Greater Spokane, Inc continues to promote poverty as Spokane’s comparative advantage

As noted previously on this web site (and more below) local home prices are often considered a proxy for local wages. Spokane’s low home prices are an indicator of the area’s low wage structure.

Kevin Dudley of Greater Spokane, Inc posted the following on LaunchPadINW (read the whole thing – GSI will be publishing this data and conclusions shortly):

Most notably, to me anyway, is housing. Spokane’s home prices are 14.5 percent below the national average. Only Mobile, Alabama came in lower out of our peer cities. That’s important, to those looking at buying a home for the first time.

So that’s the cost of living in Spokane. Pretty good, I think (again, I’m biased, but I don’t care). Is this what keeps you in Spokane?

via What brought you to Spokane, and what keeps you here? – LaunchPad – INW.

Low home prices do not indicate what we think they indicate – and GSI’s spin is already underway in the media. If this were true, then Mobile, Alabama would be an even better place to move to, right?

Let’s look at the claims one step at a time.

First, academic research suggests housing prices are an indicator of a local area’s economic status (although one paper contests that). For example:

A New Perspective on the Relationship Between House Prices And Income:

We show that a strong linear relationship exists between income and house price quantiles in Sydney (Australia), Houston, and the state of Texas. This suggests that the house price distribution is closely approximated by the income distribution after a location-scale transformation.

In English, low home prices correlate with low wages.

Or, What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values:

Private land values vary mainly from quality-of-life differences, while social land (or total-amenity) values vary mainly from firm-productivity differences. The most valuable cities are generally coastal, sunny, and have large or well-educated populations.

In English, well-educated working age populations correspond also with higher incomes.

Or, from Consumer City:

In cities with more educated populations, rents have gone up more quickly than wages since 1970-the natural interpretation of this fact is that while productivity has risen in places with more educated workers, quality of life has risen faster.

Second, GSI compares Spokane to Mobile, Alabama. GSI says Spokane has lower home prices for comparable cities except for Mobile, Alabama, which is even lower – and also has a very high poverty rate (as does Spokane). In Mobile, only 18.6% of those over 25 have a 4 year college degree or higher versus 25% in Spokane.

By this odd definition of low home prices being a good thing, that would make Mobile better than Spokane then? This makes no sense.

While home prices are a little below the national average, Spokane’s average wages are 15% below the United States and 20% below the State of Washington averages.

See also:

There is no polite way to put this so I will dispense with being polite:

By the economic and demographic report card, GSI has failed. To this day, GSI continues to promote things that are not true (more here and a whopper of a lie here told by another promoter in town). Keeping with a decades long tradition, they literally promote poverty as Spokane’s comparative advantage (see also the economic history items linked at the upper right of this page).

For decades, Spokane’s local income growth has lagged the rest of the state and the nation. Every year, Spokane residents fall further and further behind. In the GSI world of thinking, this is good!

GSI appears to be failing in its mission.

Sorry about that – I usually stick to the data.  But the overall economic data for Spokane says GSI has failed.

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One Response to Greater Spokane, Inc continues to promote poverty as Spokane’s comparative advantage

  1. Pingback: Home prices reflect the local economy « Spokane Economic And Demographic Data

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