Why Workers Without College Degrees Are Fleeing Big Cities

[JA]

Why Workers Without College Degrees Are Fleeing Big Cities

Last month the Census Bureau confirmed a confounding dynamic taking hold across the American landscape: Superstar cities, the nation’s economic powerhouses, hotbeds of opportunity at the cutting edge of technological progress, are losing people to other parts of the country.

[...]

Today it makes a lot of sense for a lawyer to move to Silicon Valley from the South. The additional pay will more than compensate for the higher cost of housing. But a janitor moving from, say, somewhere in Alabama to Cupertino could see her household income, after paying rent, fall by more than half.

The divergence of economic opportunity for workers on either side of college is not a new phenomenon. But we are only beginning to understand how it has reconfigured the rationale for migration: Moving to opportunity is not what it once was.

[...]

But as my colleagues Emily Badger and Quoctrung Bui noted recently in an article citing the work of the M.I.T. economist David Autor, big cities have lost their luster for workers without four-year college degrees. They will make no more in New York or San Francisco than they would in, say, small-town Alabama.

The clerical jobs that cities used to offer are largely gone, replaced by computer software or outsourced to other parts of the world. Moreover, the wage bump that big cities used to offer janitors and cashiers has mostly disappeared. Those who used to hold middle-income positions have dropped down the wage scale, competing for jobs at the bottom.

[...]

Research by Peter Ganong from the University of Chicago and Daniel Shoag of Harvard suggests that housing costs are a principal driver of the change in migration decisions: As the highly educated have flocked to superstar cities, they have pushed housing prices way beyond the reach of people earning less.

Rising rents affect everybody, of course. But housing sucks up a bigger share of the income of the poor. In 1960, housing absorbed 17 percent of a janitor’s household earnings in King County, compared with 9 percent of a lawyer’s, according to data from Mr. Ganong. By 2017, lawyers’ households had to pay almost 15 percent of their incomes. Janitors’ households had to pay 38 percent.

[dead0man]

I've always wondered how the hyper expensive places to live get people to clean the toilets (and other work the "lessers" must do for them until the robots finish making them obsolescent) for low wages.  They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?  In some places they must have to ride a train or bus or sit in traffic for an hour if they don't want to spend all their income on rent or want to live in a dangerous place.  I suppose there are a few of the hyper rich that aren't horrible parents, spoiling their kids and so a few of the offspring might need low skill jobs to make a little spending money, but I'm guessing they are the ...hehe...minority at a Starbucks in lower Manhattan.  Maybe there is no work available closer to their homes, but that seems unlikely in most places and if it is where they're at, why don't them move?  Oh that's right, we live in the first time in history where people can be too poor to move. <giant roll eyes>

[RFayette]

 They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?

I think there is a significant wage premium to working in service-sector jobs in expensive areas.  For example, at a local fast food spot in Mountain View, CA (the heart of Silicon Valley), there was an advertisement of a salary of $16.75/hour (plus health insurance and up to $18.50 with bonuses and guaranteed raises) for new employees.  I'd imagine that's significantly higher than one might get in poorer areas.  

[dead0man]

  They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?

I think there is a significant wage premium to working in service-sector jobs in expensive areas.  For example, at a local fast food spot in Mountain View, CA (the heart of Silicon Valley), there was an advertisement of a salary of $16.75/hour (plus health insurance and up to $18.50 with bonuses and guaranteed raises) for new employees.  I'd imagine that's significantly higher than one might get in poorer areas. 

that makes sense, it would have to be that.  You've got to assume a cheeseburger costs more too, yes?  They would have to, rents are going to higher as well.  Perhaps shipping inventory in as well?

[RFayette]

  They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?

I think there is a significant wage premium to working in service-sector jobs in expensive areas.  For example, at a local fast food spot in Mountain View, CA (the heart of Silicon Valley), there was an advertisement of a salary of $16.75/hour (plus health insurance and up to $18.50 with bonuses and guaranteed raises) for new employees.  I'd imagine that's significantly higher than one might get in poorer areas. 

that makes sense, it would have to be that.  You've got to assume a cheeseburger costs more too, yes?  They would have to, rents are going to higher as well.  Perhaps shipping inventory in as well?

Probably, but I haven't been to this chain outside the Bay Area, so I wouldn't know. 

[pbrower2a]

  They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?

I think there is a significant wage premium to working in service-sector jobs in expensive areas.  For example, at a local fast food spot in Mountain View, CA (the heart of Silicon Valley), there was an advertisement of a salary of $16.75/hour (plus health insurance and up to $18.50 with bonuses and guaranteed raises) for new employees.  I'd imagine that's significantly higher than one might get in poorer areas. 

that makes sense, it would have to be that.  You've got to assume a cheeseburger costs more too, yes?  They would have to, rents are going to higher as well.  Perhaps shipping inventory in as well?

