Broken Housing Market Fails To Make Work Pay For Jobseekers, Says Report

[interestrateripoff]

http://www.theguardian.com/money/2014/jan/13/broken-housing-market-work-jobseekers

High rents in cities with the most job vacancies mean people who decide to relocate for work may lose out, research from PricedOut, the campaign for lower cost housing, suggests.

According to its analysis, private tenants who work in England's top cities pay £251 more in their monthly rent than the national average, but they only earn an extra £167 per month after tax.

In Hull, with 32 jobseekers per vacancy, the average rent of £325 is 21% of the median monthly income of £1,640, whereas rental costs in Oxford consume 41% of income. In London, higher rents offset salary gains by as much as £4,000 a year, the analysis claims.

PricedOut spokesman Dan Wilson Craw said the findings illustrated a broken housing market that failed to make work pay: "The gulf between disposable incomes in different parts of the country creates a dilemma for people who could stay where they are and keep looking for work, or 'get on their bike' and potentially earn less after rent.

Luckily no link between rents and property prices.

[porca misèria]

Golly. They've finally caught up with the observation I made 30 years ago ...

(for a moment around the 2010 election I thought the politicians were starting to notice - when the "squeezed middle" became a catchphrase)

[(Blizzard)]

Golly. They've finally caught up with the observation I made 30 years ago ...

(for a moment around the 2010 election I thought the politicians were starting to notice - when the "squeezed middle" became a catchphrase)

...an observation that David Ricardo made over 200 years ago.

Law of rents

This law has a number of important implications, perhaps the most important being its implication for wages. The Law of Rent implies that wages bear no systematic relationship to the productivity of labor, and are instead determined solely by the productive capacity of marginal land,^[3] as all production in excess of that amount will be appropriated by landowners in rent.

All economists know this, they just don't talk about it.

Still, well done to priced-out for campaigning about it.

EDIT: A better link

Edited January 13, 2014 by (Blizzard)

[Doesn't Commute Anymore]

Good link worthy of more responses.

The number of young things I know living in London on crap money (to get first job experience) is huge.

[wonderpup]

Ok- riddle me this- George Osborn just delivered a speech featuring among other gems of wisdom the insight that it's vital that the workers of Europe are able to compete in a global economy.

However that same George Osborn also recently created a scheme called 'Help to Buy' which is universally acknowledged to put an upward pressure on house prices and therefore rents.

So he seems intent on raising the living costs of the same workers who he claims are failing to compete with workers in other places.

So are there two George Osborn's or just a single incoherent idiot?

[spongeh]

Ok- riddle me this- George Osborn just delivered a speech featuring among other gems of wisdom the insight that it's vital that the workers of Europe are able to compete in a global economy.

However that same George Osborn also recently created a scheme called 'Help to Buy' which is universally acknowledged to put an upward pressure on house prices and therefore rents.

So he seems intent on raising the living costs of the same workers who he claims are failing to compete with workers in other places.

So are there two George Osborn's or just a single incoherent idiot?

Just the one idiot that can't join the dots

[19 year mortgage 8itch]

Just the one idiot that can't join the dots

Bring out the Gidiot.

[spyguy]

What the Law of Rents misses out to my mind is the "Law of Wages^tm".

The credit bubble has been developing for so long particularly centred on London that people think it is simply the natural order of things, that somehow it is down to the genius of the locals - whereas we all know that someone doing the same job in London shouldn't really be paid more than anywhere else based on the job itself and the value output.

However, you will see this mistake in many official statistics such as GVA (gross value added) add to the lie that somehow nurses are more productive in London simply because they are in receipt of London weighting and housing benefit.

But they're not are they - Cockernays paid more than the rest.

The average wage for London is only marginal more than the UK as a whole.

When I first got a job down south in the early 90s there was a difference - I remember a boots girl in Wokingham was earning a lot more (5k) than one I knew in Yorkshire.

The minimum wage saw the end of this.

Its also the reason why London housing gets hammered when IRs rise - there's so much more leverage and not enough wage in London.

[byron78]

Ok- riddle me this- George Osborn just delivered a speech featuring among other gems of wisdom the insight that it's vital that the workers of Europe are able to compete in a global economy.

