Almost a third of adult single men live with a parent. Single men are much more likely to be unemployed, financially fragile and to lack a college degree than those with a partner. They’re also likely to have lower median earnings; single men earned less in 2019 than in 1990, even adjusting for inflation. Single women, meanwhile, earn the same as they did 30 years ago, but those with partners have increased their earnings by 50%.
These are the some of the findings of a new Pew Research analysis of 2019 data on the growing gap between American adults who live with a partner and those who do not. While the study is less about the effect of marriage and more about the effect that changing economic circumstances have had on marriage, it sheds light on some unexpected outcomes of shifts in the labor market.
Over the same time period that the fortunes of single people have fallen, the study shows, the proportion of American adults who live with a significant other, be it spouse or unmarried partner, also declined substantially. In 1990, about 71% of folks from the age of 25 to 54, which are considered the prime working years, had a partner they were married to or lived with. In 2019, only 62% did.
Partly, this is because people are taking longer to establish that relationship. The median age of marriage is creeping up, and while now more people live together than before, that has not matched the numbers of people who are staying single.
But it’s not just an age shift: the number of older single people is also much higher than it was in 1990; from a quarter of 40 to 54-year-olds to almost a third by 2019. And among those 40 to 54-year-olds, one in five men live with a parent.
The trend has not had an equal impact across all sectors of society. The Pew study, which uses information from the 2019 American Community Survey, notes that men are now more likely to be single than women, which was not the case 30 years ago.
Black people are much more likely to be single (59%) than any other race, and Black women (62%) are the most likely to be single of any sector. Asian people (29%) are the least likely to be single, followed by whites (33%) and Hispanics (38%).
Most researchers agree that the trendlines showing that fewer people are getting married and that those who do are increasingly better off financially have a lot more to do with the effect of wealth and education on marriage than vice versa. People who are financially stable are just much more likely to find and attract a partner.
“It’s not that marriage is making people be richer than it used to, it’s that marriage is becoming an increasingly elite institution, so that people are are increasingly only getting married if they already have economic advantages,” says Philip Cohen, a professor of sociology at the University of Maryland, College Park.
“Marriage does not make people change their social class, it doesn’t make people change their race, and those things are very big predictors of economic outcomes.”
This reframing of the issue may explain why fewer men than women find partners, even though men are more likely to be looking for one. The economic pressures on men are stronger. Research has shown that an ability to provide financially is still a more prized asset in men than in women, although the trend is shifting.
Some studies go so far as to suggest that the 30-year decrease in the rate of coupling can be attributed largely to global trade and the 30-year decrease in the number of stable and well-paying jobs for American men that it brought with it.
But there is also evidence that coupling up improves the economic fortunes of couples, both men and women. It’s not that they only have to pay one rent or buy one fridge, say some sociologists who study marriage, it’s that having a partner suggests having a future.
“There’s a way in which marriage makes men more responsible, and that makes them better workers,” says University of Virginia sociology professor W. Bradford Wilcox, pointing to a Harvard study that suggests single men are more likely than married men to leave a job before finding another. The Pew report points to a Duke University study that suggests that after marriage men work longer hours and earn more.
There’s also evidence that the decline in marriage is not just all about being wealthy enough to afford it. Since 1990, women have graduated college in far higher numbers than men.
“The B.A. vs. non B.A. gap has grown tremendously on lots of things — in terms of income, in terms of marital status, in terms of cultural markers and tastes,” says Cohen. “It’s become a sharper demarcation over time and I think that’s part of what we see with regard to marriage. If you want to lock yourself in a room with somebody for 50 years, you might want to have the same level of education, and just have more in common with them.”
Emery, Lydia F.; Muise, Amy; Dix, Emily L.; Le, Benjamin (17 September 2014). “Can You Tell That I’m in a Relationship? Attachment and Relationship Visibility on Facebook”. Personality and Social Psychology Bulletin. 40 (11): 1466–1479. doi:10.1177/0146167214549944. PMID25231798. S2CID206445338.
Kakabadse, A., Kakabadse, N. (2004) Intimacy: International Survey of the Sex Lives of People at Work, Basingstoke: Palgrave
Soaring property prices are forcing people all over the world to abandon all hope of owning a home. The fallout is shaking governments of all political persuasions.
It’s a phenomenon given wings by the pandemic. And it’s not just buyers — rents are also soaring in many cities. The upshot is the perennial issue of housing costs has become one of acute housing inequality, and an entire generation is at risk of being left behind.
“We’re witnessing sections of society being shut out of parts of our city because they can no longer afford apartments,” Berlin Mayor Michael Mueller says. “That’s the case in London, in Paris, in Rome, and now unfortunately increasingly in Berlin.”
That exclusion is rapidly making housing a new fault line in politics, one with unpredictable repercussions. The leader of Germany’s Ver.di union called rent the 21st century equivalent of the bread price, the historic trigger for social unrest.
Politicians are throwing all sorts of ideas at the problem, from rent caps to special taxes on landlords, nationalizing private property, or turning vacant offices into housing. Nowhere is there evidence of an easy or sustainable fix.
In South Korea, President Moon Jae-in’s party took a drubbing in mayoral elections this year after failing to tackle a 90% rise in the average price of an apartment in Seoul since he took office in May 2017. The leading opposition candidate for next year’s presidential vote has warned of a potential housing market collapse as interest rates rise.
China has stepped up restrictions on the real-estate sector this year and speculation is mounting of a property tax to bring down prices. The cost of an apartment in Shenzhen, China’s answer to Silicon Valley, was equal to 43.5 times a resident’s average salary as of July, a disparity that helps explain President Xi Jinping’s drive for “common prosperity.”
In Canada, Prime Minister Justin Trudeau has promised a two-year ban on foreign buyers if re-elected.
The pandemic has stoked the global housing market to fresh records over the past 18 months through a confluence of ultralow interest rates, a dearth of house production, shifts in family spending and fewer homes being put up for sale. While that’s a boon for existing owners, prospective buyers are finding it ever harder to gain entry.
What we’re witnessing is “a major event that should not be shrugged off or ignored,” Don Layton, the former CEO of U.S. mortgage giant Freddie Mac, wrote in a commentary for the Joint Center for Housing Studies of Harvard University.
In the U.S., where nominal home prices are more than 30% above their previous peaks in the mid-2000s, government policies aimed at improving affordability and promoting home ownership risk stoking prices, leaving first-time buyers further adrift, Layton said.
The result, in America as elsewhere, is a widening generational gap between baby boomers, who are statistically more likely to own a home, and millennials and Generation Z — who are watching their dreams of buying one go up in smoke.
Existing housing debt may be sowing the seeds of the next economic crunch if borrowing costs start to rise. Niraj Shah of Bloomberg Economics compiled a dashboard of countries most at threat of a real-estate bubble, and says risk gauges are “flashing warnings” at an intensity not seen since the run-up to the 2008 financial crisis.
In the search for solutions, governments must try and avoid penalizing either renters or homeowners. It’s an unenviable task.
Sweden’s government collapsed in June after it proposed changes that would have abandoned traditional controls and allowed more rents to be set by the market.
