Leave the car at home, take the income.  For years, City Observatory has calculated that Portland earns a billion dollar a year “green dividend” because it enables local residents to drive about 20 percent less than the typical urban American.  Portland’s Mayor effectively argued that the city can earn an even bigger green dividend if it further reduces the amount of driving in the region

Mayor Keith Wilson makes the connection between less driving and greater prosperity in answer to a question about economic development during his state of the City address.  He explicitly endorsed streetcars, transit-oriented development, and high speed rail as ways to reduce car dependence, and put more money in the hands of Portland households: “Leave the cars at home; take the income,” the Mayor said.

That’s cogent economic advice, but unfortunately much of what is happening locally is undermining this green and prosperous vision.  State, regional and city policy-makers are undermining the green dividend–and sabotaging climate commitments–by planning billions for wider freeways based on traffic projections that call for vastly more driving.

Must Read 

Inclusionary housing requirements are making affordability worse in Cambridge.  The Boston Globe reports that Cambridge, Massachusetts first adopted inclusionary zoning in 1998, and in 2018 began requiring developers of multi-famly buildings to set aside 20 percent of units as affordable.  As has happened elsewhere, the inclusionary requirements made new construction less profitable (or unprofitable) and led to a sharp decline in total housing production.

Between 2011 and 2021, builders in the city broke ground on an average of 790 units annually. That number dipped to 491 in 2022, and 404 in 2023. In 2023, developers only finished construction on 39 units, according to city data.

New Knowledge

The most trusting cities in the United States.  For decades, there’s been a decline in social trust.  The share of the population that agrees that “most people can be trusted” has gone down steadily.

A new study from the Pew Charitable Trust plots the decline in social trust, and maps out the regional variations in trust among places.  There are still some places where a majority or plurality of the population agrees that most people can be trusted.  In these cities, more than twice as large a share of the population agrees that most people can be trusted than in the least trusting cities (Las Vegas and Riverside).

The Pew study points out there’s a strong correlation between measures of trust and educational attainment:  those with higher levels of education tend to evince more trust in others than those with less education.  That explains some, but not all of the regional variation in measured trust.  Some cities have even higher levels of trust that you would expect based on their educational attainment alone.

As Robert Putnam has long argued, social capital in America has eroded considerably in the past few decades, with significant consequences for cohesion, assimilation and prosperity.  Perhaps we can begin to rebuild this essential form of capital, beginning at the community level.

Running the economy at capacity is good for equality.  For most of the last half century, the US economy has operated well below its potential capacity; monetary policy feared the effects of letting unemployment rates fall “too” low, and triggering inflation.  But the experience of the past five years has shown that much lower sustained rates of unemployment (without accelerating inflation), are not only possible, but pay huge dividends.  Arindijat Dube, notes that the last five years, when we’ve finally achieved something close to full employment, have produced remarkable gains in wages for the lowest income segments of the population.

. . .  wage growth during this period was strongest at the bottom of the distribution, marking a historic compression of wage inequality, and has continued at higher rates even after inflation eased. Contrary to expectations, low-wage workers saw their real earnings rise even as inflation surged. This “great reshuffling” of the labor market, driven by higher quit rates and increased job-to-job transitions, demonstrated how tight labor markets can function better through greater competition, empowering workers to move from low-paying jobs to better opportunities. By reallocating workers to more productive roles, tight labor market conditions also boost productivity and overall economic growth, creating a “double dividend”: higher wages and greater economic efficiency.

After nearly a half century of shadow boxing against a phantom inflation menace, we can hope that the nation doesn’t lose sight of the lesson that tight labor markets can create an environment where we can make real progress in reducing poverty and raising incomes.

Arindrajit Dube, “Full Employment: A Policy Choice Worth Pursuing, April 29, 2025, https://rooseveltinstitute.org/blog/full-employment/