Benjamin Studebaker

Yet Another Attempt to Make the World a Better Place by Writing Things

Tag: Housing Market

How to Use Minimum Wage Laws to Improve Local Schools

In American towns, school systems are the backbone. Strong schools attract affluent residents. Affluent residents boost land values and median incomes. Higher land values and median incomes means higher tax revenue. Higher tax revenue means more money for schools. More money for schools means strong schools, and that means more affluent residents. It’s a virtuous circle:

What kills American towns are low income residents. Low income residents lower the amount of tax revenue local schools have per student, damaging school performance. As the schools decline, the affluent residents dry up, and that hits land values and median income, eroding tax revenue and further damaging the schools. Towns get into death spirals, where declining schools and collapsing prosperity feed off each other. Today I want to talk about how towns get thrown off this cycle, and how higher local minimum wage laws can keep them on track.

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Suburban Decay: A Theory of Decline in Towns

Some years before I was born, my parents lived in Michigan City, Indiana. But this was only briefly–before too long, they ended up in Valparaiso, the town I grew up in. Since 1970, Michigan City’s population has fallen by a quarter, while Valparaiso’s has increased by a third. Today Valparaiso has more people than Michigan City does, and nearby Chesterton’s population has doubled its 1970 level. Another nearby town, LaPorte, has stagnated:

Why do Valparaiso and Chesterton grow while Michigan City and LaPorte decline or stagnate? I’ve been thinking about it, and I have a theory.

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