Comme la misère qui s’abat sur le bas-clergé
We have the rise of the two-earner household and so previously if you just had the head of household working, and the head of household lost his job, it was less of an issue to move. Now if you have both members of the couple working and one of them loses their job, it’s very problematic to try to locate and try to find a better opportunity for both people. That’s one of the things that’s sort of been supporting large cities. If you look at what the data says–there’s been kind of a lot of work on this in the past two decades–it suggests, especially in recent decades, density has become quite important for improving productivity. (…) When a particular industry has a lot of participants in one geographical location, the whole industry gets better. It’s not just that there’s more competition, although that’s part of it, but that there’s a lot of cross-pollination of ideas between the participants, new spin-offs get started; so many aspects of that process take place in Silicon Valley, one of the examples you use, Boston, and other places like that; or in New York, the finance sector–some of them not so healthy–but a lot of innovations taking place that are harder to take place in geographically disparate locations. (…)
Places like New York, Boston, Washington, the Bay area–these are places that have been incredibly economically successful over the last ten years, and I think a lot of that is due to the way a lot of new technology has supported the high levels of human capital that they have. Made those places more productive. What’s striking is that this economic success, growth in wages, employment, to some extent, has not translated into a lot of population growth. In fact, quite the opposite. There has been some population growth there but most of that is due to natural increase or immigration. (…)
There’s been some interesting research on this lately which is that essentially there was no surplus labor in Silicon Valley in the late 1990s. Pretty low unemployment rate, like 2-3%. That was great for the workers who could afford to be there. Salaries were skyrocketing. But it was very difficult to attract new people. You wonder why, if salaries are going up so much, why wouldn’t people just be flooding into this market and taking advantage of that; and that’s because housing prices were growing even faster than compensation. So even as the tech industry was booming, people were leaving Silicon Valley. I think what’s interesting about that is that it put a chill on entrepreneurship; made it very lucrative to stay at a place that was established, to keep piling up stock options. It was much better to be a salaried worker than to be self-employed, so the rate of entrepreneurship in Silicon Valley at this point was much lower than the national average. You have a place that’s producing some of the best ideas; it’s a center for innovation; and it’s important that we start new businesses in the center of innovation–that’s what the research tells us. And yet it was very unattractive to start a new business at that point because the labor market was so tight, thanks to the tightness of the housing market.
