrats like Bernie Sanders). Their position now? Crickets. They've gone radio silent on the matter vs a few decades ago. That specific labor vote is no longer what they view to be the future, how they are plotting political dominance for the next 50 years.
The more you think about it the worse it gets. It's one thing to be in favor of immigration, it's another thing entirely to be in favor of illegal immigration. The Tyson Chickens of the world love illegal immigrants, they don't file workers comp claims or take you to court if you fail to pay them. Supporting illegal immigration is supporting the creation of a untouchable quasi-slave caste. If immigrants had the same rights, privileges and responsibilities of domestic workers, they probably wouldn't work for such a steep discount. This is why I believe many proported immigration proponents don't ever seem to manage to meaningfully open up the border, that isn't what they are going for.
That's certainly right. One of the big lies in the US today about illegal immigration is that there are 11 million illegal immigrants in the US. That has been the same number touted for most of two decades (it's still mindlessly repeated by talking heads on TV).
The real number is now closer to 22 million illegal immigrants, according to a recent Yale study [1]. Representing around 6% of all people in the US. So wait, how are all of those people surviving? They're cheap labor for the big business machine, they're an unprotected cheap labor caste as you correctly point out. They can't complain, they don't have well protected worker rights, and it can take a long time to become a citizen. It's a human rights travesty, and both the big business conservatives and the Democrats (as both are pro open borders) are morally culpable for it.
The rational approach for the US would be to remodel its immigration system as something similar to Canada, focused more on high skill labor. We need to turn off the flood of illegal immigration while simultaneously creating a reasonable citizenship pathway for the 22 million illegal immigrants that are here now (most are never leaving, so the proper thing to do is to provide a citizenship pathway), which would also begin bringing them into the tax base and protecting them as workers.
Or simply relax immigration policies to basically let migrants get work permits, they would argue for a fair wage, and we can let the market decide. From what history says, that's what the US used to be in previous centuries. People came and worked, and grew and made what the US had become before politicians decided to make it harder and harder for migrants to settle legally.
> (including by still prominent Democrats like Bernie Sanders)
Bernie only changed his tune after Trump got elected. FWIW, it's always been obvious that more immigration reduces wages for low-skill workers (and everyone I suppose, depending on the volume of immigration). I was always really confused that this was not common knowledge.
Like, Ross Perot ran against Clinton/Bush 1 on pretty much this platform, and that was in the 90's.
There’s no opposition to gaslight, the vast majority of the population believes the myth of immigration reducing wages, while there’s no evidence of it being true (you are welcome to provide some). This vast majority is not the opposition, but the force that elected the past 3-4 conservative and euro-skeptic governments that gave us the “hostile environment for foreigners”.
In the UK, EU nationals earn more than the locals, so one inclined to silly socio-economic statements should argue that locals reduce wages.
The proof is in the pudding: "we can't find local workers willing to work for these low wages so we'll import them from abroad".
A lot of EU immigrants come to London to work in tech/finance because they offer higher wages than pretty much anywhere on the continent (I was one of them). But the working class is pretty far removed from the effect of professional-class immigration.
The UK has many other structural problems so collapsing the whole Brexit discussion into one dimension is a bit of an over-simplification, though if you asked me to do the PCA, I'd say the main cause was "protest vote". (Pre-BJ governments weren't Euro-sceptic.)
> The proof is in the pudding: "we can't find local workers willing to work for these low wages so we'll import them from abroad".
Everywhere in world there are labour shortages, because we just ended lockdowns 3 months ago. In other places they are blaming the shortage on the young being lazy or on unemployment benefits, with the same scientific rigour. So I’m still waiting for a proof (not a pun or an anecdote) that immigration reduces salaries.
> A lot of EU immigrants come to London to work in tech/finance because they offer higher wages than pretty much anywhere on the continent (I was one of them).
Which means that EU nationals living in the UK earn more than the locals, so they can’t be driving salaries down. Unless you hypothesise a fantasy counterfactual where Jack deChav, who’s now an underpaid bartender, would have become a software developer and would be earning 6 digits if only Carlos de Perros, S/W developer from Malaga, didn’t steal his job.
> But the working class is pretty far removed from the effect of professional-class immigration.
Whatever the working class is in the UK, if they believe that immigration reduces salaries, they are far removed from any modern notion of truth.
> The UK has many other structural problems so collapsing the whole Brexit discussion into one dimension is a bit of an over-simplification, though if you asked me to do the PCA, I'd say the main cause was "protest vote". (Pre-BJ governments weren't Euro-sceptic.)
I’m not collapsing anything into anything. I’ve read a false statement “immigration reduces salaries” and I replied to it. Incidentally the UK has been playing with “hostile environments”, euro-skepticism and Brexit and yet real salaries are still below 2008.
>So I’m still waiting for a proof (not a pun or an anecdote) that immigration reduces salaries.
And what would that be? A study linking both while accounting for every other factor? I don't think it's even possible to do such a thing.
>Which means that EU nationals living in the UK earn more than the locals, so they can’t be driving salaries down. Unless you hypothesise a fantasy counterfactual where Jack deChav, who’s now an underpaid bartender, would have become a software developer and would be earning 6 digits if only Carlos de Perros, S/W developer from Malaga, didn’t steal his job.
There is competition even in software development, it doesn't take anyone to be a bartender for competition to cause a wage drop, moreover the reality is way more stark when you look at jobs that aren't as cushy as software development. A Spanish waiter is probably used to lower salaries and is probably more dependent on his job than an English one that has a support network in his country, his chances to unionize are also lower. We see it all the time with immigrants from low income countries.
I can imagine how immigration can lead to economic growth and salary growth as a result, but I find it impossible that the race to the bottom caused in low-income jobs is worth for them at all, if anything the economic growth is caused by this low-cost labor.
> And what would that be? A study linking both while accounting for every other factor? I don't think it's even possible to do such a thing.
