Hotel life in Seattle, minimum wage $16/hour

From seattle.gov:

The Seattle Office of Labor Standards (OLS) announces that the 2019 minimum wage for all large employers (employing more than 500 workers worldwide) will be $16.00 per hour. In past years, there was a two-tier system under which large employers that contributed toward individual medical benefits paid a lower minimum wage than those that did not. This two-tier system ends in 2019. Also, beginning on January 1, 2019, small employers (with 500 or fewer employees) must pay at least $15.00 per hour.

From the Hyatt Regency, in a confirmation email:

HOUSEKEEPING SERVICE IS PROVIDED EVERY OTHER DAY BEGINNING AFTER THE 2ND NIGHT OF YOUR STAY UNLESS OTHERWISE REQUESTED. PLEASE INDICATE YOUR PREFERENCE FOR HOUSEKEEPING SERVICE AT CHECK IN. THANK YOU FOR CHOOSING HYATT REGENCY SEATTLE.

The “housekeeping every other day” message was regarding a $300+/night stay.

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Americans can’t afford to live in America: heartland edition

“America’s Housing Affordability Crisis Spreads to the Heartland” (Bloomberg) says that Americans with ordinary jobs can’t afford to buy houses or apartments all across the U.S.

“Financial Crisis Yields a Generation of Renters” (WSJ) notes that the median age of a home buyer is 46, the oldest ever recorded and homeownership rates for younger Americans “have fallen sharply.” The article notes “Home prices have outpaced wage gains.” Costs are up by 21 percent (after adjusting for the inflation that the government tells us does not exist) while income is up only 2 percent (2000-2017).

Related, from https://philip.greenspun.com/blog/2019/03/25/city-rebuilding-costs-from-the-halifax-explosion/ :

I talked with a guy recently who is involved in a $1.5 billion project to create 2,700 “affordable” apartments here in the Charlestown section of Boston (story). That’s $555,555 per apartment (less than 1,000 square feet on average) on land provided for free (city already has a housing project on the same footprint). Presumably these will be higher quality than whatever was built in Halifax in 1918.

[Note: poor people who are selected by the housing ministry to move into one of these apartments would actually be rich almost anywhere else in the world if they could only get their hands on the $555,555 capital cost as a direct grant instead of as an in-kind service! If they could also get their hands on the monthly operating cost and combine that with interest on the $555,555 they would be able to enjoy, without working, a middle class or better lifestyle in many of the world’s beach destinations.

How about folks who work at the median wage? That’s about $23/hour in Massachusetts (BLS) or $46,000 per year. NerdWallet says that someone earning this much in MA can afford a $258,500 house if he or she has saved $60,000 for a down payment, has a top credit score, and spends $0/month on food and other non-housing expenses. Zillow says $274,416 on a nationwide basis. So a dual-income couple in which both partners earn the median wage wouldn’t be able to afford one of these units without a taxpayer subsidy, even if landed were free and the unit were sold at zero-profit construction cost. The U.S. has apparently become a society in which Americans can’t afford to live like Americans!

But the caravans of folks streaming over the southern border and claiming asylum will surely be able to do better?

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Crazy cheap solar power plant

“World’s Largest Solar Power Plant Switched On” (Forbes):

The $870 million project was the result of a competitive tender process that will see electricity from the site sold to the Emirates Water and Electricity Company (EWEC) for around 2.4 cents per kWh, a record at the time of the auction and a record for any completed solar project. It was built by the Indian firm Sterling & Wilson with nearly 3000 people working on site during the peak of activity.

Can this be right? These profit-driven folks can recover their $870 million by selling power at 2.4 cents/kWh? That’s more or less free (the average cost in the U.S. to consumers is about 13 cents/kWh, which of course includes distribution).

Most parts of the U.S. are not as sunny as the UAE, but some parts are. Could we build a monster plant like this in Arizona or Nevada and run the power back to the cloudy East Coast? A friend who used to run a mutual fund that invested in this area said, “It would be a no-brainer economically to run a DC high voltage line from wind farms in Oklahoma to New York City. You could shut down every fossil fuel power plant in New York. But the U.S. power grid is fragmented and the people who stand to benefit from that have enough politicians in their pockets to keep it fragmented. So you’ll never see that power line built.”

Vaguely related: This investor considers Jeff Immelt to be the most incompetent executive in recent American business history. “GE actually made windmills so they knew that the price was going to drop below that of coal-fired power plants,” he said. “Yet still, GE bought Alstom, which has been disastrous. Even if the market for fossil fuel plants had held up, GE was locking itself into French labor, which any rational businessperson would seek to avoid. It is fair to say that the folks at Alstom were a lot smarter than anyone at GE.”

For the rest of the world, where they aren’t as plagued by cronyism in power transmission as we are, will it be time to go nuts with electricity (cars, planes, heat pumps, etc.)?

