More RI Comings and Goings

Don Roach presents an interesting finding in response to Tom Sgouros's suggestion that "our population loss is as likely to be an affordable housing issue as it is anything else":

The New England Public Policy Center published a report in Jan 2007 noting the percentage of low income families spending more than 30 percent of their income on housing. It would seem the higher this number is the more expensive - relative to each state - it is to rent within that particular state.

The numbers are intriguing and suggest the opposite of what Sgouros argues. There were 69 percent of low income RI renters spending at least 30 percent of their income on rent. That’s a very large number, however it’s smaller in comparison to the 74 percent by other New England states and 83 percent average nationwide. Thus, Sgouros inference falls flat against readily available data. There just is no correlation between affordable housing and falling population rates in Rhode Island.

Finding those numbers was a good thought, on Don's part, but I'm not sure that Sgouros is talking strictly about "low income families." Noting that families are a significant factor in our population loss, Sgouros finds:

I tried correlating the losses with other kinds of survey data about our towns, and wasted an afternoon testing variables like median incomes, per capita incomes, proportion of renters to owners and so on. The best correlation I found was with the ratio of average rents to income. The higher the average rent as a proportion of the average income, the more likely a district is to see enrollment losses. (You can find some of the statistical details and a pretty picture at whatcheer.net.) In other words, the more expensive the housing in a town, the more likely those schools are to have fewer kids today than in 2004. Our population loss is as likely to be an affordable housing issue as it is anything else.

A look at Sgouros's scatterplot shows not only that we're dealing with infinitesimal differences (with an enrollment change range of 0% to -0.2%), but also that the trend is basically a cluster of towns with pretty much the same rent versus median income ratio and urban areas with higher ones. The trendline is straight, as trendlines must be, but it doesn't reflect the plots well. Moreover, Don stands as evidence that people don't typically think of "affordable housing" as meaning middle class homes.

So let's turn, as I've been promising to do, to the U.S. Census data with which Sgouros begins. The first thing to note is that there's been a bit of a turnaround in the following chart from last year's iteration. Here are the latest poverty-ratio changes:

In the year-before period, Rhode Island lost many more high-income households than low-to-mid income households. Perhaps those tax cuts for the rich are working. However, over the long term, we're still losing households that earn more than two times the poverty level:

Basically, my assessment remains the same as after reviewing related IRS data (here and here), and moving on toward actual income data, the argument becomes stronger:

As I've been arguing for a while now, the people leaving aren't the rich and they aren't the poor; they're the families right in that meaty, motivated segment on the cusp of the middle class. Call it the productive class. These folks aren't likely to be looking for "affordable housing" — in the poverty industry parlance — but housing they can afford.

I'm not claiming that housing is not a factor in the RI exodus. Clearly, it's a large consideration when deciding whether to remain in an expensive region with little opportunity. But if it were the central issue — rather than, say, employment — then one would expect our emigrants to be moving nearby, so that they could still work here. According to IRS migration data, only 15% of the households that left Rhode Island during and after the 2006 tax year stayed within the range of abutting counties in Massachusetts and Connecticut. That being the case, if the problem were housing, not jobs, we'd have a lower unemployment rate, because businesses would have opportunities on offer, not filled.

"Affordable housing" programs may be desirable if Rhode Island ever gets its economy back on track, but until then, it would be at best a distraction and at worst a hindrance to the change that really has to be made: Rhode Island needs to become a place in which it is possible to succeed, which means lowering taxes, erasing regulations and other factors that hinder productivity and entrepreneurship, and devoting our limited public funds mainly to infrastructure.