What’s the point of saying something if you think that it’s impossible to prove?
> There is competition even in software development, it doesn't take anyone to be a bartender for competition to cause a wage drop, moreover the reality is way more stark when you look at jobs that aren't as cushy as software development. A Spanish waiter is probably used to lower salaries and is probably more dependent on his job than an English one that has a support network in his country, his chances to unionize are also lower. We see it all the time with immigrants from low income countries.
The number of software developers in the UK kept going up until the beginning of lockdowns, but salaries went up instead of going down. How’s that possible if more people mean lower wages?
Is there any evidence of Spanish bartenders pushing bartender salaries down?
> I can imagine how immigration can lead to economic growth and salary growth as a result, but I find it impossible that the race to the bottom caused in low-income jobs is worth for them at all, if anything the economic growth is caused by this low-cost labor.
Is there any evidence of this “race to the bottom [..] in low-income jobs”? Is there any evidence of it being caused by immigration?
Sorry, I don't agree. If the supply of labour increases without any consequent increase in demand, then one would expect to see the price of labour reduce, right?
That's what econ 101 would say, right? You're the one making the claim that it doesn't. If such a claim is self evident, then you should be able to produce some kind of reasoning as to why it is so, no?
> Sorry, I don't agree. If the supply of labour increases without any consequent increase in demand, then one would expect to see the price of labour reduce, right?
Which is only true if the foreigner in question teleports themself to their country of origin whenever they are not working. Even if they got all their food delivered from Poorland, there would be an increased demand for deliveries.
> That's what econ 101 would say, right? You're the one making the claim that it doesn't. If such a claim is self evident, then you should be able to produce some kind of reasoning as to why it is so, no?
No, unless we assume that workers don't consume anything and are perfect substitutes, if there is perfect information in the labour market, etc...
None of these assumptions holds true, so the impact of immigration on wages can't be estimated like the impact of potato overproduction on the potato market. So it becomes an empirical question, and evidence suggests that no country experienced long term wage compression because of immigration.
I meant that the vast majority of Britons (and of Westerns) believe that immigration has a negative effect on wages, which is a false credence. They haven’t all voted for the Conservative party, but the notion that these people have been gaslighted or ignored by the elite (which includes the parliament and the government) is patently absurd, given who ruled the country and what happened in the past 10 years.
> I meant that the vast majority of Britons (and of Westerns) believe that immigration has a negative effect on wages, which is a false credence.
Maybe they read Bank of England reports? [1]
> The static results suggest that the statistically significant negative effects of immigration on wages are concentrated among skilled production workers, and semi/unskilled service workers.
There's a University of Oxford study that confirms EU migration has had negligible impact on wages in the UK. The study appeared to be focused on wage decline. What I'm less convinced of, and what is much harder to measure, is what impact it has had on wages rising.
I'm pretty sure it is well known that globalization equalizes wages globally. That means they meet in the middle. Poor nations see relative wage growth and wealthy nations see relative wage decline. On average everyone is better off but it also means that those living in wealthy countries now feel extreme pressure to compete globally. For most people that simply means skilling up at college and moving to large cities to which investor money is flowing.
Globalization equalizes wages amongst people who can't lobby for protectionism. So only for the poor. If medical/drug patents and professionals were subjected to the same type of globalization that lower-leveraged workers were, inflation would run in reverse for the next 10 years. Instead, people who spend most of their income on consumption are drowning in what are really hidden tariffs and rent-seekers doing arbitrage.
This is a really good point, unfortunately I don’t think people will learn their lesson. Instead, we will complain about all the wasted food, and we will spend effort on trying to bring back this invisible servant class instead of investing in automation.
I disagree. The value of the pound plummeted as a result of Brexit. So relative wages might increase in future, but there is no guarantee that it will make workers any wealthier overall. Of course you might argue you only care about relative wealth, but then you have to worry about inflation due to rising cost of imports etc. I think it's more complicated than the simplistic picture you paint above.
For me the things that need to change in the UK are to (i) reduce the cost of access to education and (ii) reduce the cost of housing.
In the short term, sure, the domestic workers get higher wages, but in the long term it just incentivizes fruits to be imported directly from Eastern Europe instead.
On each country it really depends. For the US, low wage immigrant workers don't depress wages that much but in high skill areas immigrant workers can depress wages up to 20% last time I read a study on the matter. So it's really about what kind of work and where. Lots of engineers have felt the squeeze on immigrant labor for years but since engineers don't usually unionize they don't bark as much and thus bare the loss.
Immigration doesn't reduce the wages of those making the argument, who are usually employed in professional/managerial classes that benefit when there are lots of employees at the bottom.
This also illustrates the economically rational response to immigration, though. Be a turncoat. Move up the value chain into management (or other industries that benefit from a larger population of workers), so that you too can benefit.
It is a bit more complicated because if the wages of fruit picker decreases, the farmers may sell their fruits for a lower price. So everyone else's wage actually increases. Not the amount of £ you get at the end of the month but what you can afford with these £ (more fruits).
This same argument could be used to justify slavery. I'm quite unsympathetic to such arguments, especially when talking about the lowest classes of the society (as measured by wealth).
The meme to mock those critical of immigration (usually conservatives) is "Those dirty immigrants are taking our jerbs!"
It's a miss statement about when the crux of the issue is. It's not jobs being taken, it's wages being held low.
I worked at a warehouse that started pay at $12/hr. This was in 2016. Talking to one of the older guys, he started at $12/hr as well. In 2001. I'm sure you can guess what the worker makeup of that place looked like. There is no need to raise pay if you always have willing workers.
Usually nationalists. Conservatives love wages being lowered, and employees that can't complain without being deported. They're anti-immigration when it comes to law, but very pro-immigration when it comes to enforcement. Ideally, for them, they would have draconian immigration laws that would only begin investigations based on a tipline that only employers would have access to.