In Berlin, an attempt to tame rent increases was overturned by a court. Campaigners have collected enough signatures to force a referendum on seizing property from large private landlords. The motion goes to a vote on Sept. 26. The city government on Friday announced it would buy nearly 15,000 apartments from two large corporate landlords for €2.46 billion ($2.9 billion) to expand supply.
Anthony Breach at the Center for Cities think tank has even made the case for a link between housing and Britain’s 2016 vote to quit the European Union. Housing inequality, he concluded, is “scrambling our politics.”
As these stories from around the world show, that’s a recipe for upheaval.
With annual inflation running around 50%, Argentines are no strangers to price increases. But for Buenos Aires residents like Lucia Cholakian, rent hikes are adding economic pressure, and with that political disaffection.
Like many during the pandemic, the 28-year-old writer and college professor moved with her partner from a downtown apartment to a residential neighborhood in search of more space. In the year since, her rent has more than tripled; together with bills it chews through about 40% of her income. That rules out saving for a home.
“We’re not going to be able to plan for the future like our parents did, with the dream of your own house,” she says. The upshot is “renting, buying and property in general” is becoming “much more present for our generation politically.”
Legislation passed by President Alberto Fernandez’s coalition aims to give greater rights to tenants like Cholakian. Under the new rules, contracts that were traditionally two years are now extended to three. And rather than landlords setting prices, the central bank created an index that determines how much rent goes up in the second and third year.
It’s proved hugely controversial, with evidence of some property owners raising prices excessively early on to counter the uncertainty of regulated increases later. Others are simply taking properties off the market. A government-decreed pandemic rent freeze exacerbated the squeeze.
Rental apartment listings in Buenos Aires city are down 12% this year compared to the average in 2019, and in the surrounding metro area they’re down 36%, according to real estate website ZonaProp.
The law “had good intentions but worsened the issue, as much for property owners as for tenants,” said Maria Eugenia Vidal, the former governor of Buenos Aires province and one of the main opposition figures in the city. She is contesting the November midterm elections on a ticket with economist Martin Tetaz with a pledge to repeal the legislation.
“Argentina is a country of uncertainty,” Tetaz said by phone, but with the housing rules it’s “even more uncertain now than before.”
Cholakian, who voted for Fernandez in 2019, acknowledges the rental reform is flawed, but also supports handing more power to tenants after an extended recession that wiped out incomes. If anything, she says greater regulation is needed to strike a balance between reassuring landlords and making rent affordable.
“If they don’t do something to control this in the city of Buenos Aires, only the rich will be left,” she says.
As the son of first-generation migrants from Romania, Alex Fagarasan should be living the Australian dream. Instead, he’s questioning his long-term prospects.
Fagarasan, a 28-year-old junior doctor at a major metropolitan hospital, would prefer to stay in Melbourne, close to his parents. But he’s being priced out of his city. He’s now facing the reality that he’ll have to move to a regional town to get a foothold in the property market. Then, all going well, in another eight years he’ll be a specialist and able to buy a house in Melbourne.
Even so, he knows he’s one of the lucky ones. His friends who aren’t doctors “have no chance” of ever owning a home. “My generation will be the first one in Australia that will be renting for the rest of their lives,” he says.
He currently rents a modern two-bedroom townhouse with two others in the inner suburb of Northcote — a study nook has been turned into a make-shift bedroom to keep down costs. About 30% of his salary is spent on rent; he calls it “exorbitant.”
Prime Minister Scott Morrison’s conservative government announced a “comprehensive housing affordability plan” as part of the 2017-2018 budget, including 1 billion Australian dollars ($728 million) to boost supply. It hasn’t tamed prices.
The opposition Labour Party hasn’t fared much better. It proposed closing a lucrative tax loophole for residential investment at the last election in 2019, a policy that would likely have brought down home prices. But it sparked an exodus back to the ruling Liberals of voters who owned their home, and probably contributed to Labor’s election loss.
The political lessons have been learned: Fagarasan doesn’t see much help on housing coming from whoever wins next year’s federal election. After all, Labor already rules the state of Victoria whose capital is Melbourne.
“I feel like neither of the main parties represents the voice of the younger generation,” he says.
It’s a sentiment shared by Ben Matthews, a 33-year-old project manager at a university in Sydney. He’s moving back in with his parents after the landlord of the house he shared with three others ordered them out, an experience he says he found disappointing and stressful, especially during the pandemic.
Staying with his parents will at least help him save for a deposit on a one-bedroom flat. But even that’s a downgrade from his original plan of a two-bedroom house so he could rent the other room out. The increases, he says, are “just insane.”
“It might not be until something breaks that we’ll get the political impetus to make changes,” he says. -Jason Scott
Days after calling an election, Justin Trudeau announced plans for a two-year ban on foreigners buying houses. If it was meant as a dramatic intervention to blind-side his rivals, it failed: they broadly agree.
The prime minister thought he was going to fight the election — set for Monday — on the back of his handling of the pandemic, but instead housing costs are a dominant theme for all parties.
Trudeau’s Liberals are promising a review of “escalating” prices in markets including Vancouver and Toronto to clamp down on speculation; Conservative challenger Erin O’Toole pledges to build a million homes in three years to tackle the “housing crisis”; New Democratic Party leader Jagmeet Singh wants a 20% tax on foreign buyers to combat a crisis he calls “out of hand.”
Facing a surprisingly tight race, Trudeau needs to attract young urban voters if he is to have any chance of regaining his majority. He chose Hamilton, outside Toronto, to launch his housing policy. Once considered an affordable place in the Greater Toronto Area, it’s faced rising pressure as people leave Canada’s biggest city in search of cheaper homes. The average single family home cost 932,700 Canadian dollars ($730,700) in June, a 30% increase from a year earlier, according to the Realtors Association of Hamilton and Burlington.
The City of Hamilton cites housing affordability among its priorities for the federal election, but that’s little comfort to Sarah Wardroper, a 32-year-old single mother of two young girls, who works part time and rents in the downtown east side. Hamilton, she says, represents “one of the worst housing crises in Canada.”
While she applauds promises to make it harder for foreigners to buy investment properties she’s skeptical of measures that might discourage homeowners from renting out their properties. That includes Trudeau’s bid to tax those who sell within 12 months of a house purchase. Neither is she convinced by plans for more affordable housing, seeing them as worthy but essentially a short-term fix when the real issue is “the economy is just so out of control the cost of living in general has skyrocketed.”
Wardroper says her traditionally lower-income community has become a luxury Toronto neighborhood.
“I don’t have the kind of job to buy a house, but I have the ambition and the drive to do that,” she says. “I want to build a future for my kids. I want them to be able to buy homes, but the way things are going right now, I don’t think that’s going to be possible.”
Back in 2011, a public uproar over the city-state’s surging home prices contributed to what was at the time the ruling party’s worst parliamentary election result in more than five decades in power. While the People’s Action Party retained the vast majority of the seats in parliament, it was a wake-up call — and there are signs the pressure is building again.
Private home prices have risen the most in two years, and in the first half of 2021 buyers including ultra-rich foreigners splurged 32.9 billion Singapore dollars ($24 billion), according to Singapore-based ERA Realty Network Pte Ltd. That’s double the amount recorded in Manhattan over the same period.
