Cheesecake dreams

I came across some interesting tidbits while putting together a post on LA mass transit over at Econlog, which I’ll share with you over here.

1.  It seems that in today’s election the affluent neighborhood of Eagle’s Landing will try to secede from the majority black city of Stockbridge, Georgia.  (BTW, don’t read “black” as poor and “affluent” as white.  Stockbridge is not a poor city, and a substantial number of affluent blacks live in Eagle’s Landing.)  What caught my eye is the motivation for this attempt at secession:

The Eagle’s Landing plan seeks to merge into its boundaries the primest real estate and wealthiest households from the city of Stockbridge, leaving behind a smaller, mostly African American population with fewer resources to pay for Stockbridge city services. The Eagle’s Landing city proposal will be voted on via ballot referendum on November 6, but Stockbridge residents who live outside the Eagle’s Landing footprint—the people who will be most hampered by the division—are not eligible to vote on it. Meanwhile, neither lawsuits nor letters from global finance agencies warning that the proposal could wreck economies across Georgia have been able to stop it.

And the reason for tearing Stockbridge apart to start this new city? It has something to do with cheesecake. Or at least cheesecake is what was emphasized in a conversation with Vicki Consiglio, the chair of the Committee for the City of Eagle’s Landing, held at the Eagle’s Landing Country Club.

 “I serve on the Henry County zoning board,” said Consiglio, “and so I kept seeing all of these places like Bojangle’s, Waffle Houses, dollar stores, and all this going up in our county. And I was like, why can’t we get a Cheesecake Factory, or a P.F. Chang’s or a Houston’s? We have areas that have high incomes, so what’s the deal?” . . .

According to Consiglio, The Cheesecake Factory did consider coming to Stockbridge at one point, but balked after an income study revealed that the average median income was too low to justify placing a restaurant there. Consiglio blames this on Stockbridge, where median household income is $54,769. So in 2016, Consiglio and her neighborhood colleagues, some of them former Stockbridge city officials, began meeting to figure out what they could do to land if not a Cheesecake Factory, then a Cheesecake Factory-esque restaurant, because the dining halls and pubs in the country club would no longer do.

I’m sure Tyler Cowen or Scott Alexander could find a witty title for this story, but I’m sort of speechless.  Any attempt on my part would (already has?) come across as condescending.  BTW, there actually is a serious economic story here, relating to questions such as who absorbs Stockbridge’s bond obligations.

As an aside, I like key lime cheesecake–how’s that for bad taste! 

2.  Last week my wife and I drove through LA’s skid row neighborhood, which has an extremely dense concentration of homeless people.  This is by far the poorest neighborhood I’ve ever seen while traveling throughout the US.  Just a few miles away you have the ultra rich suburb of Beverly Hills.  But here’s what I find surprising, the difference in poverty rates between Skid Row and Beverly Hills is less than I would have imagined.  Beverly Hills is 10.2% poor while Skid Row is 41.8% poor.

You may be asking, “What’s so confusing out that; Skid Row is 4 times more poor, exactly what’s you’d expect.”  No, I get that it’s poorer; I’m surprised the gap is not even larger.  If you asked me to guess, I might have estimated that Beverly Hills was 2% to 4% poor—a few live-in nannies, plus the odd 30-year old living in his parents’ basement, while Skid Row was 80% poor.  I’m surprised the gap is not even larger.

I’m too lazy to do the research, but is there some sort of national tendency for poverty rates to cluster close to the national average of 14%, regardless of how rich or poor a neighborhood is?

3.  LA’s homeless problem got me thinking about the today’s rent control referendum in California.  Obviously, I oppose all rent controls.  At the same time, I doubt that rent controls are a major cause of homelessness.  Think about the following three groups of people:

a.  My daughter, and 5 other UCLA students who share two small rooms and one bath in a dorm.

b.  Six illegal immigrants from Fujian who share a single room in a Chinatown apartment building, work in a restaurant, and send money home.

c.  Six homeless men living in tents on LA sidewalks.

While LA’s housing policies undoubtedly make things a bit more difficult for the homeless, I’m really having trouble seeing how they could be a major cause of the problem.  Around here, fast food restaurants are desperate to get unskilled labor, even at a starting wage of $13.50/hour ($27,000/year.)  Now you may argue that $27,000/ year is a pretty low income in LA’s housing market.  But that’s entirely missing the point.  At no time in all of human history has it been assumed that poor people would be able to afford to live alone.  The expectation has always been that lower income people will live in groups, to spread housing costs.  If you have 4 people making $27,000/year, their combined income is easily large enough to share a decent LA apartment.  Lots of young professionals share apartments in California.

