Sunday, July 23, 2006

Today's NY Times "Let them eat cake" quote...

It's not really so bad that cities shed their middle class residents, you see...

SOME big American cities are flourishing as at no time in recent memory. Places like New York and San Francisco appear to be richer and more dazzling than ever: crime remains low, new arrivals pour in, neighborhoods have risen from the dead. New York is in the throes of the biggest building boom in 30 years, its population at an all-time high and climbing. Mayor Michael R. Bloomberg proudly promotes his city as “a luxury product.”

But middle-class city dwellers across the country are being squeezed.

n the San Francisco Bay Area, the percentage of households earning more than $100,000 a year rose to over 30 percent in 2000 from approximately 7 percent in 1970, said Joseph Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. “Is that area worse off?” he asked. “At least so far, there’s a lot of evidence that economically they’re better off. Land prices are really high, lots of people want to move there.”

Edward L. Glaeser, a Harvard economist who studied 300 large cities with a range of levels of income inequality in the 1960’s and 1970’s, says he found little evidence that those levels later affected the growth of housing prices, income or population there.

Of course, cities need police officers, firefighters, teachers. But as long as they can get the labor they need from somewhere nearby, some economists say, middle-class shrinkage may not hurt. In Southern California, developers import construction workers from Las Vegas and put them up in hotels; costs go up but rich clients can pay. Firefighters who want to live in high-priced cities can work two jobs, said W. Michael Cox, chief economist for the Federal Reserve Bank of Dallas. “I think it’s great,” he said. “It gives you portfolio diversification in your income.” Pay for essential workers like plumbers and cabdrivers will tend to go up, he said.

You're not poor, you see, you just need "portfolio diversification in your income."

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