The meta-analysis of our economy emphasizes its ongoing weakness, but I would like to offer a few points that add some nuance to how it is changing.

Employment: The lack of jobs is driven more by a lack of hiring than by a surge of layoffs. Most of the cutting has already taken place. Unfortunately, new jobs aren’t opening up. This is part of the reason for why it takes so long for workers to re-enter the workforce. Now, people out of work have other problems. There is a bias in the (more…)

Builders have stopped building, but not everywhere.

Fewer homes are being built across the United States. New starts fell of 71 percent between 2004 and 2009. 2004 and 2005 were peak years for new home construction in the United States. In both years, more than 2 million new homes were built. Last year, only 583,000 new homes were started.

Still, homes are still being built and in some states, the numbers are actually going up. Home construction is up more than 12 percent in North Dakota and almost two percent in Alaska.

This chart shows the percentage of new homes started in 2004 compared to those started in 2009 on a state-by-state basis. It is a randomly chosen set of states.

This chart supports the inference that the ebbs and tides of real estate – housing starts, foreclosures, mortgage financing – are driven by employment. Jobs are scarce in Nevada (14.4 percent), Michigan (13.1 percent), and Florida (11.1 percent).  They aren’t much easier to come by in Georgia or Arizona, either. Indeed, Montana (7.7 percent) is the exception to the rule.

The Dakotas are just the opposite. The Bureau of Labor Statistics published data this month that shows how well both states are flourishing. North Dakota is slightly more fortunate, with less than 1 in 22 workers unable to find a job. It is the same in Nebraska (4.6 percent) and Oklahoma (7 percent). Washington, DC has fewer jobs, but it has many high-paid jobs.

South Dakota and North Dakota were exceptions to the subprime mortgage lending mania that gripped the country from 2001 to 2008.

Louisiana may be operating under an entirely different set of pressures. Housing starts haven’t been very popular in New Orleans since Katrina. The rest of the state suffers from another common problem: the cost of new construction is far higher than the price for a existing home. Housing in rural areas, no matter what state they are located in, seem to be given to this conundrum. That is certainly the case in parts of North Carolina.

Still, the real message of this chart should be to say that there is not really a national home building crisis. The problem is more of one that afflicts some regions. In many ways, it is an expression of the free market finding its equilibrium.

Some people have pointed to a disconnect between low-income populations and environmentalism.

I have a friend who always reminds me that brownfields efforts often mask gentrification. She sees other problems: in those defining moments in budget battles at legislatures across the country, left-leaning groups often end up competing against each other for a finite sum of political power. Do we fund open space, or do we redress inequality in schools?

This plays out in a lot of ways.  In the United States, it has much to do with priorities in African-American communities: people care first and foremost about achieving financial security.  When environmental concerns emerge (environmental justice), they are often the product of partnerships driven by both whites and African-Americans.  Climate change in Bangladesh threatens the entire nation’s very existence.  The rise of sea level portend the possibility that the entire country could soon be under water.

Too, there is a recognition among many developing nations that escaping from poverty is a struggle that will fail or succeed within the constraints of fuel choices. Many third-world countries only have wood, charcoal, or coal to burn – nuclear power, solar, or wind are abstractions.

What ties these examples of resistance is that in both cases, it is low-income people who would pay the most for new investment in a greener economy.  It might even be thought of as a regressive form of taxation.

Alternatively, consider how environmental emergencies often impact communities differently.  The Ninth Ward in New Orleans has still not been redeveloped after Katrina.  Some say its not about the response, but about the a priori long-term inequalities in housing and neighborhood type that systematically sort minorities inot more vulnerable locations.  It’s not about need, perhaps, so much as it is about wealth, according to authors Donna Shai.  Those homes burning in Santa Barbara are going to get more funding, and they will be rehabilitated, before we are done with restoring the low-income neighborhoods gutted by outlash surrounding the beating of Rodney King.

Van Jones, a leader in Green Jobs, is working to reverse this very dynamic by finding ways for employment policy to collaborate with the new green movement. He’s going against a long-term problem.  Too many proponents of environmentalism come from the same well-off and largely white background.