However, close to 80% of Singapore’s citizens live in public housing, which the government has long promoted as an asset they can sell to move up in life.
It’s a model that has attracted attention from countries including China, but one that is under pressure amid a frenzy in the resale market. Singapore’s government-built homes bear little resemblance to low-income urban concentrations elsewhere: In the first five months of the year, a record 87 public apartments were resold for at least SG$1 million. That’s stirring concerns about affordability even among the relatively affluent.
Junior banker Alex Ting, 25, is forgoing newly built public housing as it typically means a three-to-four-year wait. And under government rules for singles, Ting can only buy a public apartment when he turns 35 anyway.
His dream home is a resale flat near his parents. But even there a mismatch between supply and demand could push his dream out of reach.
While the government has imposed curbs on second-home owners and foreign buyers, younger people like Ting have grown resigned to the limits of what can be done.
Most Singaporeans aspire to own their own property, and the housing scarcity and surge in prices presents another hurdle to them realizing their goal, says Nydia Ngiow, Singapore-based senior director at BowerGroupAsia, a strategic policy advisory firm. If unaddressed, that challenge “may in turn build long-term resentment towards the ruling party,” she warns.
That’s an uncomfortable prospect for the PAP, even as the opposition faces barriers to winning parliamentary seats. The ruling party is already under scrutiny for a disrupted leadership succession plan, and housing costs may add to the pressure.
Younger voters may express their discontent by moving away from the PAP, according to Ting. “In Singapore, the only form of protest we can do is to vote for the opposition,” he says.
Claire Kerrane is open about the role of housing in her winning a seat in Ireland’s parliament, the Dail.
Kerrane, 29, was one of a slew of Sinn Fein lawmakers to enter the Dail last year after the party unexpectedly won the largest number of first preference votes at the expense of Ireland’s dominant political forces, Fine Gael and Fianna Fail.
While the two main parties went on to form a coalition government, the outcome was a political earthquake. Sinn Fein was formerly the political wing of the Irish Republican Army, yet it’s been winning followers more for its housing policy than its push for a united Ireland.
“Housing was definitely a key issue in the election and I think our policies and ambition for housing played a role in our election success,” says Kerrane, who represents the parliamentary district of Roscommon-Galway.
Ireland still bears the scars of a crash triggered by a housing bubble that burst during the financial crisis. A shortage of affordable homes means prices are again marching higher.
Sinn Fein has proposed building 100,000 social and affordable homes, the reintroduction of a pandemic ban on evictions and rent increases, and legislation to limit the rate banks can charge for mortgages.
Those policies have struck a chord. The most recent Irish Times Ipsos MRBI poll, in June, showed Sinn Fein leading all other parties, with 21% of respondents citing house prices as the issue most likely to influence their vote in the next general election, the same proportion that cited the economy. Only health care trumped housing as a concern.
Other parties are taking note. On Sept. 2, the coalition launched a housing plan as the pillar of its agenda for this parliamentary term, committing over €4 billion ($4.7 billion) a year to increase supply, the highest-ever level of government investment in social and affordable housing.
Whether it’s enough to blunt Sinn Fein’s popularity remains to be seen. North of the border, meanwhile, Sinn Fein holds a consistent poll lead ahead of elections to the Northern Ireland Assembly due by May, putting it on course to nominate the region’s First Minister for the first time since the legislature was established as part of the Good Friday peace agreement of 1998.
For all the many hurdles that remain to reunification, Sinn Fein is arguably closer than it has ever been to achieving its founding goal by championing efforts to widen access to housing.
As Kerrane says: “Few, if any households aren’t affected in some way by the housing crisis.”
It is widely believed that the Covid-19 pandemic and the reactions to it by governments and businesses accelerated an already-strong trend toward increasing economic inequality in the U.S. People on the political left think this and people on the political right do too, a heartwarming exception to the political polarization of our age.
This belief is also based on some actual evidence. Thanks to big increases in the prices of stocks and other assets after the initial shock of the pandemic, the nation’s billionaires have in fact added many billions to their net worths, while lots of affluent homeowners and 401(k)-holders have added hundreds of thousands.
So yes it’s possible, maybe even likely, that when the dust settles and all the relevant data are available, we will conclude that economic inequality worsened over the course of the pandemic. But I wouldn’t be sure of it. Pandemics are one of the “Four Horsemen” of economic equalization described by historian Walter Scheidel in his acclaimed 2017 book, “The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century” (the other three being war, revolution and state collapse).
Scheidel did have more devastating diseases in mind than what Covid-19 has proved to be so far, but as of January, Nobel-prize-winning economist Angus Deaton found that economic inequality among countries had decreased during the pandemic, although this didn’t hold on a population-weighted basis because the economy of India, the largest country in the bottom half of the world’s income distribution (it’s “lower middle-income,” according to the World Bank), had suffered greatly even before this year’s rise of the Delta variant.
Within the US, the very real forces pushing toward more inequality have been counteracted by an unprecedented outpouring of government aid, while trends boosting wages in the lower part of the distribution that were apparent before the pandemic seem to be accelerating now. The numbers available so far, while preliminary and in some cases a bit contradictory, aren’t really telling a story of exploding inequality.
Perhaps the simplest of these numbers, from the distributional financial accounts that the Federal Reserve began releasing quarterly in 2019, is the wealth share of the bottom 50 per cent of the wealth distribution. It bottomed out in the second quarter of 2011 at a barely-there 0.4 per cent of US household wealth and has been rising most quarters since, reaching 2 per cent in the first quarter of this year for the first time since just before the Great Recession started in December 2007.
This measure, which I’ve written about before, has its limitations. The Fed estimates wealth by combining household-level data on assets and liabilities from its triennial Survey of Consumer Finances, most recently conducted in 2019, with aggregate numbers from its quarterly Financial Accounts of the United States, and lumps the entire bottom half of the wealth distribution together because it doesn’t have enough information to do otherwise. It is able to slice things more finely within the top half, where the top 1 per cent gained wealth share since the end of 2019 while those between them and the 50th percentile lost ground.
So yes it looks like wealth inequality increased during the pandemic within the top half, and most of the bottom half’s gains came from those just above it in the wealth distribution rather than the very richest. The bottom half did enjoy a bigger percentage wealth gain than the top 1 per cent —30.3 per cent versus 20.7 per cent since the end of 2019 — although because it had so little wealth to start with, that amounted to just $609 billion in new wealth versus $7.1 trillion for the 1 per cent. Still, the total wealth of the bottom 50 per cent in the first quarter of this year amounted to 6.3 per cent of that of the top 1 per cent, up from 5.8 per cent at the end of 2019 and the highest such percentage since 2007. In that sense, at least, inequality between the top and bottom decreased.
That sense may not be enough for most people who are concerned about inequality, but improved conditions for the less-well-off are worth celebrating in any case, and it’s not just the Federal Reserve that’s detecting signs of them. Researchers at the Urban Institute estimated last month that, thanks to big job gains and the benefits included in the American Rescue Plan approved in March and earlier pandemic-aid legislation, the share of Americans below the poverty line would fall to 7.7 per cent this year from what they estimated using the same methodology to have been 13.9 per cent in 2018.
