Response to the Jobs/Housing Balance: A Critical Analysis

What is the thesis of a jobs/housing balance? Is the balance merely a ratio, or does it take into account income levels in its analysis?

Proponents of a jobs/housing balance policy believe that traffic congestion can be reduced if the number of employment sites and the number of residences are roughly in balance within any subregion of the metropolitan area. Other things being equal, it seems reasonable to expect that people will travel shorter distances between home and work when jobs and housing are close to numerically balanced in an area. My only objection to the concept is that other things are far from equal, so the policy—though well intentioned—is impossible to implement.

A ratio is used as a measure of the extent to which an area is in balance or out of balance, and a numerical ratio has been used by the Southern California Association of Governments as a goal by which the success of the policy can be measured. A jobs housing balance can in principle be stratified by income, and to be effective one would have to provide housing in price ranges matched to the income levels of the employees of any subarea.

SCAG surely recognizes this in its policy analyses, but it does not seem to be reflected in its rather widely-quoted goal of locating 9% of all new jobs in housing rich areas and 5% of all housing in jobs rich areas. Directing local governments to achieve these ratios will be ineffective unless matching by income is included.

Has the jobs/housing balance been exacerbated in recent years?

Over the last ten years or so, a large share of the new jobs have been created in the western part of the region, especially in Los Angeles and Orange Counties, while more of the new housing has been built in the east, including Riverside and San Bernardino Counties. This is the result of lower cost housing toward the east, and fairly good freeway access between east and west. But the average length of the journey to work in this region is not increasing very much over time.

This means that while many more people are making longer trips to work, many others are making shorter trips to work as well. Congestion is worsening because of more people making more trips of all lengths; not because longer trips are becoming more dominant.

Over the longer term, the jobs/housing balance may not be getting worse. If we look back to the fifties, for example, employment was more centralized in downtown, and the suburbs were almost exclusively residential. The trend since the fifties—in this region and throughout America—has been for jobs to follow the residential population to the suburbs.

Many of the concentrations of jobs in Orange, for example, followed by ten to twenty years the earlier residential migration to the suburbs. Companies sought to locate near available labor forces. I would predict with some confidence that jobs will, over time, follow the housing which has been developed in outlying areas, and bring housing and employment somewhat more into balance than they are now.

What pressures, beyond market forces, can municipalities bring to bear to force businesses to relocate to job-poor areas?

Local governments can offer financial incentives, such as property tax rebates, to businesses in efforts to attract employers to job-poor areas. They can also offer improved services and infrastructure. But of course these all require the expenditure of resources, and typically the areas having the resources to do these things are already jobs rich, while job poor areas cannot afford them. Since businesses produce more tax revenues than residences and have lower service costs, most local governments have for some time been hungry for businesses, yet some have been winners in the competition and others have been losers. A regional policy of jobs/housing balance promises to do little to change that situation.

Is it politically realistic to expect upzoning and increased residential density in job-rich regions?

No. Local governments in areas which are attractive to business, especially in the wake of Proposition 13, will seek more and more businesses because of the increased revenues they provide. The only way to break this cycle would be to institute some kind of forced regional revenue sharing, in which some of the income from areas which are rich in jobs were to be transferred to areas which accepted more housing instead of employment. I think it would be politically difficult, if not impossible, to enact such a program of revenue sharing across jurisdictional lines.

By distributing growth throughout the region, does a jobs/housing balance run counter to the goals of mass transit?

In 1850 there was little available in the way of mass transit, and most people worked at home or walked short distances between home and work. There was nearly a perfect jobs/housing balance. Since then, every single investment in transportation—from horse cars to cable cars to subways to freeways—has reduced the cost and time it takes to cross the city and each has resulted in people living farther and farther from where they work.

Transportation improvements are always intended to facilitate a jobs/housing imbalance. I can’t imagine that we are building the Century Freeway, the Long Beach Light Rail Line, or Metrorail in the hope that people will in large numbers move closer to work and thus make less use of these facilities. If these facilities carry large enough numbers of people to justify their costs (which I think unlikely) they will certainly promote greater jobs/housing imbalance.

If we wanted to be sure that we achieve a jobs/housing balance, we would build few new transportation facilities and let congestion become so terribly bad that people would be forced to live near where they work. Somehow, I can’t imagine public officials advocating that, and it’s one reason that the jobs/housing balance is not likely to be pursued with vigor.

Does a jobs/housing balance guarantee that people will live near where they work?

No. There are several reasons why people don’t live close to work. One obvious reason is that the housing near work might not match the workers’ tastes or income levels. Another is that there are multiple workers in a growing proportion of households, and moving closer to one worker’s job might involve moving further from another worker’s place of employment. Another reason is that people choose their homes on the basis of other factors like good schools for their children, recreational opportunities, and proximity to their own ethnic and cultural groups.

In addition, people often become attached to their homes and neighborhoods, choosing to stay there even when they switch jobs. Rent control and low property taxes resulting from Proposition 13 are incentives to stay in a residence rather than to relocate frequently. There is actually little evidence that people consider the distance between work and home to be a very important factor in deciding where to live.

In one famous study of people who moved (done in another city, unfortunately), only eight percent of all movers said that their move was related to a change in work location; and only four percent said they moved in order to be closer to work.

What are the alternatives to a jobs/housing balance? What legislation or regulation do you anticipate will result from this concept?

