How Anti-Growth Sentiment, Reflected in Zoning Laws, Thwarts Equality

by Conor Dougherty, New York Times, July 3, 2016 (excerpts)

…a growing body of economic literature suggests that anti-growth sentiment, when multiplied across countless unheralded local development battles, is a major factor in creating a stagnant and less equal American economy.

It has even to some extent changed how Americans of different incomes view opportunity. Unlike past decades, when people of different socioeconomic backgrounds tended to move to similar areas, today, less-skilled workers often go where jobs are scarcer but housing is cheap, instead of heading to places with the most promising job opportunities, according to research by Daniel Shoag, a professor of public policy at Harvard, and Peter Ganong, also of Harvard.

One reason they’re not migrating to places with better job prospects is that rich cities like San Francisco and Seattle have gotten so expensive that working-class people cannot afford to move there. Even if they could, there would not be much point, since whatever they gained in pay would be swallowed up by rent….

“We’ve switched from a world where everybody educated and uneducated was moving from poorer parts of the country to the richer parts of the country,” said Professor Shoag, “to a world where the higher-educated people move to San Francisco and lower educated people move to Vegas.”

Zoning restrictions have been around for decades but really took off during the 1960s, when the combination of inner-city race riots and “white flight” from cities led to heavily zoned suburbs.

They have gotten more restrictive over time, contributing to a jump in home prices that has been a bonanza for anyone who bought early in places like Boulder, San Francisco and New York City. But for latecomers, the cost of renting an apartment or buying a home has become prohibitive.

In response, a group of politicians, including Gov. Jerry Brown of California and President Obama, are joining with developers in trying to get cities to streamline many of the local zoning laws that, they say, make homes more expensive and hold too many newcomers at bay.

To most people, zoning and land-use regulations might conjure up little more than images of late-night City Council meetings full of gadflies and minutiae. But these laws go a long way toward determining some fundamental aspects of life: what American neighborhoods look like, who gets to live where and what schools their children attend.

And when zoning laws get out of hand, economists say, the damage to the American economy and society can be profound. Studies have shown that laws aimed at things like “maintaining neighborhood character” or limiting how many unrelated people can live together in the same house contribute to racial segregation and deeper class disparities. They also exacerbate inequality by restricting the housing supply in places where demand is greatest.

The lost opportunities for development may theoretically reduce the output of the United States economy by as much as $1.5 trillion a year, according to estimates in a recent paper by the economists Chang-Tai Hsieh and Enrico Moretti. Regardless of the actual gains in dollars that could be achieved if zoning laws were significantly cut back, the research on land-use restrictions highlights some of the consequences of giving local communities too much control over who is allowed to live there.

“You don’t want rules made entirely for people that have something, at the expense of people who don’t,” said Jason Furman, chairman of the White House Council of Economic Advisers.

So far, the biggest solution offered comes out of California, where Governor Brown has proposed a law to speed up housing development by making it harder for cities to saddle developers with open-ended design, permit and environmental reviews. The Massachusetts State Senate passed similar reforms. And President Obama has taken a more soft-touch approach, proposing $300 million in grants to prod local governments to simplify their building regulations.

Mr. Brown’s proposal has inflamed local politicians, environmentalists and community groups, who see it as state overreach into how they regulate development. But it has drawn broad support from developers, not surprisingly, as well as a number of business leaders, including many from the technology industry….

read … The New York Times

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