Work camps where exploited eastern europeans live in horrible conditions, their rights are violated, they get underpaid and a substantial portion of their wage goes to the agencies acting as middle men.
People would come in, live on site and be feed on site, work hard for 3 months (maybe moving sites as demand came and went) then leave and go back home.
The 3 months of hard work and bad conditions was worth it because of the buying power the wages had comparatively back home.
UK people simply wont put up with that because they have to use the wages in the UK.
The old system isn’t that much different from the new system is it? Just the agencies will get paid more for handling the legal side and logistics of importing the workers.
In fact I can see this happening across many industries, and if you are one of those people working minimum wage can only be a good thing? The import of cheap labour does push down the wages of the working class - so the middle/upper classes get to buy cheaper fruit...
I believe farmers will have to work with this new "normal", and it'll take a few years for them to figure out how to cope.
It's not like the working class doesn't have to eat. In fact, they will be hit hardest by increasing food prices.
> Indication of some degree of food insecurity was reported by 14.2% of the sample and tended to be higher amongst younger age groups, those on lower incomes, and home renters (as opposed to owners).
True - but other aspects of your running costs (electricity, gas, rent, etc) will not increase, as I don't believe they depend on cheap labour.
Interestingly (can't find the reference right now), I've read that the high cost of labour in the UK contributed to the push for mechanisation of farming, which resulted in the industrial revolution (something we have all benefited from). In China, labour costs were (are?) so low that there was no reason to invent a farming machine, when you could pay a peasant to do the job for less.
So if this runs long term, we will see further automation of farming?
Or just better distribution. It’s not hard for an Apple picker to pick a few dollars worth of apples per minute at harvest time, but that’s the supermarket price, not what the farmer can sell them off for per bushel.
I know picking isn’t the only cost, but it seems like the cost of picking doubling or trebling should have minute effect on profitability.
Farmers need to get better at capturing the price that consumers are willing to pay.
Somehow, farmers markets have become the place to pay premium prices instead of lower prices.
Or convince consumers that a bit of scab on an apple is fine to eat and doesn’t need to be destined to make sauce or juice.
Yes, "if". The problem is that companies don't move in lockstep with the broader economy, so it might take a year or two of food and goods increasing in price 12% before your company has managed to give you a 5% raise, which in turn requires them to raise the prices of their goods. And hopefully _their_ customers don't balk at the increased price because _they_ haven't yet been able to absorb their own set of wage increases.
The context of this post is that companies are having difficulty hiring and are having to increase wages. Which is what is being hypothesised to lead to price increases. Which would suggest that wage increases would come first in this instance.
Yes, but they're hesitant to do that because of the impact the wage increases (which then get passed on to consumers) will have on sales. There's this notion that companies could simply double or triple wages with a negligible impact on the bottom line or consumer prices but are just being dicks. Which is not really the case. Margins are just razor-thin. So you get in a sort of Mexican standoff situation. Who's going to blink first, raise wages, and lose sales?
If they can't find staff then the companies don't have much choice but to raise wages. They'll lose more sales if they have to close their business due to lack of staff.
A guy driving a truck might enable 10,000 burger sales in an hour. A cashier might enable 100. It's easier to raise the truck driver's wage.
Raising wages and prices can be done, of course. But if you're planning to export those goods to other countries, you've just made your products more expensive. If your goods are fungible, you may not be able to raise the price at all. Higher wages might simply make your business not viable in the context of international trade.
It will. And they will avoid at all costs to raise it, for higher interest rates will default everyone over leveraged, which is everything and everyone at this point outside of the preppers and Libertarian types which have been yelling about this for a long time now.
I don't know why they are surprised to receive not many applicants locally, as you can't support yourself in the UK on seasonal work.
The growing prosperity of other countries, may also mean you can't rely on the difference in purchasing power to attract seasonal workers from other countries.
Which leaves either investing in machinery, or perhaps marketing your job as an "experience" to those who aren't relying on the wage, but wouldn't mind some exercise outdoors.
In this case the jobs were always done by foreign seasonal workers. I dunno if Brexit has made them more expensive but I'd imagine they are less easily available.
But the funny thing is in Eastern Europe, where these workers come from and where they presumably are now, there too are record job vacancies and rising wages. So probably something to do with either the pandemic or overheating economy from the cheap money.
Much of Eastern Europe is also undergoing demographic collapse, with total fertility rates under 1.50, and unlike Western Europe they're not getting much in the way of immigrants. Even Syrian refugees etc simply pass through.
I was thinking it must be too soon to have a significant effect yet, but apparently I was wrong.
According to [https://fred.stlouisfed.org/series/LFWA64TTPLQ647N], the working age population in Poland has declined by about 10% in 10 years.
> "We advertised locally for 70 fruit-pickers and we had nine applications. On follow-up, only one was still available... in terms of recruiting locally, we failed completely," says Ali Capper, the owner of Stocks Farm in Suckley
> There are currently NO vacancies at Stocks Farm.
> Thank you to everyone who has applied for roles. Due to an amazing amount of applicants, we have been flooded with enquiries. We have closed the April jobs and will reopen for August some time in the summer.
I noticed the article never mentioned anything about pay and conditions for the advertised fruit picking jobs.
My prediction is that the government will make it easier for people to come to Britain for seasonal work. And then they'll make it easier for companies that claim they have "labour shortages", regardless of whether those companies actually tried meaningfully improving pay and conditions first.
Seasonal agricultural labour has been a problem in the UK for literally centuries, since the move away from subsistence farming and the beginning of the industrial revolution. Traditional solutions, as well as migrant labour, include benefits such as subsidised housing and a minimal off-season social safety net. Which I guess are a form of higher wages, but more directly applied.
I suspect that the mix of crops could change in the medium term, to less labour-intensive and more automation-friendly ones. Expect lurid headlines and more expensive strawberry jam.