I would rather see an emphasis on congestion relief through methods which will be far more effective. We can substantially improve local public transit, especially bus transit (which we have ignored in our efforts to promote rail). We should stop subsidizing parking at the workplace, since it encourages people to drive to work alone. We should provide more incentives to use high occupancy vehicles, such as exclusive HOV lanes and HOV bypasses at freeway ramp meters.

Reduction in traffic as a result of a ten or fifteen percent increase in the use of public transit, carpools, and vanpools will be more easily achieved than a similar reduction through a strategy which emphasizes a jobs/housing balance. Let’s focus on the simpler, more effective approaches.

A Broader Conception for a Jobs/Housing Balance

By Kenneth Bernstein

What follows are excerpts from “Balancing Jobs and Housing in Southern California: A Critical Analysis,” submitted to the Woodrow Wilson School of Public and International Affairs. The author will become the new editor of TPR in the next issue.

The idea of jobs-housing balance is so basic and attractive that many consider it a panacea. Robert Cervero of the University of California at Berkeley asserts, “Jobs-housing imbalances seem to be a root cause for many problems plaguing America’s metropolises.” The simple story of how jobs-bousing balance can solve these problems runs as follows: if housing is provided closer to jobs (or vice versa), people will be able to live closer to the workplace. Cars will then spend less time on the road, unclogging traffic and reducing air pollution. Other jobs-housing balance advocates see it as a way to create more diverse, cohesive communities, limit “wasteful” sprawl, increase worker productivity, or reduce disparities in tax burdens among localities.

Much evidence indicates that placing jobs and housing in close proximity may not shorten commute times. Although planners often hail mixed-use projects as the key to reducing dependence on the automobile, few residents of mixed-use projects work within the project. In Warner Center, a large mixed-use, office and high-tech area in the West San Fernando Valley, only 8% of residents are employed in the complex. Although a significant amount of housing is available in Warner Center itself, and housing of most types and price levels is available within ten miles, Robert Cervero found that more than one-third of Warner Center employees commuted from more than twenty miles away. Cervero's study of Northern California cities finds no correlation between an area’s jobs-housing ratio and the number of locally employed residents.

These disappointing results arise because the housing location decision is extremely complex, influenced by far more than proximity to the workplace. Just because some housing is available near my job does not mean that I will make my home there. But if I can afford the nearby housing and if it matches my other preferences, then the probability I will live near the workplace increases significantly.

For this reason, SCAG has been justly criticized for not creating a more refined concept of balance. As Francine Rabinovitz of Hamilton, Rabinovitz and Alschuler writes, “An optimal jobs-housing balance implies however, more than mere numerical parity between gross numbers of jobs and housing accommodations. It also requires proper demand-supply balance in terms of employees’ job preference and capabilities and conversely, their housing preferences and the housing purchasing power that these preferences command.”

Rabinovitz suggests an alternative concept of jobs-housing balance, defining “jobs-housing ratio” as “the number of employees in an area relative to the number of area residents employed in that area.” The ideal ratio would be 1:1. The ratio would be improved when a new development improves the match between the housing opportunities in an area and the job opportunities within it. It might accomplish this by providing jobs that improve the likelihood area residents can hold them, or by better enabling employees to afford the housing in the area.

Affordability should be a component of jobs/housing balance, but its inclusion raises new difficulties. SCAG asserts, for example, that it is desirable but impractical: “Ideally, job/housing balance would include other factors, such as a match between an area’s price of housing and the household income of those who work there… Adding those factors to the definition would have required data management exceeding the resources available. However, this match can be achieved through review and adjustment during the implementation process.”

Aside from the difficulty in data collection, affordability balancing raises other questions. Must housing prices be perfectly balanced to salary levels? (In other words, how balanced is balanced?) If affordability balance does not exist, should government provide subsidies to assure available housing in all price ranges, and if so, which levels of government have this obligation?

And how should the balance between housing affordability and employment be preserved over time? A subregion perfectly balanced between job salaries and housing prices could fall out of balance as the housing stock ages or as the job makeup of the area changes.

Rabinovitz’s specific prescription is also problematic. While it successfully incorporates affordability balancing without imposing an absolute standard, it is not clear how jobs would be provided to make housing more affordable.

For example, making housing more affordable for employees in the Thousand Oaks subregion, where the median home price is nearly $300,000, means creating employment opportunities with a median salary of $100,000.

Although job-housing balance must consist of more than a ratio in order to improve upon probability, cities must grapple with these questions as they attempt to incorporate affordability into their balancing strategies.

Another problem for the policy is that a jobs-housing balance runs counter to the land use patterns necessary for public transit. To balance jobs and housing SCAG must channel employment growth away from areas such as downtown Los Angeles toward emerging residential areas on the outskirts.

Yet SCAG is pursuing this strategy while a subway and light rail network is being constructed to bring commuters into existing employment centers, particularly into downtown.

Creating balanced communities would actually decrease demand for rail transit, since transportation planners have found that individuals are reluctant to abandon their cars for short trips. Conversely, the rail network will enable people to live further from work conveniently, worsening the jobs-housing balance.

Though SCAG officials reply that projected demand is already high enough to support Metro Rail, most public transit systems in the U.S. have fallen short of projected ridership. SCAG should therefore promote land-use patterns that help create an additional demand for mass transit.