Kids These Days

Do they not teach economics in college any more?

University student John Stevens writes:

Nowhere in the US can a minimum-wage worker afford a two-bedroom home for their family… and in 75% of the country, even two full-time minimum-wage earners can’t pay for family housing. It seems that either basic home prices need to come back down to a realistic and affordable level or people need to be paid a living wage, before home ownership will rise much more beyond current levels.

John, rising wages without a corresponding rise in productivity is called “inflation.” You’re too young to remember what inflation is like, but I can tell you two things:

A) It’s no damn fun.

B) It’s no cure for high prices.

The government can raise the minimum wage until it’s a nice six-figure income. But all that means is a $25 Whopper and housing prices so high as to make today look tame.

In other words, you don’t cure the cancer of deflation with the brain stroke of inflation.

You also missed the other point of my original post. Currently, the hot housing market is about the only thing keeping this economy afloat. Should that market deflate, it will not mean more affordable houses for the masses. It will instead mean more unemployed people still unable to buy a house, even at a reduced price.