It will be interesting to see whether the government caves to ag-industry pressure and puts in place special summer visa schemes or similar. On the one hand, the current government is fairly right-wing. On the other; they are quite interventionist, aligned with business interests, and dependent on rural votes. And most of all, media-led. I'd guess they'll respond to headlines about fruit rotting on trees with some madcap scheme.
This reminds me of David Graeber's story on how during one of the pandemics, a plague killed so many people in the UK that those who left got rich by inheriting land and by increasing wages, as there was no one to work.
In the case of UK there was a superstorm of Brexit, IR35 change, and pandemic all in one - adding to the issue for employers. But in a way, I do not see this as an issue but a chance to equalize wealth. Either they will reduce their profit and increase wages, automate or go bust.
Is it good or bad? We will see over a longer period of time...
Second part is not that simple in global economy if you have Chinese cheap labor as direct competitors especially in the food industry where margins for farmers are already too low.
I would recommend Jeremy Clarkson - "Clarkson's Farm" first year of operation on a 300 acres farm made a yearly profit of £144 :)
I think you're also discounting that Amazon probably paid him several million dollars to film that show and he also made a lot of stupid and poor decisions for the purpose of entertainment. So while a lot of his struggles are real his actual revenue number is completely unreliable. Also most farms don't start off by buying a several hundred thousand pound Lamborghini tractor and getting all of their equipment every year.
That's sad the show is great entertaining and informative so totally watch it
His series production earnings are not important in this context as the main topic is how UK farmers have lot of crops/fruits rotting on the fields as they cannot find people to work.
Was trying to say that it is not easy to be a farmer, I watched few youtube guys in america saying the similar thing, earnings are tied to subsidies and also fluctuations in crop price, and can literally mean boom or bust.
It feels to me like having 144 profit on a 300 acre farm is closer to an accounting / tax choice then true measure of profitability. Another poster mentions writing off all equipment during the first year in that calculation.
It absolutely was an accounting trick, done in the name of TV ratings. This is Jeremy Clarkson - he's a TV personality and things done on his TV shows are not to be taken seriously.
The farm had a grain business, sheep, a farm store for veg and stuff, and grants from government for re-naturing part of the property. I have no idea how Clarkson calculated the 144 profit, but I suspect there was a lot of shenanigans do arrive at that number for effect.
Edit - I'll add that I enjoyed the show. While obviously done for shock value (similar vein as as Top Gear and Grand Tour), it did a reasonable job showing how complicated and expensive running a farm can be.
That’s a lot better than most small businesses and startups where there might not be a profit at all but lots of starting and fixed expenses. Let’s see how he’s doing at year 3 and beyond.
Not sure what style of accounting shows that profit, but it's very possible to be massively cash flow negative and still earn a profit on your balance sheet.
While I wouldn't expect most startups to be cash flow positive after year 1, I would expect most businesses report a profit on their balance sheet. Maybe not tech startups where it's hard to put a dollar figure on what 2/3 of a viable application is worth, but when you're buying things like tractors and land which are easy to value you should do pretty well.
Investing in real estate and farm equipment won't hurt the balance sheet nearly as much as it hurts your checkbook
I might be wrong, but I thought he was factoring in all the equipment he bought in that first year in that calculation? So next year you wouldn't have that cost.
The labour squeeze is placing upward pressure on wages, which is pumping more money into the economy which is in turn exacerbating the labour squeeze.
Wages have been stagnant in the UK for too long. In the last decade or so certain sectors of the economy (hospitality, agriculture, nursing) have been too dependent on a vulnerable "serf class" of easily exploitable workers.
That workers have got more money to spend is a really good thing for themselves and for business.
Good question. You have to understand that "labour shortage" is code for "I cant find workers for the price that I would like".
Clearly there isn't (and can't be) and actual shortage of workers, there can only be increased competition between employers for available workers.
Its worth noting that in recent history, the times when democracies have been closest to actual labour shortages (post WWI and WWII) have in fact been correlated with economic booms.
The pool of workers available to UK companies has just been significantly and suddenly reduced. There is an actual shortage - the number of vacancies has exceeded the number of unemployed, without even taking skill into consideration.
The kind of company that can survive in an economy paying X doesn't necessarily survive if they later have to pay 120% of X.
And that doesn't have to be a bad thing either, that kind of company probably wouldn't have existed to begin with if inequality wasn't brutal nowadays.
Zero companies are going under from increasing wages for their lowest earnings workers by 20%. The places hurting most are fast food and restaurants which have very little actual payroll cost once you amortize the amount of food they serve per hour. Increasing wages from $15/hr to (an absurd example) $50/hr at a mcdonald's here would cost less than 35c per customer assuming they serve at least 100 customers per hour (easily more in peak time).
The cost increase over the last 10y at every fast food place and restaurant near me has vastly exceeded 35 cents. Wage increases are inevitable and stagnation is only sustainable until normal people are priced out of living entirely and decide to flip the table.
They can easily afford it. If you dig into any of these companies finances you will see that payroll is generally less than 20% of their overall costs. In my area most workers are flocking to warehouse work as a major american retailer has bumped their starting wage to $25.50/hr plus benefits and is literally hiring people without any sort of phone screen or face to face interview. You will out a web form and get a start date by email.
I am curious when the UK will be less strict with worker visas again for European workers after Brexit. It seems the UK has way more economic issues during this phase of the pandemic than mainland EU. On the mainland there are no empty supermarkets, or farms not being able to harvest because of labour shortages. So it seems to be a Brexit issue. But if they allow more European workers again, what was then the point of Brexit? I would hate to be in the shoes of Boris Johnson.
> It seems the UK has way more economic issues during this phase of the pandemic than mainland EU.
Tangentially related to this, I have heard little mention about how the timing of the pandemic may have been an absolute godsend and a lifesaver for the current British government. The consequences of COVID-19 lockdowns and travel restrictions on the international economy and world trade have made it the perfect scapegoat to blame for the impact of no-deal Brexit.