Where I live, Chez Mac is offering jobs paying about $11 for the same work -- which is about $12500 less a year -- but rent is nowhere near $3000 a month for a studio apartment. Taxes are lower and gasoline is less expensive. Sure, culture is limited to cable TV, movies, and cultural schlock available at Wal*Mart and Meijer... but if you are the sort of person who has less than a college degree, you probably aren't interested in the symphony, opera, ballet, art galleries, and a wide variety of ethnic festivals anyway.  The people who qualify to work in fast-food places, warehouses, and food-processing plants simply can't afford to live in the high-cost metropolises.

It would seem that the only people who can afford to work at low-skilled jobs in those areas are those people still living with their parents or perhaps six people sharing a one-bedroom apartment. If you are talking about the parts of California within thirty miles of the coastline (the rest is awful as a whole), many there wouldn't dream of going to a place with a fire-ice climate with snow to shovel. Well, that's what I am stuck with.

Get accustomed to it. There is more profit and executive compensation from shortage and treating others badly than from serving Humanity.



 

[Associate Justice PiT]

     Cost of living has become a major crisis in the Bay Area. Those of us who do not work in tech feel the vicegrip every day; we make more than we would in most parts of the country, but the costs are altogether obscene. When I think about how bad it is at the level of a college-educated professional, it is easy to imagine why the poor who lack the benefits of making college-educated professional salaries would want to leave here.

[RFayette]

     Cost of living has become a major crisis in the Bay Area. Those of us who do not work in tech feel the vicegrip every day; we make more than we would in most parts of the country, but the costs are altogether obscene. When I think about how bad it is at the level of a college-educated professional, it is easy to imagine why the poor who lack the benefits of making college-educated professional salaries would want to leave here.

Even those working at the bigger tech companies would still have to pay a large share of their salary for a 1 bedroom apartment or studio in Mountain View, Menlo Park, Palo Alto, etc.  The Bay Area is a very high cost-of-living place, especially in the peninsula/South Bay. 

[DC Al Fine]

To be honest, I'm surprised this isn't happening more. I remember a study which suggested that a $200,000 Manhattan lifestyle  could be purchased for $38,000 in Fayetteville, NC. $38,000 in North Carolina is a plausible achievement for a person without a degree. Can't say the same about $200,000 in Manhattan or the Bay

[Person Man]

I guess that probably explains why people vote the way they do where they are. Its a better theory than abortion and why even a pro-life "libertarian-leaning" democrat like Donnelly can't win more than 47% of the vote in smaller, more isolated communities.

The main reason is that even if you are just an ordinary guy and can only make $40000, you can afford $800 in rent and $300 in groceries instead of getting paid $70000 at a union job in town but then would have to pay $1700 in rent and $600 in groceries. However, if you have unique skills, in the country you are probably making like $76000 a year as a programmer but can make $120000 a year or even $200000 (if you are "good") in the city. At that point, you can afford the higher costs of living to get the better lifestyle.

Personally, given the volatility in my profession and the amount I make, it probably is worth living in the higher cost areas so I can have access to higher UI benefits.  If a project ends or management has unrealistic expectations, I would be assured to have enough money to wait for a job I wouldn't have to move for.

[RFayette]

To be honest, I'm surprised this isn't happening more. I remember a study which suggested that a $200,000 Manhattan lifestyle  could be purchased for $38,000 in Fayetteville, NC. $38,000 in North Carolina is a plausible achievement for a person without a degree. Can't say the same about $200,000 in Manhattan or the Bay

Out of curiosity, do you have a source on that cost-of-living figure?  It seems a bit exaggerated to me.  Home ownership is absurdly difficult in certain areas (average home price is $3 million in multiple cities in Santa Clara County, CA) so I could see a lot of disparity due to housing costs, though I'm sure the person earning 200K in Manhattan/Bay Area probably would buy more 'upscale' goods - cars, food, etc. - in other respects than the Fayetteville resident.  


In my view, the Bay Area is a great place to live - great access to the ocean/bay, lots of great hiking spots, awesome views, lots of options for entertainment, fantastic food, close to great universities, and plenty of great companies around, so it's not a surprise that people try hard to stay here even though they make less when adjusted for cost-of-living.  That being said, I doubt I would be staying here if I didn't get a job at a tech company.  It is just too pricey.      

[True Federalist (진정한 연방 주의자)]

To be honest, I'm surprised this isn't happening more. I remember a study which suggested that a $200,000 Manhattan lifestyle  could be purchased for $38,000 in Fayetteville, NC. $38,000 in North Carolina is a plausible achievement for a person without a degree. Can't say the same about $200,000 in Manhattan or the Bay

Out of curiosity, do you have a source on that cost-of-living figure?  It seems a bit exaggerated to me.  Home ownership is absurdly difficult in certain areas (average home price is $3 million in multiple cities in Santa Clara County, CA) so I could see a lot of disparity due to housing costs, though I'm sure the person earning 200K in Manhattan/Bay Area probably would buy more 'upscale' goods - cars, food, etc. - in other respects than the Fayetteville resident.  

