For hundreds of years, rural poverty has driven people to urban areas:
As highly paid skilled workers and global capital have flooded into high-job-growth regions, living costs and the costs of doing business have skyrocketed: where not too long ago $1,000 a month would secure a modest one-bedroom apartment in major urban job centers, now it takes $2,000 or $3,000 a month to rent a modest flat.
I’ve addressed economy-wide real-world inflation many times
The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016)
In high-cost urban regions, burritos aren’t $7.50; they’re $10 or $12. Parking tickets aren’t $15, they’re $60, and so on. Consider this chart of rents in the San Francisco Bay Area: unless
Here are the dynamics driving this financially forced flight, which hits the young especially hard: who can afford to buy a house when cramped, decaying 100-year old bungalows are $900,000 and property taxes are $15,000 or more? Who can afford to have kids when childcare costs a small fortune? The elderly retired who don’t own a house free and clear are also being priced out of these regions.
1. Household income is stagnating as real-world inflation erodes
2. Prices in high-cost urban zones are increasing faster than in
3. Young households are burdened with student loan debt, making
4. Income in high-cost urban areas is more heavily skewed by “
5. Local government services cost more in high-cost urban areas, and
6. The sacrifices required to live in high-cost urban areas are
At some point, the urban hipsterism that seemed so cool and appealing becomes just another example of the Haves and Have-Nots:
The forced flight from unaffordable and dysfunctional urban regions is as yet a trickle, but watch what happens when a recession causes widespread layoffs in high-wage sectors and suddenly the hipster bistro that was always jammed is empty, and then shuttered. To replaced the taxes lost to layoffs and closed businesses, the political class will have no choice but to launch a frenzy of higher taxes, fees and surcharges on those left behind.
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