Please don’t read this post as offering advice to homeless people.  I understand that they may not be able to do what I suggest in the post.  My actual point is entirely different—homelessness has very little to do with high housing costs.  The reasons why it might be hard for 4 homeless people to get jobs flipping hamburgers and then share an apartment have little to do with cost; rather there are other more complex social issues.  Maybe some have drug issues that make it hard to hold a job.  Maybe some have mental health issues that make it hard to live with roommates.  Maybe they face discrimination from landlords. I could imagine any number of reasons why it’s hard to get housing.  What I can’t imagine is how any of this could be fixed by building more housing.  If I’m missing something here, please enlighten me.


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16 Responses to “Cheesecake dreams”

  1. Gravatar of Tom Brown Tom Brown
    6. November 2018 at 14:03

    How do you like our California ballots Scott? They suck, don’t they? Why oh why are there a whole page of judges we vote yes or no on? But then maybe they were worse in your old digs. I don’t know.

  2. Gravatar of Gordon Gordon
    6. November 2018 at 14:38

    There’s nothing wrong with liking key lime cheesecake. A key lime pie really isn’t that different from a key lime cheesecake. They’re both custards. The pie gets its dairy from sweetened condensed milk while the cake gets its dairy from cream cheese. Though I would guess that the latter needs less eggs to thicken the custard.

  3. Gravatar of ssumner ssumner
    6. November 2018 at 14:42

    Tom, Yes, it’s a mess.

    Gordon, Thanks for defending me. I’d hate to think my plebeian taste makes me one of THOSE PEOPLE. You know, the kind who vote for Trump. :)

  4. Gravatar of JayT JayT
    6. November 2018 at 15:37

    I suspect that more housing wouldn’t do anything for the chronically homeless that you see sleeping on the street, but for the borderline people that have a job that doesn’t quite cover rent if they have unexpected expenses a few months in a row, it could make a big difference.
    Obviously, if you have several roommates that can help in those situations, but there are cases where getting roommates can be very difficult, say a husband and wife with three kids.

    I also look at the fact that both my wife and I are well-paid professionals in the San Francisco Bay Area, and we are looking to buy a house. The areas that we are looking at were lower-class ethnic neighborhoods 15 years ago, but now the houses cost close to a million dollars. All those lower income people that used to buy houses in those neighborhoods are now renting in the neighborhoods that were slums 15 years ago, and all the people that were housed in those slums are now on the street.

    Obviously, that’s a simplified example, but I can’t imagine that at least some of the Bay Area’s homeless problems are caused by the fact that there aren’t enough houses on the market to satisfy the demand for anyone but high-income people.

  5. Gravatar of Christian List Christian List
    6. November 2018 at 15:50

    I think it’s indeed pretty established that the main reasons for homelessness are mental disorders, substance abuse/addiction, and other disabilities.

    The US treats the mental illnesses of indigent people rather poorly. I think that’s the main reason why there is so much homelessness in the US.

    Combine the poor treatment of mental disorders with the 2nd Amendment and you got a recipe for mass shootings.

    Great post about European health care at Econlog by the way. I didn’t think that you would defend the European system but you are right, it seems to be better than the US system right now.

  6. Gravatar of Rajat Rajat
    6. November 2018 at 17:10

    Thanks, Scott, point (1) made by morning. I live in an affluent suburb in Melbourne that is next to the most affluent, and I have French bistros with 20-page wine lists coming out of my ears. But no really authentic Indian or Thai restaurants! Maybe my street – which is a bit funkier than others in the suburb (we have more people with ethnic backgrounds and some ex creative and academic types) should secede?

    On (3), I completely agree with the point that “At no time in all of human history has it been assumed that poor people would be able to afford to live alone.” In any discussion of unemployment benefits, single-parent benefits or the minimum wage in Australia, advocates carry on like such people should be able to afford renting their own apartment – or even house if they have kids. Whereas young people from China or India come to Melbourne for study or work and share rooms. I don’t see anything wrong with that, but the standard these days is apparently not just food and shelter, but a “dignified life”.

  7. Gravatar of Rajat Rajat
    6. November 2018 at 22:45

    One more thing – America seems full of food chains. Instead of a Cheesecake Factory, how about someone sets up an artisanal patisserie or whatever, a byproduct of which may be to attract the fancier chains to the area? Isn’t this how it normally happens?

  8. Gravatar of ssumner ssumner
    7. November 2018 at 07:03

    Jay, I think the portion of homelessness due to those factors is tiny. Who wouldn’t prefer a roommate to being homeless?