It's not just the housing costs. for example, gas prices are usually one-third lower around here than in California. Moreover, in addition to already low costs, the inflation rate is lower here. (In the period 1990-2015, inflation averaged about 1% lower per year in SC vs. CA.)

[Mr. Smith]

Even with a simple BA degree not in STEM it's difficult.

There's a reason I set up Grad School outside the Bay Area. Even trying to be something like a teacher or public attorney around the Bay Area is a challenge.

 

[RFayette]

To be honest, I'm surprised this isn't happening more. I remember a study which suggested that a $200,000 Manhattan lifestyle  could be purchased for $38,000 in Fayetteville, NC. $38,000 in North Carolina is a plausible achievement for a person without a degree. Can't say the same about $200,000 in Manhattan or the Bay

Out of curiosity, do you have a source on that cost-of-living figure?  It seems a bit exaggerated to me.  Home ownership is absurdly difficult in certain areas (average home price is $3 million in multiple cities in Santa Clara County, CA) so I could see a lot of disparity due to housing costs, though I'm sure the person earning 200K in Manhattan/Bay Area probably would buy more 'upscale' goods - cars, food, etc. - in other respects than the Fayetteville resident.  

It's not just the housing costs. for example, gas prices are usually one-third lower around here than in California. Moreover, in addition to already low costs, the inflation rate is lower here. (In the period 1990-2015, inflation averaged about 1% lower per year in SC vs. CA.)

True, but a factor of 5 seems like too much to me.  A lot of it ends up being substitution - a lot of people ride their bike to work and may not even own a car, but also spend a lot on nice restaurants and traveling. 

[PragmaticPopulist]

This is Democrats are really lacking in talking about. This is just another effect of huge income inequality that is widening every day. Cities losing non-college grads isn't good either. Someone needs to take these jobs.

[Tintrlvr]

I've always wondered how the hyper expensive places to live get people to clean the toilets (and other work the "lessers" must do for them until the robots finish making them obsolescent) for low wages.  They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?  In some places they must have to ride a train or bus or sit in traffic for an hour if they don't want to spend all their income on rent or want to live in a dangerous place.  I suppose there are a few of the hyper rich that aren't horrible parents, spoiling their kids and so a few of the offspring might need low skill jobs to make a little spending money, but I'm guessing they are the ...hehe...minority at a Starbucks in lower Manhattan.  Maybe there is no work available closer to their homes, but that seems unlikely in most places and if it is where they're at, why don't them move?  Oh that's right, we live in the first time in history where people can be too poor to move. <giant roll eyes>

At least in NYC, the obvious answer is public or otherwise subsidized housing.

Also, even today, significant portions of the outer boroughs are really not that expensive because wealthy people don't want to live in Richmond Hill, Queens or Parkchester, Bronx or Bensonhurst, Brooklyn (let alone actually rough neighborhoods). There's still plenty of room for low-skill employees in those places.

Edit: I guess the point is that this is only really a crisis in the Bay Area, where *everywhere* has become expensive. Other pricey markets like NYC, Boston, etc. still have significant areas that are desirable only to low-income people/immigrants.

[Roronoa D. Law]

This is mostly attributed to the dot com bubble. San Francisco somehow managed to combine the educated and high net worth population of DC with the constructed and aesthetic geography of Miami. There really is nowhere or initiative to build a community for affordable housing in the bay area.

[Mr. Smith]

This is mostly attributed to the dot com bubble. San Francisco somehow managed to combine the educated and high net worth population of DC with the constructed and aesthetic geography of Miami. There really is nowhere or initiative to build a community for affordable housing in the bay area.

Last I checked, Miami didn't have so many natural hills bunched up against the shoreline creating a natural limit of space.

[T'Chenka]

 They can't live there, so they must commute....why do they commute past a thousand places that would pay them comparable money?

I think there is a significant wage premium to working in service-sector jobs in expensive areas.  For example, at a local fast food spot in Mountain View, CA (the heart of Silicon Valley), there was an advertisement of a salary of $16.75/hour (plus health insurance and up to $18.50 with bonuses and guaranteed raises) for new employees.  I'd imagine that's significantly higher than one might get in poorer areas.  

That's interesting. This is NOT the case in the Greater Toronto Area or even Toronto.

That being said, out west in Alberta, I have heard of this kind of thing at McDonalds in smaller communities people would never want to move to under normal corcumstances, where many of the other people who (temporarily) work and live there make an absolute killing working labor jobs for energy companies in oil fields and tar sands.

[True Federalist (진정한 연방 주의자)]

This is mostly attributed to the dot com bubble. San Francisco somehow managed to combine the educated and high net worth population of DC with the constructed and aesthetic geography of Miami. There really is nowhere or initiative to build a community for affordable housing in the bay area.

Last I checked, Miami didn't have so many natural hills bunched up against the shoreline creating a natural limit of space.

No it has a natural wetland, the Everglades.  Even with drainage canals, you can only realistically have urban areas expand some 20 miles inland from West Palm Beach south. That's wider than the San Francisco peninsula, but the Miami "peninsula" of urbanizable land is much longer.