I don't think they can. Anything related to the EU is toxic within the current government, including relaxing immigration from Europe. Nothing will change unless we get a new government.
If you fancy annoying people go to a UK subreddit and claim Brexit was about workers rights, workers compensation and was humanitarian issue to help those most in need.
Not sure how /uk works, but /Canada is basically made up of people whose own metro/regional/provincial subreddits don’t have a critical mass, which basically makes it representative of low-population density areas in low-population density provinces.
I guess on the one hand businesses aren't paying enough. But I mean, business owners aren't all just evil conspiring anti-labor types. They're in it for the profits and would pay more if they could eek out a reasonable return on investment. On a deeper level, you have all these zombie-businesses now supported by government handouts and terribly low interest rates. The zombie businesses soak up labor for relatively less-productive pursuits.
Zombie businesses required to pay more for labour go bust.
Raising the cost of labour is a far more reliable way of eliminating zombies than attempting to raise interest costs. No business can operate without labour.
> Zombie businesses required to pay more for labour go bust.
They may survive for a long period of time in a perma low interest rate environment where debt has become cheap and stocks are highly inflated. Low interest rates, as well as enabling debt accumulation, also float the stock market, which provides shareholder dilution-based funding to businesses that otherwise would have far more severe problems.
Uber is an ongoing example of that. Previously they abused venture capitalist institutional money to get by, now they're living as a parasite on shareholders (who are hoping that something changes about the financials in their business, some day, some how).
Tech hasn't had a good 'ol brush fire clean out of garbage in a long time now.
Companies like Snowflake that are bleeding enormous sums of money, would collapse in a traditional 1990-1991 or 2001-2002 style recession. Snowflake is similar to any number of supposedly fast growing, huge loss-making companies like Exodus Communications from the dotcom era, that imploded when the music stopped (and so many of their business clients pulled back on spending). Snowflake's sales over the last four quarters: $851 million, their operating loss over that time: $775 million. They would instantly shatter if a real recession hit, the stock would drop by 95% rapidly. There is a lot of that garbage floating around the tech space these days, because we haven't had any good clearing fires in a long, long time.
I agree with the sentiment of lofty multiples, but what do you think happens to good product companies in that scenario? Sure their stock tumbles quite a bit but would it actually affect the business itself?
I heard the dot com bubble "garbage" was full of companies with no revenue, no customers, etc. I'm not sure many of the high growth tech companies burning $$s are cut from the same cloth though as they really do have products and customers in the present; it's just that the market expects an insane number of new services/customers in the near future...
For example, I'm guessing customers can't just cut off Snowflake easily (time wise and effort wise) so the cashflow would remain stable for a while. As long as they don't need to do a secondary offering (and have some cash), wouldn't they be able to weather a storm? Perhaps at the cost of some massive layoffs/refinancing but would still prevent an actual collapse?
Keep in mind the minimum wage also varies by state. The state minimum wages overrule the federal minimum wage when eclipsed (so if the federal rate is $7.25, and Maryland state is $12, then you have to pay $12 as a business in Maryland). It's probably ideal that the minimum wage is state based, with a lower baseline provided by the federal, given the extreme variance in prosperity and income levels between the states.
It'd be like Germany and Greece or Lithuania having the same minimum wage, if you had Massachusetts or Connecticut with the same minimum wage as West Virginia or Arkansas (two of the poorest states).
GDP per capita (loose reference for income potential) in New York state is $90,000 per year ($87k in Massachusetts). It's $40k to $45k in Mississippi / Arkansas / West Virginia by comparison.
So for reference that $90k New York figure is higher than Norway and comparable to Switzerland. And the Mississippi figure is a bit above Italy. Base wages just can't rationally be the same in Italy and Switzerland for common service jobs.
Almost nobody earns the federal minimum wage in the US. It doesn't matter very much at the present rate and could be easily, safely raised with minimum labor disruption. The federal minimum wage hasn't been relevant for 15-20 years, because the market left it behind.
To push the lower tier wages higher, the US would need to set the federal minimum wage up near $15 these days. That's the floor that Amazon (via their fulfillment centers) has placed on the labor market as they compete to fill their huge need for labor, pulling it away from companies like Walmart. You can now earn $15 working at Walmart, Target, Amazon, grocery stores and a lot of convenience stores or similar type service businesses with essentially zero labor skill or experience.
The tipped jobs minimum wage is a bit odd in that its not the actual minimum wage, its more of the minimum amount a business can pay an employee that otherwise earns at least the traditional minimum wage via tips. So if you're not pulling in enough tips to meet the federal or state minimum wage, the business has to make up that shortfall.
Thinking about it, this also disproves the common refrain by business owners of "we can't raise wages, or we'd have to raise prices, and people wouldn't pay them".
Aside from the fact that prices wouldn't need to go up that much, as wages are only part of running costs, people are already paying more than the sticker price by paying in tips.
There are quite a few cafes and restaurants near us that have closed or reduced their opening hours. Our nearest farm shop has removed what used to be a thriving cafe.
I get the impression a lot of these service businesses just won't be viable in a higher wage economy.
Good. Wages must be forced up. You can’t have a modern economy without a capitalized middle class.
Real estate is so ludicrous we need quite a bit of inflation to make it reasonable again. The alternative would be a deflationary crash where real estate crashes and obliterates everyone’s home equity, but that is far more painful to virtually everyone.
If these days a house listed for x gets offers at x+10%, after average wages increase it will receive offers at x+20%. Is there any historical precedent of house prices not rising faster than inflation, absent external factors?
I think a major correction of house prices can happen in two ways:
- economic catastrophe (everyone's unemployed) / war / natural disaster / ... - we wouldn't want to buy a house anyway in that case;
- major increase of interest rates or minimum deposit required - we wouldn't be able to afford the mortgage in that case.
If existing owners are allowed to build how they want, it would actually make their portfolio shoot up. Fewer restrictions on property use makes property values rise, obviously and trivially.
