Why Don't People Move To Opportunity?
Why Don't People Move To Opportunity?
A blog about business and economics.
Jan. 18 2012 12:18 PM

Why Don't People Move To Opportunity?

Nominal wages vary dramatically from place to place in the United States, so why doesn't everyone pack up and move to high-wage metropolitan areas and get rich? Here's one theory:


That's all true, but I don't think it really explains it. Those highly paid Silicon Valley workers with specialized skills hire maids, they get their hair cut, they eat at restaurants, their cars need repairs, they get lab work done when they go to the doctor, they shop in stores, they hire plumbers, they order Chinese food, etc. They participate, in other words, in the vast sector of the economy that consists of services that can't be traded across long distances. And in general, if you're selling services like that—whether as a fancy surgeon or a lowly maid—you're better off selling them to richer clients. And if you look at it, you'll see that cities like San Jose, Boston, San Francisco, and Washington DC have median wages that are much higher than the national average even though the median person in all those places doesn't have a college degree. So why isn't everyone flocking to these high wage dynamos? To make a long story short, it all has to do with housing costs and land use regulations and it's a much bigger deal than people realize. My forthcoming ebook The Rent Is Too Damn High is all about this, but as a simple illustration note that Chicago, Detroit, and Houston all experienced explosive population growth during these periods. San Francisco's population is not exploding, it's just becoming a very expensive city.


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