Why the High Cost of Big-City Living Is Bad for Everyone

Cities like San Francisco provide decreasing opportunities for many of those who already live in them.Photograph by Sean Gallup / Getty

In 1948, a federal housing bureaucrat named Paul Oppermann, trying to come to terms with the perils of the nuclear age, proposed a solution to the problem of protecting America’s cities from the bomb: empty them out preëmptively by encouraging the population to move to suburbs and small towns of fifty thousand or fewer. “No power in the world could afford to drop an atomic bomb on a city of 50,000 or less” is how the San Francisco Chronicle summarized the talk that Oppermann gave to a local planning organization. Plus, Oppermann explained, you get slum clearance into the bargain. The next year, Oppermann assumed office as San Francisco’s planning director.

The story of Oppermann—who did not send the residents of San Francisco packing but merely crippled growth with arcane lot-size rules and off-street-parking-space minimums—comes down to us via a San Francisco Bay Area cartographer, programmer, and amateur historian named Eric Fischer. Fischer, a transplant from Indianapolis, has spent his free time in the past months digging through newspaper archives to understand how San Francisco housing came to be as insanely expensive as it now is.

In a Twitter feed and a blog, Fischer has catalogued decades of planning decisions and concomitant rent increases, which, since the nineteen-fifties, have made real rents in San Francisco quadruple. In New York, Curbed, the real-estate Web site, undertook an anecdotal look at seventy years of New York City rental ads and found that the typical monthly rent went up from sixty dollars, in the nineteen-fifties (about five hundred and forty dollars, adjusted for inflation), to thirty-eight hundred dollars now. Jane Fonda and Robert Redford, in the 1967 movie "Barefoot in the Park," had to settle for a walkup with no bathtub and a broken radiator. The modest West Village building at 111 Waverly Place, whose façade stood in for Fonda and Redford’s walkup? The Web site Trulia estimates its value at $5.5 million.

With all the advantages of hindsight, it’s hard to believe that anybody didn’t see the skyrocketing cost of housing coming in New York and San Francisco (and other cities around the globe like London, Singapore, and Washington, D.C.). But, in fact, for many years the conventional thinking pointed in the opposite direction. Urban planners such as Oppermann saw growing cities as an overcrowded traffic puzzle. Later, it was said that the deterioration of old urban cores would push everyone who could afford it out to “edge cities.” Most recently, we were promised that information tech and the virtual office would make cities largely unnecessary.

In reality, the opposite happened. New York, San Francisco, Washington, Miami: these have become international centers of commerce, issuing an ever louder siren call to the global élite. The San Francisco Bay Area is the most widely discussed example; nearly half of the fifty-eight billion dollars invested in technology last year was concentrated in San Francisco and San Jose, California. But economic vitality of all sorts has become increasingly concentrated in a few desirable locales. Brooklyn is the country’s third leading locale for new businesses; Miami-Dade County, which has also seen spectacular increases in rent, is No. 1.

This economic boom has been accompanied by the growth of urban amenities. These desirable places to live draw a disproportionate share of the country’s wealth, and of the world’s richest citizens. They have become increasingly pleasant places to live for those who can afford it, so much so that Bloomberg’s Justin Fox calls big-city living a “luxury good.”

The price of the creation of these imperial cities is that they actually provide decreasing opportunities for many of those who already live in them, or for those who move to them and are not already armed with resources, status, and education. Everyone living in New York or San Francisco understands the general contours of this. Artists get pushed out of the center, the middle class gets pushed into the suburbs, and bus riders are asked to make way (literally) for tech workers.

An expanding body of economic research confirms this. Harvard’s Equality of Opportunity Project ranked U.S. counties by their success in fostering economic opportunity, measured by the future incomes of children who grew up there. Of the hundred largest counties, San Francisco came in thirty-fourth. Manhattan was a dismal eighty-fifth. Growing up in Manhattan actually makes it less likely that you will advance up the economic ladder—assuming you are not already at the top of it.

More recently, a study by the economists Peter Ganong and Daniel Shoag analyzed the patterns of migration between U.S. regions. In previous decades, workers of all kinds moved to high-wage states, and particularly to high-wage cities such as Boston, San Francisco, and New York, to increase their opportunities. By the middle of the nineteen-nineties, things had changed. No longer were low-wage workers moving to these cities. Instead, the migration to high-wage locales became increasingly limited to those who already_ _had high-paying jobs. “New York and California have always been places of economic opportunity," Ganong said. "The question is: Does that opportunity also come with the need to pay a bajillion dollars in rent?”

In short, cities that planners thought would hollow out and become obsolete have instead become magnets for increasing concentrations of wealth. The more expensive they are, the more closed they become to everyone but those who already have money—pushing them to become more expensive still. In turn, imperial cities become wellsprings of resentment both for residents who can no longer afford them and for those who live outside and see the concentration of wealth mainly in the light of their television screens.

So what is to be done? One hardheaded answer is to build more housing. An increasing supply of housing would theoretically put downward pressure on prices. The reality, unfortunately, is that almost all urban construction happens too late. Fischer estimates that bringing San Francisco’s rents back to the level of fifteen years ago would require adding close to a hundred and fifteen thousand living units to the city's current three hundred and eighty thousand—all in a city short on space and with infamously onerous building regulations. It would mean, more or less, an urban Marshall Plan for housing.

On the other hand, it is also possible to encourage the migration of wealth outside imperial metropolises. To some degree, this is already happening; Vauhini Vara wrote recently about the emerging technology scene in Denver. There are signs of success in smaller cities around the country, sometimes tied to universities, sometimes driven by refugees from Silicon Valley and New York. Given enough time, these cities may grow into true competitors. But enough time means decades, at the very least.

The recent history of urban planning has to invite some humility in offering solutions. Cities that seem to have been resistant to the efforts of planners like Oppermann to shrink them may prove equally resistant to the ideas of future planners about how to expand them. Simply describing just where we stand, though, has value. The cost of living in New York, San Francisco, and Washington is not just a local problem but a national one. That these cities have grown into centers of opportunity largely for those who already have it is not good for the cities, which need strivers to flourish. It would be a shame if the cities that so resiliently survived the anxieties of the atomic age were quietly suffocated by their own success.