Southern California wages are rising but a new report from University of Southern California shows that’s not going to make rents more affordable in the long run.
The annual USC Casden Real Estate Economics Forecast found that rents will keep rising over the next two years because the supply of apartments is tight and not enough new housing is coming online.
In Los Angeles County, average monthly rents are expected to rise to $2,373 by 2019 — up $136 from the 2017 average.
Backing up Hassett’s assertions, former CEA chair Glenn Hubbard recently wrote in the Wall Street Journal that too many economists fail to consider the share of the U.S. corporate tax burden borne by labor -- 60 percent according to his research. Neither the TPC, the CBO, nor the JTC (Joint Tax Committee) model these results. Instead, they ignore the evidence.
A recent analysis of the House tax plan -- which is nearly identical to the Trump plan -- by professors Alan Auerbach (Berkeley) and Laurence Kotlikoff (Boston University) concluded that it would boost wages by 8 percent. That’s a big number.
It’s the difference between a prospering and optimistic middle class and a pessimistic middle class that lives day-to-day, paycheck-to-paycheck.
This Working Paper focuses on this challenge through multiple case studies, covering both state and local governments. The case studies demonstrate a marked increase in both employer pension contributions and unfunded pension liabilities over the past 15 years, and they reveal that in almost all cases that costs will continue to increase at least through 2030, even under the assumptions used by the plans’ governing bodies—assumptions that critics regard as optimistic. It examines the impacts of increased pension contributions on other expenditures, including services traditionally considered part of government’s core mission. Pension costs have crowded out and will likely to continue to crowd out resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety.
California governments likely will make do with fewer teachers, parks employees and other public workers while they struggle to absorb fast-rising pension costs in the next few years, a former state lawmaker argues in a study released this week through Stanford University.
Former Democratic Assemblyman Joe Nation projects that many cities, counties and school districts will double their spending on pensions by 2030, “crowding out” their ability to fund public services.
The trend is an acceleration of the swelling pension costs that most California governments have recorded since the dot-com crash in the early 2000s, when pension plans that had been over-funded suddenly had to catch up with investment losses.
“As painful and as steep as these increases have been since 2003, my best estimate is that we are only about half way through these increases,” said Nation, who is now a researcher at the Stanford Institute for Economic Policy Research. “If you’re a public agency and you went from paying $1 million a year to $10 million a year, that’s an enormous increase. You’re likely to go from $10 million to $20 million by the year 2030.”
The dispute over methodology explains the importance of this summer’s research on Seattle’s minimum-wage experiment. The city’s wage floor, previously about $9.50 an hour, has been raised to $13 and is on its way to $15. A comprehensive study by academics at the University of Washington estimated that the higher minimum “reduced hours worked in low-wage jobs by around 9 percent.” Consequently, earnings for these employees actually dropped “by an average of $125 per month.” What’s especially inconvenient for minimum-wage proponents is that the Seattle study used a “close comparison” method similar to the one they have favored for years. The authors of the study compared workers in Seattle with those in other metropolitan areas in Washington, like Olympia, Tacoma and Spokane. To no one’s surprise, that hasn’t stopped minimum-wage supporters from attacking the Seattle research. In a June letter to city officials, Mr. Reich, the Berkeley professor, wrote that the study “draws only from areas in Washington State that do not at all resemble Seattle.” But this gives away the game: Any researchers doing this kind of study should explicitly choose control areas that show similar trends, as did the University of Washington team. More to the point, if the controls for Seattle can’t be trusted, it undermines the whole idea of “close comparison.” Criticizing the method only when it delivers evidence against minimum wages suggests the motivations here may be ideological rather than empirical.