They won't in major cities which are all basically real estate cartels, which is why I am bearish on major cities as anything other than office parks for rich people and young professionals without families.
Most other things like art, actual innovation, and child rearing are going to migrate to medium sized cities, towns, and the countryside for basic economic reasons. It's already slowly happening.
You're basically describing the norm in the US from post-WWII until about 20 years ago. Many large cities that many think of as desirable elite cities today (with real estate prices to match) were losing population into the 1990s.
The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
> The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
Especially since it already was a reversal. The white return-flight was driven by suburban and small-town white kids growing up in boring sterile sundown towns (and paying a premium to live in them.) In the city, if you were willing to put up with crime, substandard housing, and living within a mile of a brown face, you would also be exposed to the cultures of those brown faces, and the creativity of people whose rent was low enough that they had time to follow dreams.
Of course, when they (and their employers) moved back, they accidentally recreated their mallworld hellscapes as all the brown/interesting people were forced out and to the margins. Living in their circumscribed neighborhoods is now even more expensive than the suburbs they fled. Now the only benefit is that the city-suburb they live in is somewhat walkable and they may not need a car, but they're now living very close to the poors that their grandparents moved to sundown towns to avoid, there are panhandlers and shit in the streets, and armed kids make expeditions into their neighborhoods to hunt them.
edit: It's only rational to get bored by this and go back home. Especially if you've gotten married, had the dog for two years, and now you've gotten pregnant. Especially with the internet and television taking up so much cultural space now. They work everywhere.
I already see it reversing among everyone but those in high income industries. I'm seeing a ton of artists settling in small towns these days. The cost of living is low, allowing you to live on things like Patreon and Etsy and make your art.
This kind of radical decentralization is something the original boosters of the Internet in the 90s predicted, but then the great urbanism wave of 2000-2020 happened. But... remember that we tend to over-estimate the effect of technology in the short term and under-estimate it in the long term. The true decentralizing effect of the Internet might just not have been felt yet.
I'm not sure I've ever heard a good explanation for why the urbanism wave (among a fairly specific demographic) happened. As far as I can tell, it was mostly led by people and employers increased their urban presence in response to better educated/better off young people wanting to live in cities--not the other way around.
(There are some exceptions I can think of like pharma in Kendall Square Cambridge. But I assume Google, VMware, and Facebook would be just as happy if not happier establishing offices in Metro West--where most of the computer tech has historically been--rather than Cambridge.
Manhattan is somewhat of an outlier but Manhattan has long been an outlier in lots of ways.
Yeah, it's a political struggle. It's also the only solution. NIMBY landowners cannot be allowed to override human well-being and political will and economic growth indefinitely.
> Real estate is so ludicrous we need quite a bit of inflation to make it reasonable again.
Alternatively, we could invest in rural areas and other left-behind areas ("flyover states" in the US, Eastern Germany in Germany). Right now, the infrastructure there is flat-out unable to sustain quality modern human life unless you're Amish and fine with travelling on horseback: no high speed internet, no public transport, road and rail infrastructure are crumbling apart, no business opportunities, no education, no entertainment, no access to healthcare.
The demand for urban housing is so immense because urban areas are the only places to enjoy modern living. Making rural areas inhabitable again would take away a lot of the pressure.
Additionally, we could go and use eminent domain against foreign (especially Chinese) speculators who use Western urban housing solely as a "safeguard" for their wealth against the CCP. The side effect from doing that would be that it increases the pressure inside China against the CCP - when people suddenly have nowhere to hide their assets from the CCP, they will have to demand an end to the CCPs unilateral seizures.
Rural areas aren't so bad off. Satellite and boosted cellular internet are a thing, and that covers the education, entertainment and business opportunity categories. Health care and shopping are infrequent things that you can drive for as needed.
Current satellite and hotspots can be made to work. Netflix is not actually a necessity for modern life. But it does mean compromises. Hopefully some combination of StarLink and 5G will be able to better fill-in for lack of wired broadband than we have today.
Also, while there are certainly very rural areas in the US, most of "flyover" country is not actually in the 100+ miles from a grocery store, Walmart, or hospital category.
That sounds like a recipe for suburban housing sprawl, which is what you get in North America when people start moving en masse to a rural area, and it's expensive on infrastructure and unsustainable from a climate perspective.
I am no longer convinced that urbanism is categorically better for the environment. Here's why.
First of all, consider direct energy consumption. A suburban or rural home can probably get >50% of its energy use (including cars if they are EVs) from solar power directly off its own roof and property. This is year round in the sun belt and at least 2/3 of the year elsewhere. Batteries are getting cheap enough that home load leveling or even fully grid-free homes are now approaching middle class affordability.
EVs are now 100% practical as replacements for gas cars even in rural areas. I have a 200 mile range Nissan Leaf which was very affordable and would suit me just fine even if I lived way out in the exurbs or countryside, and they're building fast chargers everywhere where I live (Ohio) even along highways in the country. The next generation or two of cars (or a Tesla today) might even drive me to my destination, allowing me to read on the way the way I did in the subway when I lived in the city.
Secondly, the vast majority of your land use and probably more than 50% of your energy use is not direct. A huge fraction of your energy use is in the embodied energy of the products that you purchase and their transportation around the global supply chain. An even larger fraction of your land use is in farming and resource extraction to support you and your lifestyle.
Where you live changes none of that. A cheeseburger or laptop purchased in the city has exactly the same footprint as a cheeseburger or laptop purchased in the country.
In fact, I can see a future where dense cities are actually worse due to being harder to power with renewable energy. To power a dense city you might have to gather a lot of renewable energy from far away, which means more transmission infrastructure and more transmission losses. If we shifted to local farm-to-table eating patterns food in the city may even have more embodied energy due to a longer supply chain to get it there. Then consider that city dwellers eat at restaurants more and restaurants waste a lot more food than cooking at home usually does. (Seriously... look into how much food most restaurants throw away!)