Also, does this mean we don’t have to worry about about climate change and CO2? Who is going to bother burning fossil fuels for any reason if they can get electricity for 2.4 cents/kWh plus reasonable transmission fees? (Aviation? Just turn the electricity into hydrogen and then run your electric motors off a fuel cell!) We were terrified in the 1970s about burying ourselves in nuclear waste. Then it turned out that we couldn’t operate nuclear plants economically, so the amount of waste generated was much smaller than anticipated (we just burned natural gas and dumped out CO2 instead!).

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Is Irish GDP misleading?

Based on GDP per capita, Ireland is substantially better off than the U.S. It is ahead of Switzerland and Norway, though not within sight of Singapore or Qatar.

Yet the observed lifestyle in Ireland does not seem lavish or gold-plated as it does in Switzerland. A “national road” (comparable to a state highway in the U.S.) will be the width of a North Carolina dentist’s driveway. There is no shoulder and a dirt embankment or hedge will be flush to the edge of the pavement, which is also the edge of the travel lane (see “no shoulder”). Houses are smaller than in the U.S. and systems for central and water heating, etc., seem to be more primitive (one huge plus: no mosquitoes and therefore no screens on the windows!). Public transport infrastructure is better than the U.S., but nowhere near the Russian standard (commuter rail every 15 minutes!). The country does not seem to live any wealthier than southern England, for example.

Costs for labor-intensive items, such as car or aircraft maintenance, are comparable to what people pay in the U.S. and much lower than in Switzerland. Hotels and restaurant prices are also reasonable, especially when you consider that taxes and service are included.

I spoke with several Irish guys who are frequent travelers to the U.S. They think that Ireland is a better country overall, especially for young people, due to the fact that citizens come out of university debt-free and into a strong job market. So they aren’t impressed with our infrastructure, apparently. Thanks to the cold/wet climate, nearly everyone in Ireland can afford to live close to the ocean. Oceanfront property prices are approximately 1/10th of what one might pay in Florida, for example, despite the fact that the Irish property will typically be high enough above sea level (on the rocky shore) to survive quite a bit of sea level rise. (Below, a statue in Cobh that commemorates the first person to immigrate to the U.S. through Ellis Island, but when the future was plainly brighter for a young person in the U.S.)

Our government investigators are the best (look at how the Mueller investigation, in only two years, figured out that older Americans were paying younger Americans to have sex and that Americans sought to avoid paying tax!) so I hesitate to doubt the CIA’s published GDP numbers. However, the facts on the ground don’t seem consistent with the higher-than-Switzerland purported GDP-per-capita.

The Financial Times seemed to agree with this back in 2016: “Multinationals obscure real state of Ireland’s economy; Bloated GDP data blamed on difficulty of measuring their activity.”

The good news is that, whatever the actual level of GDP per capita, Ireland is growing nicely, though property prices are not yet back to their peaks (a real estate developer told me that prices for completed structures, as opposed to undeveloped land, are now roughly where they were at the 2008 peak, but that’s in nominal dollars, not inflation-adjusted).

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Would it make sense for cities to hire homeless relocation concierges?

From the Los Angeles Times, “Councilmen weigh legal action, saying other cities are pushing homeless into L.A.”:

Councilmen Mike Bonin and Joe Buscaino called Wednesday for City Atty. Mike Feuer to explore “legal steps” that L.A. could use to compel those cities to comply with a federal court decision on homelessness and sidewalk camping in Boise, Idaho. The proposal, they said, would stop nearby cities from pushing homeless people into L.A. city boundaries.

The U.S. 9th Circuit Court of Appeals ruled last year that homeless individuals may not be held criminally responsible for sleeping on government property when no alternative shelter is available.

Bonin, whose council district touches Santa Monica, Culver City and El Segundo, said he believes many cities in the region are not complying with that decision.

“Instead of allowing people to sleep on their sidewalks, they are encouraging people, or compelling people, to move to the city of Los Angeles to do that,” he said.

I’ve occasionally wondered in these pages why people who are homeless in a place with a cold and/or wet climate, e.g., Seattle, do not relocate to Santa Monica. Readers have put forward various theories about the challenges faced by the homeless. The LA Times article shows that at least some cities are eager to see homeless residents move to other places (but they also want to provide sanctuary to undocumented low-skill immigrants?).

Would it make sense for cities to hire concierges for their homeless populations? The concierge El Segundo, for example, would organize luxury bus tours of nearby California cities, would know the best places to camp out and receive services in each of those places, etc. Instead of an arms race of hostility, seeing which city can make life miserable for the homeless, try to facilitate their moves.

[The article also contains a comparison of homeless to trash that, had Donald Trump made it, would have been newsworthy:

Councilman Jose Huizar and several colleagues called for increased enforcement, fines and rewards, along with the expansion of a program that allows homeless and formerly homeless individuals to work on cleanup crews.

“I have long said that downtown Los Angeles needs an emergency, triage-like response when it comes to addressing homelessness,” Huizar said in a statement. “But that is also true for the amount of trash that is illegally dumped on our streets.”

]

Readers: What do you think? Cities already provide a lot of services to the homeless. Why not a concierge to help with moving?

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Don’t hire American college graduates (says Harvard Business School)

“Dismissed by Degrees; How degree inflation is undermining U.S. competitiveness and hurting America’s middle class” (Harvard Business School) is a 2017 report recently brought to my attention by a reader.