These estimates use what’s called the Supplemental Poverty Measure, a decade-old metric that attempts to better incorporate all the resources available to poor families, and the Urban Institute’s number for 2018 is a bit higher than the 12.8 per cent SPM rate estimated by the Census Bureau and the 12.7 per cent estimated by Columbia University’s Center on Poverty and Social Policy based on Census data. Measuring poverty is complicated, especially over time. But the trend does seem to be headed in the right direction.Because the expected drop in poverty in 2021 owes so much to federal aid, some of it could prove temporary. But gains for the lower part of the income distribution are also coming from the private sector in the form of higher wages.
It’s hard to know what to make of the 2020 data, which may be skewed by low response rates to government surveys and big job losses among low-wage workers. But the high wage growth before the pandemic and so far this year seems to be for real, and all the anecdotal evidence from the job market points to it continuing. In previous economic expansions the wage gains at the bottom of the scale came only after years of job growth; this time it seems to be the norm from the get-go.
A full picture of the pandemic’s impact on income and wealth inequality will have to wait on more data. The most recent income-distribution numbers available are from 2019 in the case of Census Bureau survey data and 2018 for tax statistics from the Internal Revenue Service. The Census Bureau’s estimate of the Gini coefficient, a measure of how equally incomes are distributed that comes out to one if one person gets all the money and zero if everyone earns the same amount, has been rising at a somewhat slower pace in the 2000s than in the 1980s and 1990s. It even fell slightly in 2018 and 2019, although it seems too early to make much of that.Such broad measures of inequality have taken something of a backseat in recent years to the statistics on income and wealth at the very top compiled from tax data by economists Thomas Piketty, Emmanuel Saez, Gabriel Zucman and others. Saez and Zucman’s most recent updates of the US data (and revisions in response to critiques from other economists), show a decade-long plateau in the share of income going to the top 0.1 per cent and a more recent halt in wealth-share gains.
Given what we know from other sources it seems pretty likely that the income and wealth shares of the top 0.1 per cent rose in 2020, and given that I don’t have a great explanation for why inequality was declining — or at least somewhat on hold — before the pandemic, I’m not going to make any confident predictions here about what it will do after.
One thing that is clear from the above chart is that inequality can decline, and decline by a lot. Amid the great equalization of the mid-20th century, economist Simon Kuznets (another Nobel winner) wrote an influential paper in 1955 speculating that it might be in the nature of economic modernization and industrialization for inequality to at first increase and then decline. After decades of rising inequality in the US and other rich countries, such examinations are now more likely to conclude that a growing gap between rich and poor is an inevitable trait of capitalist economies (Piketty’s “Capital in the Twenty-First Century”) or human society in general in the absence of calamity (Scheidel’s book). They may be right! But again, I wouldn’t be sure of it.
Rapidly advancing technology, including automation and AI and its impact on education, skills and learning in the UK, is a subject of much debate for universities. How can institutions equip students with the skills they need to succeed in a changing jobs market? It’s a valid question, though often the answers are the problem.
Since technology is driving these changes, there’s an assumption that the government should keep focusing on Stem subjects. These are often referred to as “hard skills”, which are prioritised in primary school and right through to university level. In the meantime, “soft skills” – which are already disadvantaged by the term’s connotations – are being relegated even further down the pecking order in terms of curriculum must-haves.
This is a mistake. Much evidence suggests that soft skills are far more beneficial to graduates than is currently acknowledged. Research from Harvard University on the global jobs market has shown that Stem-related careers grew strongly between 1989 and 2000, but have stalled since. In contrast, jobs in the creative industries – the sector probably most associated with the need for soft skills – in the UK rose nearly 20% to 1.9m in the five years to June 2016.
Soft skills are in fact increasingly in demand in the workplace: Google cites creativity, leadership potential and communication skills as top prerequisites for both potential and current employees.
So why, in an age cited as the “fourth industrial revolution”, are soft skills so highly sought after? With the rapid evolution of technology, a focus on hard skills leaves students vulnerable to change, as these often have a shorter shelf life.
According to research by the World Economic Forum, more than one in four adults reported a mismatch between their skills and those needed for their job role. Although technical skills, such as learning to code, can be taught and assessed more easily and soft skills take time to develop and are more complex in nature, the latter can turn out to be more beneficial in the long term.
If taught well, these skills should enable students to adapt to change more easily, gain a greater understanding of people and the world around them, and ultimately progress further in their chosen career.
Of course technical, practical and more easily quantifiable skills are important but without the curriculum placing equal, if not greater, importance on soft skills, our governments and education systems are missing a huge trick. Hard skills may help a student get a job in a particular industry, but soft skills will help them disrupt it, creating change for the better and achieving a wider impact in their chosen field.
To return to the Google example, many of the company’s top “characteristics of success” are soft skills: being a good coach, communicating and listening well, possessing insights into other points of view, being supportive of one’s colleagues, critical thinking and problem solving, and being able to make connections across complex ideas. It’s these fundamentally human emotional and social skills which should be nurtured, developed and celebrated as the key to future success for students and society in general.
Many universities have embraced this, teaching students soft skills such as critical thinking, idea generation and interdisciplinary ways of working alongside hard skills. But the issue goes much deeper: it needs to be tackled across the entire education system, so that by the time students reach university level they are already familiar with the importance of, and the qualities needed to develop, these essential skills.
With enrolment in arts and humanities degrees in decline and the government’s continued focus on technical Stem subjects, the value of soft skills may be in danger of being lost along the way. Perhaps a good place to start would be a reframing of the language we use to describe these skills as, if the evidence is correct, they’re not so “soft” after all.
If you know you have an old bitcoin or dogecoin account somewhere but haven’t gotten around the digging up your login information, you may have a nasty surprise waiting for you. With the rise of cryptocurrency, nine states have now adopted rules that include it as a form of unclaimed property and several more are requiring or recommending that companies report their unclaimed virtual currency.
That means that this fall, when banks, insurers, retailers and state government agencies are required to annually report and remit any unclaimed funds, your old cryptocurrency account could be liquidated and turned in to the state’s unclaimed property office.
There are a lot of concerns about this possibility, not the least of which is the fact that liquidating a cryptocurrency account prevents the owner from realizing any future gains. But there’s also a larger economic issue, says Kristine Butterbaugh a solution principal, at the tax firm Sovos.
“Some of our clients don’t want to liquidate these accounts because it could have an impact on the market as a whole,” she says. “We’re talking millions of accounts, potentially, across the country.”
What’s muddling things is a lack of clarity on the rules around cryptocurrency. Unclaimed property law is written for traditional property but now it’s being enforced for non-traditional property.
Here’s how unclaimed property law usually works: Every fall, businesses are required to remit any unclaimed property to the state. For accounts and other financial instruments to be considered unclaimed, they have to be dormant for three to five years, depending on the state. That means the account holder hasn’t accessed the account or responded to any communications. Once the account is deemed unclaimed, it gets transferred to the state’s general fund.
