Building More Housing Supply is Sort of Like Automation Creating More Jobs

how long and for whom?

There’s a lot of YIMBY momentum going, which is good, as we badly need a housing abundance agenda. I do think that NIMBYism has been the default for so long that its forces haven’t really been awakened yet, and fierce pushback will come, but it seems more housing is on its way. (We’ll get there a little easier if the YIMBY movement drops its bullshit about the racial dynamics of NIBMYism.) We gotta build. “Just building,” however, is not enough, as many left YIMBYs have said for a long time. Public housing and various other government efforts can make the impact of more housing more reliable for the most disadvantaged.

I dearly wish that there was more of an acknowledgment of the time-lag problem within YIMBY politics. Yes, building more housing does bring down housing prices in a neighborhood, eventually. The trouble is that this effect is slow-gathering and diffuse, whereas need is immediate and acute. If you live in a poor minority neighborhood that’s rapidly gentrifying, and they start putting up luxury towers, you might understand that in the long run the existence of those towers will slow the increase in rents in the area. But if you’re at risk of eviction from nonpayment now, that’s very little comfort. Meanwhile the changes to neighborhood character and demographic composition are staring you in the face. (Indeed, the addition of a new set of luxury towers would in the immediate term raise the average rent in the neighborhood, even though their spillover effects will eventually reduce supply restrictions and thus upward rent pressure.) You can understand then why some rent-burdened residents might be resistant to said luxury towers. They literally fill the skyline, while rent relief seems far away.

For the life of me I cannot understand why there isn’t better messaging on this basic reality - the short-term downsides of new market-rate housing are obvious to long-term residents, while the eventual benefits to housing affordability are going to take some time to arrive. This is a real political difficulty.

This conundrum reminds me very much of the issues with automation in the labor market. I’m talking about the classic scenario of a factory replacing a bunch of workers with new machinery. We can see this in American manufacturing, where the percentage of American workers in the field has fallen dramatically in the past half-century. Without wading into the controversy over offshoring, there’s no doubt that a lot of those job losses are due to technological advancements that make human workers redundant. Some economists are adamant that automation eventually leads to more jobs, as more efficiency means more productivity which means more growth which means a bigger economy with more jobs. That may very well be so, but it certainly doesn’t mean that the same people are going to get new jobs. They don’t lay you off from the plant and then hand you a new coding job on the way out. For the individuals who have their jobs automated out from under them, the change can be devastating, and you can drive through the Rust Belt and see a lot of communities that have never recovered from catastrophic job losses. It’s hard to get a look at Gary, Indiana and say “hey, good news, more productive economy, more jobs in the country overall.” You have to count the very real costs even if you believe in the long-term good.

(For the record, the old “somebody’s gotta fix the robots!” line doesn’t make much sense since if employing people to fix the robots required as many people making as much money as they did before, there would be no economic incentive to install the robots in the first place.)

What’s necessary, then, is robust state programs to help provide a safety net for workers whose jobs are lost to “creative destruction,” including cash transfers for the unemployed and robust retraining opportunities. Similarly, left YIMBYs have called not just for loosening our archaic regulatory apparatus and enabling more building, but for public housing and rent regulation and all manner of programs to help long-term and low-income residents. What we need to take care to do, in this fertile moment for housing abundance, is to fight for that vision. Because if we’re not careful the developers and landlords will try to take the loosening regulatory environment without supporting any of the programs that could help ease the potential burdens on ordinary residents. We can’t expect people to simply make way for more building in their neighborhoods if the rent relief that comes with that building seems so far away. We need to make promises via policy that they’ll be able to live there long enough to enjoy that relief.