Housing Supply Promotes Job Growth

A new study by the Massachusetts Housing Partnership suggests that a region must continue to produce new housing in order to foster adequate job growth.  Without new housing, key workers are more likely to avoid moving to an area, curbing competitiveness among regional businesses and stunting new employment.

MHP is a regional group that promotes affordable housing.  The study was publicized in the Boston Globe, in part because MHP linked the lagging production of new housing in the Boston area to a relative under performance in the area’s employment rolls.   The study tracked housing costs and job growth in 242 metro areas in the United States from 2000 to 2006.

The study was led by Edward Moscovitch, an economist from Gloucester.  Regions with a high share of manufacturing jobs showed lower rates of growth.  But building new homes is critical to attracting young workers.  If those workers also come from a non-manufacturing field — such as knowledge jobs – then all the better.

An interesting second story was the finding that high housing costs were not necessarily a curb on job growth.  This conclusion was based on comparing the rules surrounding housing production in different areas.  Some places have high cost housing but still achieve job growth (San Diego, Los Angeles) because they also built a lot of new homes.  Boston is among a group of cities with high cost housing, but less ability to relieve that shortage because of restrictions on supply, in the form of zoning and land use controls.

So the study lends some suggestions to the ongoing debate about what is more important – building more housing, or keeping housing costs low.  It suggests that land use controls can have unintended consequences.

The Globe got a comment from Harvard economist Edward Glaeser, who commented that “the way a place grows is to add housing units. “If the Boston metropolitan area built more housing, it would grow more.”