Abundance

by Ezra Klein

The result is a housing crisis of staggering proportions. Almost 30 percent of American adults are “house poor”—spending 30 percent or more of their income on housing.7 But that understates the problem. Housing costs are highest in the superstar cities that now drive the economy. Millions endure multi-hour commutes, or far worse jobs, in order to live in a far-flung city where they can afford a home. These choices are missed in raw estimates of affordability, but they are a drag on the economy and an anchor on people’s lives.8 To immerse yourself in analyses of American housing is to drown in data. But sometimes a number stands out. Here is one: The economist Ed Glaeser calculates that, prior to the 1980s, wages in New York City were unusually high even after correcting for the local cost of living.9 The city had its problems, but most people would make more money by moving there. But that flipped. By the year 2000, moving to New York meant, for most people, taking an effective pay cut. That’s not because paychecks have shrunk but because housing costs have risen. People now pay to live there; they aren’t paid to live there.