That’s all well and good when we’re talking about a traditional bank account that is sitting around earning minimal — if any — interest. But states aren’t equipped to hold cryptocurrency, so they’re telling firms to turn those accounts into cash before handing them over.
Now let’s say you watched the meteoric rise of dogecoin this past spring and decided to go hunting for those coins you invested in on a whim a few years ago. And when you finally tracked them down you discovered your account was liquidated back in November, robbing you of thousands of dollars in potential earnings? You’d probably be pretty angry.
“Companies are in a really uncomfortable position because they’re unsure whether or not they should be liquidating for fear of owner retribution down the road,” says Butterbaugh. “And then you have the state saying, ‘You have to,’ even if it’s not explicitly in the statute.”
States are also motivated to enforce unclaimed property laws because it’s a revenue gain for them. Although the state keeps track of the amount due and the rightful owner can still eventually claim the money at any time, states in the meantime can use the money for their general operations. This may seem like a gamble, but only about 2% of unclaimed property ever gets returned to the true owner, according to Accounting Today.
Delaware — home to more than a million companies — is one of the most aggressive states when it comes to auditing companies on unclaimed property law compliance and has secured hundreds of millions of dollars over the last decade in unclaimed property and fines.
So, companies are stuck between not wanting to get dinged for noncompliance and being afraid to liquidate a cryptocurrency account. They want more clarity on what to do and Butterbaugh says two places — New York and Washington, D.C. — are working on a solution.
But in the meantime, she advises companies dealing in cryptocurrency to start addressing their dormant accounts now.
I am a fiscal policy expert, national journalist and public speaker who has spent more than 15 years writing about the many ways state and local governments collect and spend taxpayer money. I sift through that complicated information then break it down in quick ways that everyone can understand. I’m most known by policy wonks for my work at Governing magazine and for my fellowship at the Rockefeller Institute of Government where I write about the intersection of government and the future of work. My work is also in the Wall Street Journal, Bloomberg, CityLab and other national publications. Frequent and enthusiastic radio and podcast guest.
The IRS is facing numerous challenges that have caused setbacks in issuing tax refunds this year. A recent National Taxpayer Advocate report confirmed that some 35 million tax returns are yet to be processed and explained the long delays. The tax agency is tasked with more than usual this time of year. Many 2020 tax returns are requiring adjustments or corrections, disbursing stimulus checks, calculating other tax credits and refunding overpayment on 2020 unemployment compensation.
And then there’s the unprecedented situation brought on by the pandemic. The IRS is taking more than the standard 21 days to send refunds — some taxpayers are waiting months. It’s hard to get live assistance by phone, as many callers wait on hold or aren’t connected due to high call volumes. So what if you need your tax money to cover debt or household expenses? How can you check the status of your money without calling the IRS?
We’ll walk you through how to see your personalized refund status online through IRS tracking tools and what to do if you’re waiting for a tax refund on unemployment benefits, as well. For more on economic relief aid, here are some ways to know if you qualify for the child tax credit payments that start next week. If you’re curious about future stimulus payments or the latest infrastructure deal, we can tell you about that, too. This story has been recently updated.
Why is there a tax refund delay this year?
Because of the pandemic, the IRS ran at restricted capacity in 2020, which put a strain on its ability to process tax returns and created a massive backlog. The combination of the shutdown, three rounds of stimulus payments, challenges with paper-filed returns and the tasks related to implementing new tax laws and credits caused a “perfect storm,” according to a National Taxpayer Advocate review of the 2021 filing season to Congress.
The IRS is open again and currently processing mail, tax returns, payments, refunds and correspondence, but limited resources continue to cause delays. Earlier in the tax season, some refunds were already taking longer than 21 days, including those that required manual processing. The IRS said it’s also taking more time for 2020 tax returns that need review, such as determining recovery rebate credit amounts for the first and second stimulus checks — or figuring earned income tax credit and additional child tax credit amounts.
Here’s a list of reasons your refund might be delayed:
Your tax return has errors.
Your refund is suspected of identity theft or fraud.
You filed for the earned income tax credit or additional child tax credit.
Your return needs further review.
Your return includes Form 8379 (PDF), injured spouse allocation — this could take up to 14 weeks to process.
If the delay is due to a necessary tax correction made to a recovery rebate credit, earned income tax or additional child tax credit claimed on your return, the IRS will send you an explanation. If there’s a problem that needs to be fixed, the IRS will first try to proceed without contacting you. However, if it needs any more information, it will write you a letter.
How can you track the status of your refund online?
To check the status of your income tax refund using the IRS tracker tools, you’ll need to give some information: your Social Security number or Individual Taxpayer Identification Number, your filing status — single, married or head of household — and your refund amount in whole dollars, which you can find on your tax return. Also, make sure it’s been at least 24 hours (or up to four weeks if you mailed your return) before you start tracking your refund.
Using the IRS tool Where’s My Refund, go to the Get Refund Status page, enter your SSN or ITIN, your filing status and your exact refund amount, then press Submit. If you entered your information correctly, you’ll be taken to a page that shows your refund status. If not, you may be asked to verify your personal tax data and try again. If all the information looks correct, you’ll need to enter the date you filed your taxes, along with whether you filed electronically or on paper.
The IRS also has a mobile app called IRS2Go that checks your tax refund status. The IRS updates the data in this tool overnight, so if you don’t see a status change after 24 hours or more, check back the following day. Once your return and refund are approved, you’ll receive a personalized date to expect your money.
Where’s My Refund has information on the most recent tax refund that the IRS has on file within the past two years, so if you’re looking for return information from previous years you’ll need to contact the IRS for further help.
How can you check the status of unemployment tax refunds online?
Taxpayers who collected unemployment benefits in 2020 and filed their tax returns early have started to receive additional tax refunds from the IRS. Under new rules from the American Rescue Plan Act of 2021, millions of people who treated their unemployment compensation as income are eligible for a tax break and could get a hefty sum of money back.
However, it’s not easy to track the status of that refund using the online tools above. To find out when the IRS processed your refund and for how much, we recommend locating your tax transcript by logging in to your account and viewing the transactions listed there. We explain how to do that step-by-step.
What is the wait time for a standard tax refund?
The IRS usually issues tax refunds within three weeks, but some taxpayers have been waiting months to receive their payments. If there are any errors, or if you filed a claim for an earned income tax credit or the child tax credit, the wait could be pretty lengthy. If there is an issue holding up your return, the resolution “depends on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return,” according to its website.
The date you get your tax refund also depends on how you filed your return. For example, with refunds going into your bank account via direct deposit, it could take an additional five days for your bank to post the money to your account. This means if it took the IRS the full 21 days to issue your check and your bank five days to post it, you could be waiting a total of 26 days to get your money. If you submitted your tax return by mail, the IRS says it could take six to eight weeks for your tax refund to arrive.
What do the IRS tax refund status messages mean?
Both IRS tools (online and mobile app) will show you one of three messages to explain your tax return status.
Received: The IRS now has your tax return and is working to process it.
Approved: The IRS has processed your return and confirmed the amount of your refund, if you’re owed one.