It is worth reading because it corroborates the minimal improvement in skills described in books such as Academically Adrift (my review). Today’s typical college graduate doesn’t perform much better on tests of general research/thinking/writing than he or she did on finishing high school. HBS:

The results of our survey were consistent across
many industries—employers pay more, often
significantly more, for college graduates to do jobs
also filled by non-degree holders without getting
any material improvement in productivity.

Results vary by major, but our funding and investment in college educations is, unlike Chile’s, not conditional on major.

Related:

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Evil corporations put profits before human life

One of my virtuous neighbors was talking about evil corporations that prioritize profit over human life, not making products as safe as possible.

Of course I had to agree that this was, shall we say, Deplorable.

I asked “What about our own town?” We don’t have Danish-style bike infrastructure, in which a curb separates an automobile road from a bike lane and a second curb separates the bike lane from the pedestrian sidewalk. A cyclist was killed in our town recently, an accident that wouldn’t have happened with a Danish-style system.

I then pointed out that we have several busy roads through town that aren’t divided, thus inviting a deadly head-on collision. Since we do not want to put a price tag on human life, wouldn’t it make sense to raise property taxes sufficiently to widen these roads and insert a concrete divider in the middle?

Had he stood up at town meeting (at which recently the good townsfolk voted to spend $110 million on a new school for about 440 town-resident K-8 students) to demand these initiatives for safer roads?

The corporate critic was horrified at these ideas: “That would cost a fortune,” he said, “to acquire the strips of land and build the barriers. It would never make sense.”

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Ubernomics

A recent Sunday afternoon trip to Boston’s Logan Airport:

There was plenty of time to chat with the Uber driver:

He was a 24-year-old U Mass Lowell graduate with a business degree and he’d figured out that revenue was $20-25 per hour before car expenses. He had a day job. Why also drive Uber?

Everyone my age that I know is living for the weekend. They’re on autopilot Monday through Friday and miserable. Even the computer science graduates who did everything right and are working for Raytheon are living paycheck to paycheck.

He volunteered that most of these folks should not be broke. They were spending on Starbucks and other unnecessary luxuries in his opinion. He subsists primarily on Soylent and says a week’s nutrition costs less than one meal out in a city restaurant. The Uber project was partly insurance against an uncertain W-2 market: “Being a white male in corporate America is career suicide.”

The next opportunity to learn from a young person came at the Intercontinental Hotel at the Minneapolis Airport (to make a long story short, I now know that it takes Americans 2.4 hours to perform a Chinese fire drill from a broken Airbus to a working one and this is incompatible with making one’s connection to San Diego). A ripped tatooed guy at the gym offered the workout tip of immediately switching to progressively lighter weights after doing max reps on heavier. Repeat until down to 5 lbs. dumbbells. He volunteered that he was a former meth head. Why the gym passion? “I’m a loser so I have to look good.”

All but two of the Uber drivers whom I met in San Diego were immigrants, but not from Mexico as one might expect given the proximity of the border. Drivers were from Afghanistan, Brazil, Eritrea, Ethiopia, etc. The native-born drivers believed that their hourly earnings would be approximately double if not for the inexhaustible supply of immigrants.

A San Diego weekday afternoon, described by the driver as featuring lighter-than-usual traffic:

And they can do this with gasoline that costs less than $5 per gallon:

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Crony capitalism ends when immigrants try to become the cronies?

The NYT did an interesting analysis of the declining fortunes of government cronies (holders of NYC taxi medallions).

But the methods stripped immigrant families of their life savings, crushed drivers under debt they could not repay and engulfed an industry that has long defined New York. More than 950 medallion owners have filed for bankruptcy, according to a Times analysis of court records. Thousands more are barely hanging on.

It turns out that as soon as the assets had been sold to recent immigrants, politicians decided that the profits of the cronies did not need to be carefully protected (in this case against Uber and Lyft, though even without them it would have been tough to keep the medallion price bubble inflating).

Of course Donald Trump is at least partly to blame, according to the NYT! No article on malfeasance would be complete without his name appearing.

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Malthus was right in rural America too?

In https://philip.greenspun.com/blog/2019/04/03/malthus-was-right-but-it-is-real-estate-not-food-that-is-limiting/ we looked at data from cities around the world. “Housing’s hidden crisis: Rural Americans struggle to pay rent” (CBS) says that a lot of Americans can’t afford housing even in thinly populated areas of the U.S.

Since there is plenty of land in rural areas, I’m wondering if high costs can be partly explained by high materials prices due to demand from a growing economy worldwide. The 25th percentile American worker can’t afford cement for a home foundation because a 75th percentile worker in China or Mexico has purchased the cement instead.

Related:

  • “Bay Area Housing Struggles Extend To Farm-Rich Salinas”: “Salinas families earn a median income of $69,000, while the region’s 90,000 farmworkers bring in far less. They face a median home price of nearly $550,000 and two-bedroom apartments costing roughly $1,800 a month, according to Zillow.”
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