    Having said that, lack of housing is a huge problem–it just doesn’t generally show up as homelessness.

    Christian, Just to be clear, I don’t like the European system. But I HATE the American system.

    Rajat, Good points.

  9. Gravatar of Jon Jon
    7. November 2018 at 07:16

    It’s minimum sqft rules that ban micro-apartments and zoning regulations that broke the flophouse industry. See you say mental health means they cannot have roommates — why do they need a roommate ? Because they cannot get a room small enough on their own.

    Second, the reason they have trouble getting jobs is that they cannot shower and they cannot secure their belongings. Again because of zone regulations preventing them even a very modest space.

  10. Gravatar of JayT JayT
    7. November 2018 at 10:00

    Is the portion tiny though? I always hear people say that only like a quarter of the homeless people are chronically homeless, the others are people that lose their housing for one reason or another, and then end up living in their car or some kind of temporary housing for some period of time before they can get permanent housing again.

    If there were more houses, then rents would go down, and it would be easier for someone (or a group of people) that lost their current housing to get new housing, rather than end up living in their car.

    Like I said, I live in the Bay Area, which is an extreme example, but to rent a two bedroom place reasonably close to the city centers, the move-in cost is nearly $10,000. Even if you are planning on putting four people in that place, it’s really hard to come up with $2,500 per person.

    All that said, I think the best evidence that it makes a difference is that if you look at the cities with the highest homeless populations it seems to correlate pretty well with how expensive that city’s rent is. The top cities for homelessness are a lot of expensive coastal cities, while cheaper inland cities have much lower rates, even if the inland cities have a more hospitable climate, eg, Houston vs Washington DC.

  11. Gravatar of Christian List Christian List
    7. November 2018 at 17:09

    JayT,

    The top cities for homelessness are a lot of expensive coastal cities, while cheaper inland cities have much lower rates, even if the inland cities have a more hospitable climate, eg, Houston vs Washington DC.

    How do you control for the possibility that homeless people don’t go there for the same reason as everyone else? Because those cities are so attractive, thus the high prices.

    If rents are the issue why aren’t homeless people moving more?

    It’s mostly mental disorders. To really solve the problem, you would have to take many homeless people by the hand and take care of them for a long time. A nanny state that takes care of everything. But this is very expensive. I don’t think the US is the right country for this.

  12. Gravatar of Christian List Christian List
    7. November 2018 at 17:16

    Scott,

    it’s all relative, of course. Compared to the US system, you like the European system. =)

    I do not like the European systems either. But so many lobby groups are so extremely strong that in Europe, as well as in the US, real reforms are hardly possible for many years. It seems, the jug has to go to the well until it breaks.

  13. Gravatar of ssumner ssumner
    7. November 2018 at 17:21

    Jon, Good point. I think that sort of complements my theory.

    Jay, I’m talking about the homeless people who lack jobs. Ask yourself why they are living in the Bay Area.

  14. Gravatar of Matthias Goergens Matthias Goergens
    7. November 2018 at 17:48

    Jon, interesting point. The Wikipedia page on flophouses even mentions this:

    > They preferred lodging and boarding houses to cages, cages to dormitories, dormitories to flops, and flops to the city’s shelters. Men could act on these preferences by moving as their incomes increased.[13]

    > “Regulatory efforts to combat low-cost ‘cage hotels,’ … [has been] a driver of the expansion of the homeless population in US cities”, according to Jencks.[14]

    https://en.m.wikipedia.org/wiki/Flophouse

  15. Gravatar of Jon Jon
    7. November 2018 at 19:34

    Scott,

    Fair. Check this out for some background:

    https://www.nybooks.com/articles/1994/05/12/housing-the-homeless/

    Homeless preferred flophouses because of the ability to secure their belongings and person by means of a private cubicle. The poor generally lack adequate police services to make close accommodation with other poor safe.

  16. Gravatar of JayT JayT
    8. November 2018 at 22:50

    I’m not defending the actions of people that are living in a place they can’t afford. I’m a strong proponent of people moving to find better opportunities, as it has worked out well for me on multiple occasions.

    That said, for the borderline people that end up homeless, they most likely don’t have the money to move to a cheaper area.

    Scott, you might be talking about the homeless that lack jobs, but that is not the entire homeless population. Here’s an article that estimates that ~10% of homeless people have jobs:
    https://www.kqed.org/news/11690325/thousands-of-californians-are-working-while-homeless-and-many-dont-want-their-boss-to-know
    I image that a good number of people in that situation wouldn’t be homeless if there was more housing available. Building more housing certainly wouldn’t get rid of homelessness, but I believe it would lower the rates of homelessness.

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