The State of American Housing

California is in the midst of a housing and development crisis as a reluctance from neighborhoods and, subsequently, regional governments towards the construction of new affordable housing has forced the state government’s hand. California is not the only state struggling to accommodate its citizens, but the overall area available, variety of regions, and economic opportunities make the coastal state an appropriate case study.

As more neighborhoods attempt to disrupt their local development efforts so as to preserve their current domain, state officials are running out of prospective places to meaningfully expand. The stagnation has also played a role in rising housing and construction costs in the short-term and can affect workforce and labor demands for regional businesses in the long-term.

The state’s median home price has now reached $500,000, twice the national average and 60 percent higher than five years prior. An inability to relocate has also impacted normal commute times and could cause further complications to an already overworked California transportation network.

Chris Brown, Director of Policy and Research at the Common Sense Policy Roundtable, will be presenting a guest webinar on Thursday, December 14th from 2 to 3 p.m. EST discussing the economic and fiscal effects of capping housing growth in Lakewood, Colorado.

You can read more on the state of California’s housing situation in this article from the New York Times.

Auto Regulations & the Economy

Researchers from Indiana University analyzed the combined effects of three regulatory programs aimed at reducing greenhouse gases through rules for new cars and light trucks: the U.S. Department of Transportation’s corporate average fuel economy (CAFE) standards for model years 2017-2025; the Environmental Protection Agency’s greenhouse gas (GHG) emissions standards for model years 2017-2025; and the California Air Resources Board’s Zero-Emission Vehicle (ZEV) requirements for 2018-2025.

You can access the full report by clicking here.

The study, titled “Macroeconomic Study of Federal and State Automotive Regulations with Recommendations for Analysts, Regulators, and Legislators,” was authored by Sanya Carley, Denvil Duncan, John D. Graham, Saba Siddiki, and Nikolaos Zirogiannis. REMI recognized their work this year with George I. Treyz Award for Excellence in Economic and Demographic Analysis.

Using REMI’s modeling software, the researchers found that the overall annual impact is negative in the near term but positive in the longer term. They looked at the price effects of the increasingly more stringent standards and related economic impacts; the economic benefits of innovations inspired by the regulations; and reallocation of spending as the result of savings on gasoline spending.

REMI’s Dr. Treyz Talks to “Marketplace” about Amazon HQ 2.0

Amazon HQ 2.0 is the hot topic in economic development right now, and people are asking: Is enticing the tech giant worth the cost?

REMI CEO and Chief Economist Fred Treyz, Ph.D. was one of the experts interviewed this week for a segment on “Marketplace with Kai Ryssdal,” the popular business news program from American Public Media, discussing the pros and cons of any possible deal.

The Economics of Renewable Energy

In December 2015, Congress extended federal wind and solar tax credits, providing support for growing renewable energy industries.

The Natural Resources Defense Council released a report on the tax credit extensions in March, titled “Engine of Growth: The Extensions of Renewable Energy Tax Credits Will Power Huge Gains in the Clean Energy Economy.”

The organization estimated that the policy will add 220,000 jobs and nearly $23 billion in gross domestic product to the U.S. economy this year, and will drive an average annual increase of over 80,000 jobs and $11 billion in economic value through 2025.

ICF performed this economic analysis for NRDC using the REMI PI+ model. NRDC used these estimates to make the case that the extensions will produce both environmental and economic benefits.

Minimum Wage Stirs Maximum Controversy

There’s no magic bullet to solve thorny policy questions. Minimum wage is an increasingly popular way to tackle income stagnation and inequality, but it requires a trade-off: higher wages will cause some degree of job loss.

After the District of Columbia instituted a minimum wage hike earlier this year, the city needed to understand how the increase in wages would affect D.C. workers. The District is increasing the minimum wage incrementally until it reaches $15 in 2020.

To analyze the impacts of this policy, the D.C. Office of Revenue Analysis used the REMI model. The authors of the resulting report found that District residents will see an average increase in income of roughly 20 percent. At the same time, around 3.4 percent of residents will lose their jobs.

While these findings appear largely positive, reports on minimum wage impacts often reach differing conclusions and spark fierce debate.

For example, two universities researched the effects of Seattle’s minimum wage increase and produced opposing results. Seattle recently adopted a tiered system of wages, requiring large employers who don’t provide benefits to pay $15 per hour and small employers who do provide benefits to pay $11. University of California, Berkeley found that the minimum wage increase helped workers, while University of Washington found that the reduction in employee hours outweighed the increase in wage.

Why the difference? Differences in methodology can lead to vastly different sets of predictions. For example, an important methodological factor when studying minimum wage impact is which workers to study. The UW study excluded workers at businesses with more than one location, effectively excluding 48% of Seattle’s low-wage workforce. Bloomberg View called the move “a glaring weakness.”

Other studies focus on subgroups of the population such as teenagers or restaurant workers. These are important subgroups to study, but when it comes to making policy decisions, it is crucial for decision-makers at all levels of government to estimate broader impacts as well.

The D.C. analysis studies all workers in the city and predicts that the wage increase will impact 60,000 District residents. The authors also consider the effects of the wage increase on D.C.’s substantial commuting population.

Rigorous analysis, such as that undertaken by the D.C. Office of Revenue Analysis, exposes the complexity of issues such as minimum wage and ultimately leads to more realistic expectations and better policy.