White House: Land-use limits linked to flat incomes

White House economic advisers have produced a stream of studies on America’s puzzling lack of productivity and middle-class income growth, and they have identified land-use regulations as a likely culprit.

Jason Furman, chairman of the White House Council of Economic Advisers, said in a recent speech that zoning and restrictions on land use have put “artificial constraints” on housing development.

A limited supply of housing impedes the mobility of Americans, and increasing their mobility “is going to be an important part of the solution to increasing incomes and increasing incomes across generations,” Furman said, speaking at a conference co-hosted by real estate databank  CoreLogic and the Urban Land Institute.

Tough zoning rules are “actually correlated with those places that have higher [income] inequality,” Furman said.

He cited research by Raven Molly, a Federal Reserve economist, showing that an increase in demand for labor in cities with tough limits on land use will result in less housing development, elevated home prices and lower employment in the long run.

“If you’re not pricing people out of the market, you’re able to attract more people and increase employment more,” Furman said.

He also said the Obama administration’s concern about land-use regulations and housing affordability starts at the top: “It’s something he president is personally concerned about.” [Wall Street Journal] — Mike Seemuth