If you receive your tax refund by direct deposit, you may see IRS TREAS 310 for the transaction. The 310 identifies the transaction as an IRS tax refund. This would also apply to the case of those receiving an automatic adjustment on their tax return or a refund due to new legislation on tax-free unemployment benefits. You may also see TAX REF in the description field for a refund.
If you see a 449 instead, it means your refund has been offset for delinquent debt.
What is the IRS phone number to check on a tax refund?
The IRS received 167 million calls this tax season, which is four times the number of calls in 2019. And based on the recent report, only seven percent of calls reached a telephone agent for help. While you could try calling the IRS to check your status, the agency’s live phone assistance is extremely limited right now because the IRS says it’s working hard to get through the backlog. You shouldn’t file a second tax return or contact the IRS about the status of your return.
Even though the chances of getting live assistance are slim, the IRS says you should only call if it’s been 21 days or more since you filed your taxes online, or if the Where’s My Refund tool tells you to contact the IRS. Here’s the number to call: 800-829-1040.
Why will a refund come by mail instead of direct deposit?
There are a couple of reasons that your refund would be mailed to you. Your money can only be electronically deposited into a bank account with your name, your spouse’s name or a joint account. If that’s not the reason, you may be getting multiple refund checks, and the IRS can only direct deposit up to three refunds to one account. Additional refunds must be mailed. Lastly, your bank may reject the deposit and this would be the IRS’ next best way to refund your money quickly.
Tax returns in the United States are reports filed with the Internal Revenue Service (IRS) or with the state or local tax collection agency (California Franchise Tax Board, for example) containing information used to calculate income tax or other taxes. Tax returns are generally prepared using forms prescribed by the IRS or other applicable taxing authority.
Under the Internal Revenue Code returns can be classified as either tax returns or information returns, although the term “tax return” is sometimes used to describe both kinds of returns in a broad sense. Tax returns, in the more narrow sense, are reports of tax liabilities and payments, often including financial information used to compute the tax. A very common federal tax form is IRS Form 1040.
A tax return provides information so that the taxation authority can check on the taxpayer’s calculations, or can determine the amount of tax owed if the taxpayer is not required to calculate that amount. In contrast, an information return is a declaration by some person, such as a third party, providing economic information about one or more potential taxpayers.
As oil prices spike to a nearly three-year high, a bitter disagreement between international oil producers has shattered hopes for a deal to increase oil production this year—thereby threatening to further hike up rising oil and gas prices as a broad economic reopening looks to ramp up travel demand.
Following two days of fraught discussions last week, the group of oil producers known as OPEC+ called off an afternoon meeting Monday and set no date to meet again, effectively suspending a planned agreement to raise output by 2 million barrels per day from August to December
Two unnamed sources told Reuters the failed negotiations mean the expected production hikes this year will no longer occur.
The price of U.S. oil benchmark West Texas Intermediate—at about $75.31 a barrel—jumped 1.3% Monday after the news and has climbed 5% over the past week’s disagreement, while the price of the United Kingdom’s Brent Crude ticked up 1.1% and 4%, respectively.
The United Arab Emirates, which has invested heavily in its oil production capacity, refused to move forward with the deal because it would also extend oil production cuts through late 2022.
Though the UAE wants to raise its output unconditionally, Saudi Arabian oil producers, who supported the agreement, argued the extended output cuts are necessary to prevent excess oil supply that could tank prices.
The production increase was meant to help curb rising oil prices and buy producers time while they assess the risk of rapidly spreading variants in countries like India once again hurting demand and shuttering economies.
60%. That’s how much the price of WTI oil has surged this year alone, while the price of Brent Crude has climbed about 50%.
Oil prices crashed last year but recouped all their pandemic losses by March, and they’ve surged roughly 20% higher since. After cutting production by about 10 million barrels per day last year, oil producers are still supplying about 5.8 million fewer barrels per day than before the pandemic. Most recently, OPEC+ in early June agreed to increase oil output by 450,000 barrels per day starting this month.
Despite the easing of lockdowns and an accelerating vaccine rollout, producers have been careful to ramp up supply after excess inventories drove prices down to negative territory for the first time in history last spring. That happened after an all-out price war erupted between oil-producing giants Russia and Saudi Arabia in March 2020—just as travel demand began to plummet during the coronavirus outbreak.
Costly-to-maintain storage tanks soon filled up with no buyers, and the price of one American oil futures contract plunged below zero in April 2020. OPEC and its allies agreed to cut production in order to stabilize prices amid the turmoil, but according to the International Energy Agency, those inventories are still being worked off to this day.
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at firstname.lastname@example.org. And follow me on Twitter @Jon_Ponciano
After being shut down for nearly a year and a half, international travel has started to pick up again, with countries in the Caribbean, Africa, and Europe paving the way. The reopening of borders has been far from straightforward as the world negotiates inequities in Covid-19 containment, vaccine access, and economic recovery. And everything can change in an instant.
For airlines, airports, cruise lines, and hotels, the new normal is increasingly looking like the old normal; While advanced cleaning protocols are (happily) here to stay, social distancing and even mask requirements have started to peel away. A lack of cohesive guidelines from governing authorities mean that protocols are being patched together by individual properties and companies, leaving consumers to wade through fine print and determine what fits their risk thresholds.
If the wealthiest initially set the tone for the future of nonessential travel, the masses are now unleashing a storm of pent-up demand that has caused prices to multiply and availability to evaporate. Compounding those issues are labor shortages in many popular vacation destinations, already slim inventory gobbled up by last year’s cancelations, and a hampered import market that’s making it impossible to get a rental car or wrap up that hotel renovation. Consumers may feel safe traveling again, but it’s going to be a bumpy rebound.
Those of us who remain stuck in place can still daydream. According to the National Institutes of Health, simply planning a trip can spark immeasurable joy—and there’s high hope that the ongoing challenges of availability and border restrictions will iron themselves out by 2022. Getting into an adventurous frame of mind can remind us of the power of travel—not only in the billions of dollars in daily economic activity but also to forge cross-cultural connections and bring us closer to those we love.
$150 million The amount of cash U.S.-based airlines were losing on a daily basis as of March 2021.
1.2 million Average increase of daily travelers passing through TSA checkpoints in June 2021, compared to June 2020. The number still represents roughly a 30% decline from 2019 figures.
67 Percentage of people who would feel confident traveling once vaccinated.
Why It Matters
It’s not just your vacation or business trip that’s on the line. The travel industry customarily accounts for 10% of the global economy, rippling to the remotest corners of the world. Each trip a person takes sets off a domino effect of consumption that directs dollars to airlines, hoteliers, restaurateurs, taxi drivers, artisans, tour guides, and shopkeepers, to name a few. In all, the tourism industry employs 300 million people. Especially in developing countries, these jobs can present pathways out of poverty and opportunities for cultural preservation.
In 2020, the pandemic put a third of all tourism jobs at risk, and airlines around the world said they needed as much as $200 billion in bailouts. By December, the World Tourism Organization had tallied $935 billion in global losses from the tourism standstill, and was estimating that the ripple effects would result in a total economic decline exceeding $2 trillion. Even with international tourism now cautiously reopening, the organization expects that the world will not return to 2019 tourism levels until 2023.
