What City Observatory did this week
1. Why gentrification is good for long time residents of low income neighborhoods. We take a close look at a new study from the Philadelphia Federal Reserve Bank that challenges much of the frequently repeated claims about gentrification. It finds that there’s relatively little displacement from gentrifying neighborhoods, that low income residents don’t experience significant rent increases, and that neighborhood poverty declines in a way that is consistent with higher levels of inter-generational mobility for low income children. It also shows that otherwise poor neighborhoods that don’t gentrify experience population loss, reminding us that all neighborhoods are continuously changing.
2. The devaluation of housing in black neighborhoods, Part 1. According to estimates from the Brookings Institution, houses in majority black neighborhoods sell at a 20 percent discount to otherwise similar homes in otherwise comparable neighborhoods that are predominantly white. This disparity in home values means that homeowners in predominantly black neighborhoods have about $150 billion less in home equity than they would if their homes were valued in the same way as homes in predominantly white neighborhoods. This large disparity in home values is a major component of the black-white wealth gap. We explore the reasons behind this gap and some of its implications.
3. The devaluation of housing in black neighborhoods, Part 2: Appreciation. Whether housing is a good investment depends heavily on its rate of appreciation. Homes in black neighborhoods lost value more rapidly than homes in white neighborhoods in the housing bust. In the recovery, the pattern seems to have reversed, with black homebuyers experiencing somewhat greater appreciation in most markets than white buyers in those markets. While appreciation signals greater wealth for those who bought homes, it may also mean diminished affordability for renters and for other buyers going forward. The inherent contradiction between our two goals of housing policy (that it ought to be both a great investment and affordable) bedevil the policy decisions around reducing the racial wealth gap.
1. Childless cites? Views differ. Last week, The Atlantic’s Derek Thompson published an essay decrying the emergence of childless cities. What with their high rents, small units, and weak schools, we’re told, cities are invariably hostile environments for families with children. That’s a provocative thesis, but is it true? Writing at Planetizen, Michael Lewyn challenges the data on declining numbers of kids in cities. In effect, it’s always been the case that larger households with kids were somewhat more likely to live in suburbs than cities (mostly because single person households are concentrated in urban locations). But the key question, is whether than suburbanization of kids is increasing or not. Lewyn’s evidence suggests that it isn’t: the birth dearth is affecting suburbs as much as cities, and many cities, including New York, Washington and San Francisco are all recording increases in the number of kids. Additionally, from the policy standpoint, there’s the question of what we do about enabling and encouraging families to live in cities. As Hanna Love and Jennifer Vey of the Brookings Institution write, childless cities aren’t a fait accompli. Addressing housing affordability, by expanding supply will likely ease rents and make cities more affordable for households who’d like to stay. And, as Washington DC’s experience has shown, universal pre-school programs are a powerful inducement to households to stay in cities.
2. The primacy of cars. Two recent articles got us thinking about how the unspoken primacy of cars in the public realm is starting to be questioned in a serious way. For example, the conception of parking in the public imagination is undergoing a seismic shift: from “why isn’t there ‘enough’ parking”” to ‘who decided that free private car storage was a legitimate use of the shared public realm?’ Take the New York Times, whose Style section offered the observation:
City street parking should be considered public space. The current setup is ridiculous: In front of millions of New Yorkers’ apartments, for one example, there are 9-by-18-foot plots of space, available to anyone in the city . . . if they have a car and want to leave it there. Less than half of the city’s residents own cars, and far fewer can lay claim to any kind of outdoor space. So from Fort Worth to Philadelphia, why not let people use these patches of cement for something they can actually enjoy? Let people set up a table with some food, a little grill, a folding table to sit at and enjoy the sun, and each other. Make space next to the sidewalk. Hatch 10,000 tiny little public spaces in cities that are starved for some life.
. . . the tacit assumption that “traffic” means, exclusively, people in cars [is a] concept is so thoroughly baked into our culture that you don’t even notice it, like the water in a Spongebob cartoon. Pedestrians can’t be traffic—they’re the enemy of traffic! They mill about in the crosswalk, like cattle, and make us late for stuff. Besides, if they were going anywhere important, they’d be in a car.
Was job polarization real? One of the leading labor market stories of the past couple of decades has been the notion of job polarization, that a combination of technological and market shifts was destroying middle wage jobs, and shunting more workers into either the high or low end of the wage spectrum. A new study from Jenniver Hunt of Rutgers and Ryan Nunn of the Brookings Institution challenges that claim.
The nerdy detail here is that analyses of job polarization are based on occupational data. The Bureau of Labor Statistics classifies people into one of about 330 occupations, and also reports on the average level of wages paid to persons working in that occupation. Most of the literature finding job polarization takes these occupational average wages to compute the number of persons in low, medium or high wage work.
That would be fine, if everyone an occupation earned the average wage. The trouble, as Hunt and Nunn point out is that there’s huge variation in wages within occupations. In fact, there’s more variation in wages within occupations than there is among occupations. The result, they conclude is that you simply can’t use occupational data to make meaningful statements about the changes in the number of workers earning high, middle or low wages.
. . . occupation mean wages are unsuitable for the analysis of wage inequality: most of the increase in wage inequality is within and not between occupation; occupation mean wages do not capture the bottom of the individual wage distribution; and middle–wage workers are distributed widely across occupations. Computerization and automation may be increasing wage inequality, but the hypothesis cannot be studied through the lens of occupations and does not find support in our analysis.
Hunt and Nunn compile an alternative set of data from the Current Population Survey that overcome the problems inherent in the occupational data, and test whether there’s been job polarization. They find that while there has been a decline in middle wage jobs, that’s chiefly been because of the increase in high wage jobs.
Hunt and Nunn’s data show that while there has been a decline in middle wage jobs (the red and green lines on this chart), the biggest changes have been a decline in jobs in the lowest quarter of the wage distribution and an increase in jobs in the highest quarter of the wage distribution. The nature and timing of these changes are a challenge to an oft-repeated story about job polarization.
Jennifer Hunt and Ryan Nunn, IS EMPLOYMENT POLARIZATION INFORMATIVE ABOUT WAGE INEQUALITY AND IS EMPLOYMENT REALLY POLARIZING? Working Paper 26064 http://www.nber.org/papers/w26064