High housing costs are stopping us moving for work – and it’s damaging the economy

Symbolism, yeah? Image: Getty.

Donald Trump tells us there are no protesters. He says it so often, he probably believes it. Which is worrying, but also fairly normal. There are stories we hear so often that we simply assume they are true.

Here’s one. Our communities are changing ever faster as more and more people move around for work, driven in part by growing economic gaps between richer and poorer places.

That’s the story – and then there’s the reality. In fact, we are almost a third less likely to move for work than our predecessors at the turn of the millennium. This is particularly true of the supposedly ever more footloose and fancy free youth. The number of young people (aged 25-34) moving home and starting a new job has fallen from 30,000 in 1997 to 18,000 in 2018.

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So why is everyone no-longer heading cross-country for work? There are many potential reasons, going far beyond the economic incentives we focus on in new research, to our family structures and social norms. There can be good reasons that job mobility has fallen, if people are no longer forced to upsticks; and there can be bad reasons, if we’re trapped from taking up opportunities we would like to seize. A look at how our country has changed suggests that economic change, both good and bad, explains part of our tendency to stay put.

First the clearly good. Repeating Norman Tebitt’s supposed call to “get on your bike” to find work in the 1980s would be a bad idea politically today, and it wouldn’t make much sense economically either. Ours is a much higher employment country than it was then – over 76 per cent of us are in work. This success reflects both the post-crisis jobs boom and a longer term trend of reduced worklessness.

Crucially, recent jobs growth has been strongest in areas that have long lagged behind employment wise – the fastest growth has been in Merseyside and South Yorkshire. The result is a more equal country jobs-wise: 39 local authorities had employment rates 10 per cent below the national average in 1999. By 2018 this had fallen to 18. While there are still places where a good job is too hard to come by, there are far fewer places where people have to move away to find any job at all.

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But moving for work isn’t just about getting a job, it’s often about getting a better job – doing something you’d prefer or earning a higher wage. Ours is a country with big gaps in earnings between places – the typical weekly wage is £670 in Richmond upon Thames but only £360 in Kingston upon Hull. But those gaps have shrunk in recent times, in part as the minimum wage has pushed up earnings at or near the bottom. Of course there are different stories for different groups, with different qualifications or in different industries. But the big picture is smaller earnings and employment gaps across Britain, adding to the picture that labour market incentives to move for a new job have decreased.

But what about beyond the labour market? Here we get to very bad reasons for reduced job mobility – housing.

We might expect rents to move in line with earnings in each area. If so rent rises would be annoying, but they wouldn’t impact on financial incentives for people to move for a better paid job.

But in fact, rents have risen fastest in areas that have the highest earnings levels – not the fastest earnings growth – rising by almost 90 per cent the among highest paying local authority areas, compared to 70 per cent among the lowest paying. This has reduced the living standards boost that people might receive from moving to higher paying parts of the country. And yes, this is about far more than London.

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To make this concrete we can provide some (very simplistic) illustrations of how the incentives to move from lower to higher paying places has fallen over time. While moving from a typical paying job in Scarborough to one in Leeds in 1997 might have seen a living standards boost of 29 per cent, today that figure is 4 per cent. Moving from Sunderland to York in 1997 would have meant a 6 per cent boost: today that move would entail a sizeable after-rent earnings fall of 24 per cent.

 

Our analysis focuses on rents, because that is the more likely housing cost faced by young people who move (or not). But rising house price gaps between places, relative to earnings gaps, also lock older and home owning workers out of moving should they wish to do so. Housing shifts may be trapping baby boomers, not just millennials, from moving for work.

These financial incentive shifts do appear to be changing our behaviour. Not only are we moving less for work, but those that are moving are more likely to head somewhere with lower housing costs. That may bring relief via lower costs, but it could also mean a lower paying job, or a longer commute to work. On average we’re spending 12 minutes more a day commuting than we were in the mid-1990s.

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So where does that leave us? Fewer people moving for work, which is good news when people are no longer forced to move for any work, but bad news for those trapped by housing costs so that they cannot take up opportunities they would love to seize. The latter problem matters for individuals – the typical pay rise for those moving areas for work is over three times higher than for those who stay in the same job – but it also means lower productivity for the economy as a whole, as fewer people move from low productivity firms to higher productivity ones.


Three lessons for policy makers stand out. First, they should seek to further close earnings and employment gaps. Second, housing is needed in high demand areas so that higher productivity delivers higher living standards not just higher rents. And third – remember to dig deeper to understand our country, rather than just believing the stories we’re told.

Torsten Bell is director of the Resolution Foundation.

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.