Cities are hands-down superior to suburbs and the country in a fossil fuel powered world. In a post-fossil-fuel world it's very debatable.
Last but not least, we new urbanists (Gen-X and younger) have discovered that big cities are real estate cartels that make it impossible for the middle class to accumulate wealth. That's already pushing people away. For young people today I would recommend not going to a high cost of living city for any reason other than to level up your career and then leave. Big cities used to be fun centers of art and culture, but that's being driven away by real estate hyperinflation. I'm seeing more and more cool stuff happening in small towns across the country where creatives are settling so they can afford to live without spending >50% of their income on rent.
How does the global job vacancy market look? Here in the US, a lot of local restaurants and retail stores are hiring; practically every place you enter has a NOW HIRING sign out front.
I'd say immigration would be a huge boon to many of these small businesses, but when I spoke to one restaurant owner, he bemoaned the labor shortage and a $15 minimum wage. It'd kill his prices, he'd lose customers. Then, in other rants, he's using all the Fox News lines about stealing our jobs, keep them out of our country, caravans, ugh.
He doesn't connect the dots and see how pivotal immigration is to the economy. Either you have more babies, increase productivity, increase efficiency, or you allow immigrants in to make up the gap in the babies we're not having anymore. But no, the color of their skin, the difference of their culture, is enough to make economics less important than identity to the right wing in the USA.
My first thought was the pandemic and Brexit, but according to the article the employment numbers are back to where they were pre pandemic. So it's only Brexit? A lot of seasonal workers left before the pandemic and are not coming back?
For the Brexit-related component of worker shortage: It's a mix of workers leaving and choosing not to come back, many of them full-year not just seasonal, as well as workers that would like to come back temporarily to plug the gap, but aren't permitted even for skills-shortage roles.
Brexit and changing social attitudes have indeed put many off the UK, making other EU countries more attractive destinations. But there are still some people who would return temporarily for seasonal work if it was permitted.
This is not just the "low-paid, unskilled fruit picker" types of jobs, that are sometimes headlines. It is also skilled jobs that require considerable training and are paid well.
Example: Industry has been crying out to allow truck drivers from the EU to come to the UK, under the same "skills shortage" short-term visas that are allowed for some other sectors. A number of these involve driving routes on both sides of the UK-EU border, too, so it would make sense from that perspective as well. The government has said no, they must hire British workers for those roles. But they know it isn't possible in the short term, as it takes about 9 months of training. The government saying "just hire British workers today" when they know perfectly well that's not possible to comply with, is typical for this government in many areas, imho.
The shortage is obvious when shopping now. Common items you think of as in perpetual oversupply are currently out of stock, from normally well-managed supermarkets. For example, I can't buy any size pack of Coke Zero cans for delivery from the biggest supermarket Tesco. This is a popular item in the UK, and Tesco have a reputation for great logistics. Same for about a third of the other items on my regular items list. That's due to the truck driver shortage. Wages have increased tremendously (about 3x I think) for those roles this year. It's now a decent wage, more than a lot of people are earning, and they still can't be filled. So there's a genuine skills shortage in the UK, and people outside would do the jobs even temporarily while British workers were training, if it were permitted.
I'm not so sure about the whole "just pay workers more" solution every talks about. If that were viable for many businesses, don't you think they'd choose to do that over closing their doors? A business owner has to consider what kind of wage increases would even be needed for a short-term hiring boom and whether they could sustain that increase in the long term.
A case could be made that some businesses are not viable if they can't afford to pay market rates for labor, so they should close. However, the market rates for labor seem to be in fluctuation due to the ongoing pandemic and associated government responses. It looks to me like many businesses are still just trying to ride the storm out and hope things look better for them on the other side, hence many businesses opting to close temporarily rather than committing to more expenses - especially in a time when revenue is still down.
I'm also concerned about the competitive landscape going forward. Big businesses will all survive this recession no doubt, but what happens when a significant portion of their competition vanishes? I'd guess markets will consolidate even more as competition dries up and we'll double down on our dependency on cheap foreign labor.
Maybe raising wages is part of the solution, but I think this problem is a bit trickier than just that.
Not every posted open position will be filled. Some of those postings are the equivalent of lowball bids. They are opportunistic. Some are critical and must be filled at any price. The vacancies number does not capture the difference. I wonder how that shakes out in retrospect. Jobs that never got filled were not real vacancies just as "I'll give you five dollars for that car" does not make me a customer.
There's a huge amount of people holidaying within the UK instead of going abroad. I wonder how many millions (billions?) are being captured in the internal market that would otherwise be spent elsewhere. Definitely part of the fuel driving the economic rebound, lots of people's holiday savings being released locally, and the middle class has generally been increasing their savings pots over the lockdowns.
I haven't looked at the data but I imagine foreign tourists mostly go to London and a few venture out to nearby hotspots. People within the UK seem to be branching out to every half-beauty spot we have in every corner of the Isles.
Sample of 1 but my last 3 vacations in the UK have skipped London.
My impression is anybody visiting for more than a week will likely do a few days in London then move on to someplace else (of my friends, that’s usually Scotland for camping/hiking).
Clearly you have never been to Oxford, Bath, York, Edinburgh, Lake District, Cornwall etc etc which are teeming with visitors from the US, China, Japan and many other countries during the summer...
I've been to most of them but teeming isn't a word I'd really use. They're also the most obvious hotspots outside London, I was mostly attempting to make a point about all the 2nd-tier and 3rd-tier locations that are currently very busy with UK staycationers.
We did the North Coast 500 this year (we live in NE Scotland, but obviously aren't going to get anywhere further afield for now!), and it was really difficult to find accommodation because so much was fully booked.
This is a very interesting topic and I feel very hard to make ends of.