However that same George Osborn also recently created a scheme called 'Help to Buy' which is universally acknowledged to put an upward pressure on house prices and therefore rents.

So he seems intent on raising the living costs of the same workers who he claims are failing to compete with workers in other places.

So are there two George Osborn's or just a single incoherent idiot?

Nailed it.

[Neverwhere]

But they're not are they - Cockernays paid more than the rest.

The average wage for London is only marginal more than the UK as a whole.

When I first got a job down south in the early 90s there was a difference - I remember a boots girl in Wokingham was earning a lot more (5k) than one I knew in Yorkshire.

The minimum wage saw the end of this.

Its also the reason why London housing gets hammered when IRs rise - there's so much more leverage and not enough wage in London.

+1

Minimum wage in London is widespread. I wouldn't trust the average wage figures at all because they are totally skewed by a tiny minority sitting on silly money in the city.

[dkujsbap]

Presumably also skewed by single person "consultancies" and also tax credits.

Salary probably only applies to 50% of the working population.

[Neverwhere]

Presumably also skewed by single person "consultancies" and also tax credits.

Salary probably only applies to 50% of the working population.

Tax credits apply across the whole UK, my point was that once you weed out the 1% London average income is unlikely to be far off UK average income whether you include tax credits or not.

[EUBanana]

So are there two George Osborn's or just a single incoherent idiot?

Oh he knows what he's doing - maximising his chances for re-election.

That it might even work shows that there are a great many more idiots than 1.

[24gray24]

There is no inconsistency.

The people he's helping are buy to let landlords and developers. They vote Tory.

The people he's getting ready for Chinese wages are the MinWa.

[porca misèria]

...an observation that David Ricardo made over 200 years ago.

Aha!

The difference between now and then (30 or 200 years ago) is modern communications, that enable you to enlighten me on such things, and put it in historic context.

30 years ago it was just bewilderment at why do we put up with it ... dammit, I'm out of here!

[winkie]

[steve99]

But they're not are they - Cockernays paid more than the rest.

The average wage for London is only marginal more than the UK as a whole.

When I first got a job down south in the early 90s there was a difference - I remember a boots girl in Wokingham was earning a lot more (5k) than one I knew in Yorkshire.

The minimum wage saw the end of this.

Its also the reason why London housing gets hammered when IRs rise - there's so much more leverage and not enough wage in London.

No, the reason wages went lower for 'Boots girls' and the like is the fact that back in the late 90's employers had to look for and retain workers. Mass immigration put paid to that line of 'market forces' which according to employers and government should only be applied to the housing market and their own personal financial welfare. The rest of us have to take it up the poop shoot re the other side of market forces. For eg. Back in 98/9 I used to do some IT work for a big retailer in London, all their shop floor staff and office bods got 8quid an hour. Now their shop floors staff get min wage, thats right 15 years later the workers get less in nominal terms than they did then and to top it off, half the workers in there now are from EEurope. Nothing against them of course but you can see how the workers have been bu&&ered soundly from behind. Pre min wage there were workers, like say a junior hairdresser I knew up north on 1 pound per hour ( have US keyboard right now.) and that was after 3 years working, relied on charity at home in order to live.(which is what our current government drools about behind closed doors). I cant imagine this girls wage going from 1 to 5 quid per hour would make the business she worked for unprofitable, dito all the low paid workers, just cuts into the petty cash of the concerned business a tad.

[Tonkers]

Good link worthy of more responses.

The number of young things I know living in London on crap money (to get first job experience) is huge.

Has it ever been thus for London? I got my hand in by squatting basically, and I only emigrated to Central London from Hayes & Harlington!

A beggar collapsed in the Sainsburys in Vauxhall yesterday, not sure if lived but didn't look good. Now Vauxhall is a bit rough, but in the 2 years I lived there it was never so bad as it is now for vagrancy. The amount of time I am harassed by beggars has doubled easily in te last 6 months. It's nasty, and it's everywhere.

[pig]

Ok- riddle me this- George Osborn just delivered a speech featuring among other gems of wisdom the insight that it's vital that the workers of Europe are able to compete in a global economy.

