Comment by SquibblesRedux
5 hours ago
> Rent rises (and falls, but more slowly) to exactly the level required to keep some portion of people in poverty and near-poverty, no matter how productive the local area is.
That's an interesting claim. While it does seems there are some kind of structural forces that all but guarantee a certain percentage of people will live in poverty, I'm not certain that changing rent prices is necessarily a significant factor. I tried to find evidence that changes in rent prices "keep[s] some portion of people in poverty and near-poverty."
Can you point to any references that suggest this is the case?
It's self-evidently the case: go to any city in the world and you will find people in poverty regardless of the city's productivity and, as nradov points out, countless more who fled as the baseline cost of living overtook their own productivity potential.
An extreme example is Palo Alto where local productivity is so high that a family income of ~$200k/yr qualifies for public housing assistance. These are people who are outputting massive amounts of productivity but in dire need of public assistance.
Why? Rent.
There is an equilibrium between rent prices, people's willingness to live in a region, and the productivity of that region.
There is an equilibrium. When rents rise, workers at the margins demand higher wages or move away. This particularly applies to low-wage unskilled workers employed in service jobs like restaurants. There is friction in moving to a cheaper location and finding a new job so unfortunately some of those people will always be living in poverty.