For example, you can compare local money (brits spending money in UK) vs foreign money (foreigners coming to UK for holidays) and get a part of the picture. On the other hand, local money are going to be spent in smaller towns, but the foreign money mostly go to large centres, London, Manchester, Liverpool, Glasgow etc. Then there are the amounts involved, 500gbp in London will buy say, a weekend for a couple, therefore employing not really that many people (cook, bartender, server, cleaner etc). The same amount will buy a weekend on the east coast for quite a few more people, therefore requiring more support personnel (hence, more jobs).
> "We advertised locally for 70 fruit-pickers and we had nine applications. On follow-up, only one was still available... in terms of recruiting locally, we failed completely," says Ali Capper, the owner of Stocks Farm in Suckley
> There are currently NO vacancies at Stocks Farm.
> Thank you to everyone who has applied for roles. Due to an amazing amount of applicants, we have been flooded with enquiries. We have closed the April jobs and will reopen for August some time in the summer.
There is always some inflationary pressure when inequality is reduced. For example, very few can support nannies and home servants like they could in the past (and like in India now), when poor people’s wages were so low that they would give up their life to support anyone that owned land.
The only way to prevent inflation is with technology and productivity, for example, people today could have home servants in the form of robots if that technology existed, but it currently does not, because the problem is currently extremely difficult given humanity’s existing tool set.
Yes, but in practical terms the opposite of wage inflation is asset inflation, and this has probably been the defining problem of the UK for the last 20 years.
Related discussion happening on reddit about this, personally i've already noticed an uptick in wages for Software Engineers in London and an increase in remote roles.
I've noticed a big uptick in availability of senior roles (e.g. Architect) recently, but also a big uptick in salary - I've had several recruiters contacting me over the past month for senior roles in the range of £80-95k, and every one was OK with remote work too. Never seen anything like it.
There are 1M openings across the UK (population about 60M) and 10M across the US [1] (population 300M-ish). There are twice as many openings per person in the US. (I also don't assume the demographics are wildly out of step).
Theory: A lot of people have decided to be unemployed during COVID times. Even 5% of population deciding this will result in tremendous labour shortage. I think as people started staying home, many are realizing that they can actually get away with lot less or even no work.
Jobs only stay vacant when the compensation is not market clearing. In many cases, the compensation for the marginal jobs will need to include childcare or training.
I’m not sure why none of the popular narratives are considering that this is just demographics- the boomers are aging out of the workforce. This pushes up the cost of labor due to supply and demand. Which is a good thing, if you’re not a boomer. But it’s going to constrain gdp growth.
If you want to create jobs, start a pandemic. Over a hunderd thousand jobs were created for testing, contact tracing and vaccinations in my small European country.
It has much more to do with ending Freedom of Movement with the EU. In this respect Brexit has worked (although who knows the long term implications). Basically labour demands have gone through the roof and its now an employee market. My aunt who is a hotel cleaner just got a £500 monthly increase and has been offered a retention bonus. Lorry / truck drivers are constantly being approached to switch jobs with higher payouts.
The rest of the market is getting a feel of what its like to be a software engineer.
On the other hand how many jobs were made redundant as a side-effect of the pandemic? Catering moving a lot towards delivery, people realizing they can actually work from home, etc.
You can create jobs to do anything. E.g. build the Sydney Harbour Bridge. I’d be building solar power stations and nuclear ones to create jobs and reduce carbon emissions longer term.
I was actually talking about this with some friends yesterday night. We didn't know whether is was an effect of Brexit, the pandemic or both of them combined.
If only there were people willing to move to your country from their current bad situation, so eager for citizenship they’d take on any job.. it’s almost an arrangement too good to be true
Brexit as implemented isn't what most people voted for in 2016 either. Just ask them. Others have. The more common answer is some variation on "I didn't vote for this Brexit". Particularly entertaining are the business owners now going bankrupt who voted for Brexit, now saying "I didn't know this is what Brexit meant when I voted for it".
I'd also argue that the fundamental, defining feature of democracy is that the people most immediately affected by an issue vote on the issue. So it's not democracy when the people most affected are not included in the vote. That's fake democracy, where the foxes vote who to have for dinner and the other animals don't get a say, but it's what we have, so here we are.
Jobs growth is weak and yet there are many vacancies.
Does this mean people are finally holding out for higher pay? The goals of UBI have been demonstrated? And we have barely given out a UBI, only a few stimulus checks.
Perhaps people got a taste of working from home and companies need to allow more remote work.
> Ali had to turn to specialist recruitment firms and has brought in seasonal workers from Poland
I ain't no picking anything! Sent your daughters over here, now we want some easy sex for free! (after charging half of their salary for staying in a moldy hut).
And how is your employer going to pay you in the same amount of crypto each month, if that crypto is mooning? The company's revenue stream is still in fiat, which they must use to buy that crypto to give to you, so eventually you will become too expensive to employ.
But that would be only half the solution. If the value of fiat decreases daily, then you should also negotiate a salary raise every month? Most people do not get raises more than once per year.
If you negotiate a 2 BTC/y salary for example you could be rich or flat broke next year depending on factors such as if Elon Musk is pro-dog-based-coin or pro-original-coin
You’d quit if the monthly 1/6 BTC salt was worthless so the job is effectively a call option on BTC
CPIH for example in the UK which nominally includes owner-occupier housing costs that aren't part of normal CPI but doesn't contain the elephant in the room which is the increase in house prices.
Either wages need to rise or house prices need to fall.
[0] If you look at somewhere mundane like Essex the median 'affordability ratio', as measured by the Office of National Statistics ( https://tinyurl.com/x5jatcx8 ), was 4.5 in 2000 but is now north of 10. And yes, low interest rates help with monthly affordability but house prices have gone up ~4 fold in the last 20 years while the multiple of your income banks will lend has not, and peoples capacity to save a deposit that is 4x bigger has not.
[1] https://www.thisismoney.co.uk/money/buytolet/article-9969349...