However that same George Osborn also recently created a scheme called 'Help to Buy' which is universally acknowledged to put an upward pressure on house prices and therefore rents.

So he seems intent on raising the living costs of the same workers who he claims are failing to compete with workers in other places.

So are there two George Osborn's or just a single incoherent idiot?

Its the same party who are so concerned about Housing Benefit that they are hell bent on pumping up house prices.

[Neverwhere]

No, the reason wages went lower for 'Boots girls' and the like is the fact that back in the late 90's employers had to look for and retain workers. Mass immigration put paid to that line of 'market forces' which according to employers and government should only be applied to the housing market and their own personal financial welfare. The rest of us have to take it up the poop shoot re the other side of market forces. For eg. Back in 98/9 I used to do some IT work for a big retailer in London, all their shop floor staff and office bods got 8quid an hour. Now their shop floors staff get min wage, thats right 15 years later the workers get less in nominal terms than they did then and to top it off, half the workers in there now are from EEurope. Nothing against them of course but you can see how the workers have been bu&&ered soundly from behind. Pre min wage there were workers, like say a junior hairdresser I knew up north on 1 pound per hour ( have US keyboard right now.) and that was after 3 years working, relied on charity at home in order to live.(which is what our current government drools about behind closed doors). I cant imagine this girls wage going from 1 to 5 quid per hour would make the business she worked for unprofitable, dito all the low paid workers, just cuts into the petty cash of the concerned business a tad.

I don't think the argument being made was against a minimum wage per say, just that the introduction of one that is below the living wage has had some detrimental effects. Other factors such as immigration have of course had an impact as well.

[wonderpup]

Its the same party who are so concerned about Housing Benefit that they are hell bent on pumping up house prices

Whatever happened to 'joined up government?' You would swear that Osborne had an evil twin- which in sense is quite true- there is fiscal responsibility Osborne who is keen on reducing the deficit and there is re-election strategy Osborne who is keen to buy as many votes as possible- sadly the two are hopelessly at odds.

So we get these wildly contradictory policies that-taken isolation- might make sense- but in the round are utterly incoherent.

What Osborne wants is an internationally competitive workforce paying huge mortgages for inflated house values and to reduce the housing benefit bill while inflating the price of housing via 'Help to Buy'.

Yep- he's gone mad.

[(Blizzard)]

Aha!

The difference between now and then (30 or 200 years ago) is modern communications, that enable you to enlighten me on such things, and put it in historic context.

30 years ago it was just bewilderment at why do we put up with it ... dammit, I'm out of here!

Thought you might read that as a criticism, it wasn't meant to be.

What I wanted to show was that this understanding of rents and the land market isn't some fringe belief cooked up on the internet, nor is it a weird political ideology. It is well established economics.

All the government economic advisors know it. All the TV talking heads economists understand it as well.

Yet the view of the housing market held by the man on the street and espoused by politicians and the media, that landlords are entrepreneurial suppliers of housing basically, is radically at odds with it.

I find that amazing, and for me its a clear example of the way that the media acts as a propaganda machine without any need for a controlling conspiracy.

Edited January 18, 2014 by (Blizzard)

[porca misèria]

Thought you might read that as a criticism, it wasn't meant to be.

I didn't read that as criticism. Far from it: always glad to be educated (and you know I regularly post longer views and historical contexts here).

FWIW, I've made two variants of the observation at different times of life:

1. As a young graduate in the 1980s: This is outrageous. I'm in a supposedly good job at a decent salary, yet I'm priced out of living here. If I were on the dole I could claim more in housing benefit alone than my total income through hard work, but unfortunately Landlords Benefit isn't a route out of this hole either. Germany here I come!

2. In the HPI of the early 2000s: People are much richer now, higher incomes, lower taxes, and prices for everything-but-houses are pretty-much negligible. Lots and lots of surplus money has nowhere else to go, and is going into housing. Low interest rates and loose lending compound this, and with the expectation of ever-rising prices create a bubble. Damn, if all the country's money goes in to HPI, that's starving the productive economy of investment!

Edited January 18, 2014 by porca misèria