
Uncomfortable Truths Behind California’s Economic Surge - dwynings
http://www.wsj.com/articles/uncomfortable-truths-behind-californias-economic-surge-1483747393
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ec109685
Comparing minimum wage and median housing prices doesn't make sense. The
author claims a person making $15/hour couldn't afford to live one San Jose
given its $1000 median rent. The right comparison would be take a look at what
percentage of people make that much money and whether there is enough housing
for them.

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11thEarlOfMar
Median, 2-bedroom rent in San Jose is $2,289. That is $27,468 annually.
$15/hour wages is $31,200 annually.

After paying income taxes, there's nothing left. Even 2 minimum wage earners
sharing a median priced one bedroom apartment would be hard pressed to also
own cars and feed and insure themselves.

[http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro](http://www.zilpy.com/rentalmarket/San_Jose,_CA_metro)

~~~
r00fus
And by "own cars" you mean "have freedom of movement" as Silicon Valley (like
most of the US) has incredibly poor public transport.

And CA doesn't have $15/hr wages (yet). $15/hr is above minimum wage of
$10.50. That's $21,840 annual gross.

I guess you can afford to live here with a lower income if a) you room (or
even share a room), b) you live with parents or c) you got section-8 or
something a lot less than market rate rents.

~~~
erikpukinskis
You don't need to have a car to have freedom of movement. Maybe you're used to
a car for comfortable movement. But there are bikes, there are busses. Sure
Silicon Valley isn't the best, but if you don't have a car, you just live
somewhere that's convenient to public transit.

If you have a disability that prevents biking, etc, you should be able to get
some level of assistance.

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twblalock
I'm always amused when people write that middle-class people cannot afford to
live in California. It's just not true.

Almost everyone I know is middle class. Only a few of my friends are in the
tech industry -- most of my friends make incomes that are well below what a
developer makes, and are fairly average for middle-class Americans. Yet, they
all live in Silicon Valley and none of them are starving or at any risk of
becoming homeless. They live about as well as their parents did, if not
better.

Even people on minimum wage can afford to live here. There is clearly no
shortage of gas station workers, retail workers, warehouse workers, restaurant
workers, etc. They certainly aren't commuting from Arizona. In fact, I know a
number of people making close to minimum wage who live in the Bay Area, have
very short commutes to work, and live in perfectly safe neighborhoods. They
don't own their own homes, but they live here (not with their parents), so by
definition they can afford to live here. If they wanted to make more money,
this is one of the best places in the world for them to develop marketable
skills and climb the income ladder.

I think most of these articles assume that everyone lives in San Francisco,
which is a small part of the Bay Area and far more expensive than the rest of
it, or that everyone deserves a house on an acre of land in order to avoid
suffering. Middle-class people live here. People on low incomes live here.

~~~
mistermann
This seems extremely inconsistent with the numerous stories I've heard of
crazy rent prices in Silicon Valley. Are a big chunk of some of these people
commuting in on transit maybe?

~~~
twblalock
Most of the people I know drive their cars to work. I live in Santa Clara. I
know there are people who commute from places like Tracy, but I don't know any
-- I know plenty of people who live near me who don't make a lot of money and
manage to live here just fine.

Outside of San Francisco, rent prices are only crazy if you want your own
place. Single people can easily rent with roommates, and couples usually have
two incomes. Two people making an average wage can afford a place to live --
maybe not a luxury apartment, but a decent place in a safe area.

~~~
j2kun
I know people who commute from Tracy to Hayward just to attend community
college.

~~~
twblalock
So what? I know people who commute within the same Silicon Valley city to do
the same thing.

~~~
j2kun
Just corroborating your story.

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h4nkoslo
The startup ecosystem & consumer property are driven by 0% interest rates; the
investment property economy is driven by 0% interest rates & overseas money
laundering. Agriculture relies on illegally imported labor & perpetual
groundwater reserves.

All of these things add up to a "thriving" economy, but none of these things
are perpetuities, especially when the state government is determined to
Venezuelify at all costs.

~~~
digitaltrees
False. If that were true, that interest rates were the only driver of this
real estate increase, we should expect similar increases in other areas.
Texas, Florida, and countless other states have had more inward migration with
no increase.