According to data from the World Travel and Tourism Council, every 1% increase in international arrivals adds $7.23 billion to the world’s cumulative gross domestic product. Any improvement in this sector is significant—and it’s just beginning.
Americans, who have easy access to vaccines and command an overwhelming share of the international travel market, are back on the road; two-thirds intend to take a trip in 2021. In the U.S., flight capacity has climbed back to 84% of 2019 levels. The questions are what it will take for the rest of the world to catch up and how the industry must evolve to be flexible at handling future Covid-19 variants so travelers will feel safe and willing to spend.
Grounded for many months, airlines are beefing up their summer schedules—though the number of flights will be a fraction of their pre-pandemic frequency. Airports are still mostly ghost towns (some have even been taken over by wildlife), and international long-distance travel is all but dead. Around the globe, the collapse of the tourist economy has bankrupted hotels, restaurants, bus operators, and car rental agencies—and thrown an estimated 100 million people out of work.
With uncertainty and fear hanging over traveling, no one knows how quickly tourism and business travel will recover, whether we will still fly as much, and what the travel experience will look like once new health security measures are in place. One thing is certain: Until then, there will be many more canceled vacations, business trips, weekend getaways, and family reunions.
Travel will normalize more quickly in safe zones that coped well with COVID-19, such as between South Korea and China, or between Germany and Greece. But in poorer developing countries struggling to manage the pandemic, such as India or Indonesia, any recovery will be painfully slow.
All this will change the structure of future global travel. Many will opt not to move around at all, especially the elderly. Tourists who experiment with new locations in their safe zones or home countries will stick to new habits. Countries with strong pandemic records will deploy them as tourism marketing strategies—discover Taiwan! Much the same will be true for business, where ease of travel and a new sense of common destiny within each safe zone will restructure investment along epidemiological lines.
With the support of IATA and others, the International Civil Aviation Organization developed a global restart plan to keep people safe when traveling. Restart measures will be bearable for those who need to travel, with universal implementation the priority. It will give governments and travelers the confidence that the system has strong biosafety protections. And it should give regulators the confidence to remove or adjust measures in real time as risk levels change and technology advances.
In many of the world’s cities, planned travel went down by 80–90%.Conflicting and unilateral travel restrictions occurred regionally and many tourist attractions around the world, such as museums, amusement parks, and sports venues closed. UNWTO reported a 65% drop in international tourist arrivals in the first six months of 2020. Air passenger travel showed a similar decline. The United Nations Conference on Trade and Development released a report in June 2021 stating that the global economy could lose over US$4 trillion as a result of the pandemic.
Korstanje, M. E. (2020). Passage from the Tourist Gaze to the Wicked Gaze: A Case Study on COVID-19 with Special Reference to Argentina. In International Case Studies in the Management of Disasters. B. George & Q. Mahar (eds). Wagon Lane, Emerald Publishing Limited, pp. 197-212.
Tzanelli, R. (2021). Frictions in Cosmopolitan Mobilities: The Ethics and Social Practices of Movement Across Cultures. Edward Elgar Publishing.
Mostafanezhad, M., Cheer, J. M., & Sin, H. L. (2020). Geopolitical anxieties of tourism:(Im) mobilities of the COVID-19 pandemic. Dialogues in Human Geography, 10(2), 182-186.
Korstanje M. & George B (2021) Mobility and Globalization in the Aftermath of COVID19: emerging new geographies in a locked world. Basingstoke, Palgrave Macmillan.
Financial strains among Chinese property developers are hurting the Asian high-yield debt market, where the companies account for a large chunk of bond sales.
That’s widening a gulf with the region’s investment-grade securities, which have been doing well amid continued stimulus support.
Yields for Asia’s speculative-grade dollar bonds rose 41 basis points in the second quarter, according to a Bloomberg Barclays index, versus a 5 basis-point decline for investment-grade debt. They’ve increased for six straight weeks, the longest stretch since 2018, driven by a roughly 150 basis-point increase for Chinese notes.
China’s government has been pursuing a campaign to cut leverage and toughen up its corporate sector. Uncertainty surrounding big Chinese borrowers including China Evergrande Group, the largest issuer of dollar junk bonds in Asia, and investment-grade firm China Huarong Asset Management Co. have also weighed on the broader Asian market for riskier credit.
“Diverging borrowing costs have been mainly driven by waning investor sentiment in the high-yield primary markets, particularly relating to the China real estate sector,” said Conan Tam, head of Asia Pacific debt capital markets at Bank of America. “This is expected to continue until we see a significant sentiment shift here.”
Such a shift would be unlikely to come without a turnaround in views toward the Chinese property industry, which has been leading a record pace in onshore bond defaults this year.
But there have been some more positive signs recently. Evergrande told Bloomberg News that as of June 30 it met one of the “three red lines” imposed to curb debt growth for many sector heavyweights. “By year-end, the reduction in leverage will help bring down borrowing costs” for the industry, said Francis Woo, head of fixed income syndicate Asia ex-Japan at Credit Agricole CIB.
Spreads have been widening for Asian dollar bonds this year while they’ve been narrowing in the U.S. for both high-yield and investment grade amid that country’s economic rebound, said Anne Zhang, co-head of asset class strategy, FICC in Asia at JPMorgan Private Bank. She expects Asia’s underperformance to persist this quarter, led by Chinese credits as investors remain cautious about policies there.
“However, as the relative yield differential between Asia and the U.S. becomes more pronounced there will be demand for yield that could help narrow the gap,” said Zhang.
Spreads on Asian investment-grade dollar bonds were little changed to 1 basis point wider, according to credit traders. Yield premiums on the notes widened by almost 2 basis points last week, in their first weekly increase in six, according to a Bloomberg Barclays index
Among speculative-grade issuers, dollar bonds of China Evergrande Group lagged a 0.25 cent gain in the broader China high-yield market on Monday. The developer’s 12% note due in October 2023 sank 1.8 cents on the dollar to 74.6 cents, set for its lowest price since April last year
The U.S. high-grade corporate bond market turned quiet at the end of last week before the holiday, but with spreads on the notes at their tightest in more than a decade companies have a growing incentive to issue debt over the rest of the summer rather than waiting until later this year.
The U.S. investment-grade loan market has surged back from pandemic disruptions, with volumes jumping 75% in the second quarter from a year earlier to $420.8 billion, according to preliminary Bloomberg league table data
For deal updates, click here for the New Issue Monitor
Sales of ethical bonds in Europe have surged past 250 billion euros ($296 billion) this year, smashing previous full-year records. The booming market for environmental, social and governance debt attracted issuers including the European Union, Repsol SA and Kellogg Co. in the first half of 2021.
The European Union has sent an RfP to raise further funding via a sale to be executed in the coming weeks, it said in an e-mailed statement
German property company Vivion Investments Sarl raised 340 million euros in a privately placed transaction in a bid to boost its real estate portfolio, according to people familiar with the matter
The Chinese property bubble was a real estate bubble in residential and/or commercial real estate in China. The phenomenon has seen average housing prices in the country triple from 2005 to 2009, possibly driven by both government policies and Chinese cultural attitudes.
