Council housing increases the unemployment rate

A useful little illustration of the problem that the planners always have - the world’s a complicated place.

John Harris tells us that:

Particularly in cities, selling council houses sooner or later eats away at places’ sense of stability and continuity: once buy-to-let landlords enter the picture, most tenants tend to become transient and disconnected from where they live.

It’s even possible to accept that this is a real thing. And yet. Council housing also raises the unemployment rate. The issue was raised by Blanchflower and Oswald:

We explore the hypothesis that high home-ownership damages the labor market…..We show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility,

Lower labour mobility - less ability to move to where the jobs are - leads to a higher unemployment rate. Now, true, the paper looks at home ownership, not council houses - but they are something that doesn’t really exist in that US market analysed. For us we need to know that council house tenures are longer than private rentals (obviously) but also than direct ownership. Further, while it is theoretically possible it’s something that takes many years, if achievable at all, to move council housing across a council boundary. That right to housing does, after all, depend rather upon “a local connection”.

From the way that British council housing works this means that the effect upon unemployment is higher than mere home ownership.

Or, to put this the other way around, keeping the unemployment rate low (the structural that is, not the cyclical) depends upon there being some transience, possibly disconnection, in the labour force. Even, less stability and continuity.

As oft said, there are no solutions, only trade offs. One of them being that the less of the population we have in the current form of council housing the lower - at that resting, structural, state - the unemployment rate will be. Stability and continuity can indeed be seen as virtues - less so when the jobs are now three towns over of course.