The guest worker program for migrant farm labor is not illegal neither is
NAFTAs integrated North American market.

Finally California has depended on agriculture for a long time, well before
the current drought.

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uniformlyrandom
The article fails to make any point. Weird.

~~~
WalterSear
It doesn't, to appeal to prejudice. It just has to give people something to
worked up about.

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blazespin
The truth is that California has great weather and a non compete clause law.
What else do you need?

~~~
velodrome
Low cost of living would be nice...

~~~
wernercd
Supply & Demand. Demand is high and supply doesn't meet it? Prices go up.

Why is demand high? Nice year round weather, Hollywood, large military
presence, etc.

Why doesn't supply meet demand? Restrictive policies, companies taking options
that have more profit, demand increases faster than supply, etc.

Any which way you look at it... You have a nice area and tons of people want
to live there? Things are going to cost more.

On top of that, increasing wages won't really solve everything as costs will
go up (Businesses have to increase costs to make up for increased paychecks.
Example: [http://townhall.com/tipsheet/erikahaas/2016/11/16/child-
care...](http://townhall.com/tipsheet/erikahaas/2016/11/16/child-care-costs-
spike-after-minimum-wage-goes-up-n2246718) ) negating the extra money you
make.

You want a low cost of living? Move further inland. Move to Arizona or the
mid-west. Much cheaper to live.

~~~
caryhartline
That is all painfully obvious. What Velodrome is saying is not out of reach in
the slightest. State and local governments could take plenty of steps to lower
the cost of living.

~~~
DannyBee
Which would just make more people want to live there, and ... make supply
lower, and make the cost go up.

California has a finite people carrying capacity. You can remove all the cars,
build sky scrapers to the stratosphere, etc, etc.

It's like arguing that all the people in the world who want to live in hawaii
should be able to live in hawaii.

~~~
barrkel
California isn't very densely populated. It's much less populated than UK,
Switzerland, Italy, Germany etc.

Large swathes of the coastline are protected. That's not a particularly bad
thing. But also, development in general is really wasteful of space. Spending
time in California as a European was an object lesson in scale: everything is
bigger than it needs to be, everything is spread out, walking places takes
ages, roads are far wider than necessary, parking lots take up loads of space
(legally mandated!), etc.

~~~
gr33nman
California's urban planning has long been guided by the assumption that
everyone owns an automobile:

[http://www.autolife.umd.umich.edu/Environment/E_Casestudy/E_...](http://www.autolife.umd.umich.edu/Environment/E_Casestudy/E_casestudy3.htm)

As vigorously promoted by the automobile industry:

[https://en.m.wikipedia.org/wiki/General_Motors_streetcar_con...](https://en.m.wikipedia.org/wiki/General_Motors_streetcar_conspiracy)

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obstinate
Seems like you can write this article, but you could easily write the
opposite. I'm always puzzled why conservatives are so sure that taxation
suppresses growth. I get that there are models that show that this can happen
at some level of taxation, but there are two issues. One, model parameters
need to be discovered. Second, we just don't seem to see the effect very much
in real life. So you have to write articles like this that are really . . .
speculative . . . in observing whether policies are having an effect in one
direction or the other.

~~~
velodrome
_> I'm always puzzled why conservatives are so sure that taxation suppresses
growth._

[https://en.wikipedia.org/wiki/Laffer_curve](https://en.wikipedia.org/wiki/Laffer_curve)

~~~
r00fus
Hasn't that been disproven? Even George Bush called it "voodoo economics".

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obstinate
The Laffer Curve is very much real. The question is what the real shape of the
curve is. Do we have optimal government revenues at 10% average taxation, or
90%? The answer probably lies between these numbers. There's also the
question, after deciding this, of how much revenue the government needs to
accomplish each marginal goal, and how much utility that revenue has compared
to leaving the revenue in the hands of taxpayers.

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mturmon
A lot of cherry picked single point numbers in this op-ed. Not very
informative.

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chetanahuja
tl;dr Economy is booming but living here is expensive. Also, gas prices are
cheap right now so... that helps.

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dmode
Typical WSJ garbage - "It's so crowded no one goes there anymore"

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sxcurry
It's so crowded nobody goes there anymore. Typical WSJ FUD.