People who meet Jones come away with a sense of resilience against any obstacle.  Still, many profess some doubts about his ideas.  Robert Stavins summed it up:

“Let’s say I want to have a dinner party. It’s important that I cook dinner, and I’d also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I’m not going to get very clean and it’s not going to be a very good dinner.”

Right now, Jones is the Green Jobs Czar in the Obama administration.  Its hard to know what that means, but it certainly is a platform to realize change.

Those efforts are laudible, and I support them.  Then again, the context of the distribution of wealth in this world reminds us of the fissure between environmentalism and class.  We know we need to worry about our environment.  We know that our future economy will be fundamentally thwarted without natural resources. We have one billion hungry people in this world – today.  For many of them, it is not pollution that undermines life, but about finding any way out of crushing poverty.

The diagnosis for the affordable housing problem usually focuses on strategies to increase the supply of appropriate properties.  From non-profit groups such as Habitat or community development groups to municipal housing groups and state housing finance agencies, much effort is given to building new properties.  Those efforts are stimulated by the availability of low-income housing tax credits.  The Federal Home Loan Banks provide AHP funds.  On the secondary market, Fannie and Freddie have purchased some of the mortgages that finance these properties.

Yet another conclusion, perhaps well-known but otherwise not linked to the problem, is to recognize the significant portion of our population that earns wages that are really too low to purchase any kind of housing.  UNC-Chapel Hill reports that the top five (by number of employees) jobs in North Carolina all have average wages that fall below $30,000 per year.  After taking out for social security (but not for income taxes), that amounts to $27,900.  Oh, and another 11.2 percent of all workers in the state are currently without a job.

These jobs are necessary in our service economy, but they cannot approach the buying power needed to equal the cost of housing construction.  What kind of jobs are we talking about?  Jobs like nursing assistants, ambulance drivers, teaching assistants, poultry and pork processors, and light manufacturing (fast food, warehouse worker).  If it is bad in North Carolina, check out the situation in some high cost areas such as Palm Beach, Florida.

A conservative estimate would suggest that these employees should be paying no more than  $700 per month on housing costs.   That will pay for a house that costs approximately $100,000, accounting for a little margin to pay taxes and insurance.  Zillow estimates that the average price for a home in the state is $163,000.  In metro areas like Charlotte, it is far higher – over $215,000.

Wages are tied to housing prices.  The effect is not uniform, however.  Even worse, it appears that income inequality, even when mostly a product of steep gains to the highest earners, contributes to increases in the cost of low-income housing.  Yet in recent years, wages and home prices de-linked.   Wages were relatively unchanged, accounting for inflation, but housing went way up.  Affordability has actually been getting better, as housing prices have dropped in the last year. It is a hidden blessing that stagnant wage growth has finally been correlated with home prices, as they are stagnant (or falling) themselves. Still, this blessing could be short-lived, as long-term trends indicate that areas with high levels of highly educated workers will only accelerate in their concentrations, while have-not areas will continue to decline in the share.

Other factors have a role in housing prices.  Some say it is related to restriction in the construction of new homes (a supply issue) because of zoning.

Perhaps a better strategy for states would be to eliminate the silo-like orientation of state policy.  Right now, states have housing agencies designed to meeting housing needs.  They are generally independent from job-driven agencies such as Employment Security Commissions or the Department of Commerce.

If more dollars went to job retraining and workforce education, then perhaps fewer families would be priced out of housing.  Home values would be better supported, and tax revenues from income would be grow.

With the benefit of some time to think, I want to point a few potential shortcomings to Edward Moscovitch’s study of housing supply in US metro areas.

Moscovitch published a report for the Massachusetts Housing Partnership that correlated high levels of housing production with high levels of job growth.  He looked at 242 metro areas from 2000 to 2006.  He found that high shares of manufacturing employment were also likely to be found in regions that had low job growth.

First, I wonder how this study would change if it were compiled over a longer period of time.  The years from 2000 to 2006 were one of low interest rates, a relatively booming economy, and short of 9/11, constant prosperity.   Actually, now that we are in a (more…)