Tianjin High price-to-income and price-to-rent ratios for property and the high number of unoccupied residential and commercial units have been held up as evidence of a bubble. Critics of the bubble theory point to China’s relatively conservative mortgage lending standards and trends of increasing urbanization and rising incomes as proof that property prices can remain supported.
The growth of the housing bubble ended in late 2011 when housing prices began to fall, following policies responding to complaints that members of the middle-class were unable to afford homes in large cities. The deflation of the property bubble is seen as one of the primary causes for China’s declining economic growth in 2012.
2011 estimates by property analysts state that there are some 64 million empty properties and apartments in China and that housing development in China is massively oversupplied and overvalued, and is a bubble waiting to burst with serious consequences in the future. The BBC cites Ordos in Inner Mongolia as the largest ghost town in China, full of empty shopping malls and apartment complexes. A large, and largely uninhabited, urban real estate development has been constructed 25 km from Dongsheng District in the Kangbashi New Area. Intended to house a million people, it remains largely uninhabited.
Intended to have 300,000 residents by 2010, government figures stated it had 28,000. In Beijing residential rent prices rose 32% between 2001 and 2003; the overall inflation rate in China was 16% over the same period (Huang, 2003). To avoid sinking into the economic downturn, in 2008, the Chinese government immediately altered China’s monetary policy from a conservative stance to a progressive attitude by means of suddenly increasing the money supply and largely relaxing credit conditions.
Under such circumstances, the main concern is whether this expansionary monetary policy has acted to simulate the property bubble (Chiang, 2016). Land supply has a significant impact on house price fluctuations while demand factors such as user costs, income and residential mortgage loan have greater influences.
Neil Gough (11 June 2015). “Idle Home Builders Hold China’s Economy Back”. The New York Times. By some economists’ estimates, real estate and related industries account for more than 20 percent of China’s gross domestic product
Another month, another explosive rise in home prices. May’s median annual housing price rose 23.6%, a new monthly record. Buyers are still buying, helped by low interest and mortgage rates. But since housing construction hasn’t kept pace with demand and economic growth, it will take more housing production to reduce long-term pressure on prices.
The buying pressure in housing markets is setting records. Although home sales fell slightly in May compared to April, houses aren’t sitting very long on the market. According to the National Association of Realtors, total housing inventory is down 20.6% from a year ago. Properties only last on the market for an average of 17 days, and 89% of sales in May “were on the market for less than a month.”
Given this high demand, we’d expect supply to respond. Ronnie Walker at Goldman Sachs notes housing starts are rising, hitting their highest levels since 2006. But it isn’t cooling the market off. But Walker says despite these higher starts, “red-hot demand has brought the supply of homes available for sale down to the lowest level since the 1970s.”
Walker expects a “persistent supply-demand imbalance in the years ahead.” New construction will come online, and more sellers eventually will enter the market, but his model foresees “home prices grow(ing) at double digit rates both this year and next.”
Tight future markets are confirmed by Harvard’s Joint Center for Housing Studies (JCHS). In their 2021 report, these experts say “the supply of existing homes for sale has never been tighter,” and is at its lowest level since 1982.
So where are the houses? What happened to supply and demand? JCHS notes several reasons for underproduction, but the primary blame goes to restrictive local policies such as single-family zoning, minimum lot sizes, parking requirements, etc. A 2018 survey of over 2700 communities found “93 percent imposed minimum lot sizes” with 67 percent requiring lots of at least one acre in size and sometimes more, many in suburban towns.
What about big cities? Despite perceptions that there’s a lot of development in many cities, not much housing has been built in some. Between 2010 and 2018, jobs in New York City increased by 22% “while the housing stock only increased four percent.” Jobs in San Francisco and San Mateo counties rose by over 30% between 2010 and 2019, while new housing permits only rose by 7%.
There are strong political biases in these cities against more construction, but other liberal places are re-examining their housing policies, especially single-family zoning. A New York Times 2019 analysis confirmed that many cities’ land area is dominated by single-family zoning —70% in Minneapolis, 75% in Los Angeles, 79% in Chicago, 81% in Seattle, and 94% in San Jose. Combined with excessive parking requirements, zoning policy effectively takes land out of production while pushing its price sky-high and preventing multifamily options.
Cities’ anti-development policy means new housing is pushed further out in the metropolitan area, adding to suburban sprawl, longer commute times, and environmental damage. Ironically, some progressive environmental groups have allied with anti-development forces, with the net result of fostering suburban sprawl.
In New York City, the left Sunrise Movement has joined with many other groups to oppose “upzoning” for higher density and more development in Manhattan’s Soho neighborhood, one of the wealthiest in the nation. In contrast, Berkeley California, one of the most liberal cities in the nation, has voted to end single family zoning, persuaded by the argument that such policies result in racially segregated neighborhoods and lack of affordable housing for people of color.
But it isn’t just liberal cities that face this problem. Even though red states like North Dakota, Utah, and Texas lead the nation in home building, a recent study found that only four of America’s 25 largest metropolitan areas “built enough homes to match local job growth.” And much of that growth was in outlying suburbs, adding to sprawl and pollution.
Urban economist Ed Glaeser locates a good deal of the problem in the rising power of local citizen groups, especially existing homeowners. Their housing investments often rise in value with scarcity, and they usually like the existing neighborhoods where they reside and don’t want new residents.
This creates an “insider/outsider” problem that limits housing. As Glaeser notes, current homeowners don’t “internalize the interests of those who live elsewhere and would want to come to the city…their political actions are more likely to exclude than to embrace.” These anti-housing groups often are labelled “NIMBYs”, for “Not In My Back Yard.”
In response, so-called “YIMBYs” (Yes In My Back Yard) are pushing for policies such as relaxed zoning, allowing multi-family housing (at least duplexes to quadplexes) on single family lots, and allowing denser housing near mass transit stops (“TOD”, for “Transit Oriented Development.”). They are having some success, but anti-development forces are deeply entrenched and politically powerful in many places around the country.
But would more development create not just housing, but add to affordable housing? What about the impact on low-income and non-white families, who could face rising rents or displacement from gentrification while still not being able to buy a house? In my next blog, we’ll look at the tangled racial history of housing development and home ownership. Unless renters and lower-income people can be mobilized to support development, NIMBY opposition to more housing will be hard to overcome.
I’m an economist at the New School’s Schwartz Center (https://www.economicpolicyresearch.org), currently writing a book for Columbia University Press on cities and inequality. I have extensive public sector experience studying cities and states. I’ve served as Executive Director of the Congressional Joint Economic Committee, Assistant Secretary of Labor for Policy, Deputy Commissioner for Policy and Research at New York State’s Department of Economic Development, and New York City Deputy Comptroller for Policy and Management. I also worked as Director of Impact Assessment at the Ford Foundation.
Any collapse of the U.S. housing bubble has a direct impact not only on home valuations, but mortgage markets, home builders, real estate, home supply retail outlets, Wall Street hedge funds held by large institutional investors, and foreign banks, increasing the risk of a nationwide recession. Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President George W. Bush and the Chairman of the Federal ReserveBen Bernanke to announce a limited bailout of the U.S. housing market for homeowners who were unable to pay their mortgage debts.