To Grow the Economy, We Need to Build More Housing


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If we want to ensure that all working families in our state are thriving, we need economic growth. Economic prosperity is the best way we know to generate economic opportunity. If we care about social justice, we need to find ways both to generate this growth and to make sure it benefits everyone, not a privileged few.

Much has been said, in recent years, about the disappointing economic performance of our state for the past few decades. According to a recent report from CT Voices for Children, since the Great Recession, in 2008, our state has lagged national employment growth by 14.4%. Although the pandemic recovery has been less disappointing (we are only 3.1% behind so far), we are still lagging the country significantly. Figures for personal income growth and gross domestic product are similarly dismal. Although our state is still incredibly wealthy, we are falling behind.

The usual narrative, when confronted with these numbers, is that Connecticut has struggled to create job opportunities for its residents. Our unemployment rate, however, is roughly in line with the national average, and wage growth for low- and middle-income workers has been both above the national average and faster than inflation. We have jobs, and jobs that pay well. The problem is that we are not adding enough workers to generate meaningful economic growth.

It all starts, like most things going wrong in our state, with housing: we are not building enough. Connecticut ranks 49th in the nation for new housing starts, and we have been spectacularly behind national trends in anything close to adequate affordable housing, like multifamily building construction. This has the very predictable result of barely seeing any population growth in our state for years. An economy that does not add new workers will not create new jobs, and without new jobs, it is pretty much impossible for businesses to expand and grow the economy. We are stagnating the economy on purpose, just by refusing to build places for additional workers to live in.

Housing is a peculiar market. While demand for housing depends on location, job opportunities, quality of life, schools, weather, and the usual list of factors listed by your local realtor, supply is tightly controlled and regulated by local governments. The amount of new housing that Connecticut produces in any given year is solely determined by local planners and zoning boards, not the market. Municipalities decide, via zoning, how much housing we can build and where. For decades, they have mostly decided not to build anything, leaving our economy chronically short of new workers.

A persistent lack of supply, especially on multifamily housing, has predictably pushed prices upward, and made housing increasingly unaffordable. Connecticut is an expensive place to rent or own a house. Rental vacancy rates are among the lowest in the nation, so landlords are perfectly happy charging abusive rents and evicting tenants, fully knowing they have an endless supply of desperate families struggling to find a place to stay. As a result, those wonderful rising wages and higher incomes that Connecticut has compared to the rest of the country mostly end up in the pockets of landlords (the “privileged few”), not on the workers that earn them.

We do have a fairly easy way out of this problem, policy-wise, and one we know it works: building more housing. Outside Connecticut, the United States had a massive multifamily building boom in the years that followed the pandemic. The increased housing supply has produced a big slowdown in rent increases, leading to a probable decrease in the next year. This might be bad news if you are a landlord or a developer, but it is really good news if you are a worker living paycheck to paycheck.

It is worth noting, as well, that these changes are not linked to the kind of multi-family housing. New “luxury condos” might be expensive, but the added supply of fancy apartments makes existing older, less fancy housing drop prices. The best way to keep landlords honest is having a choice of where to live instead of landlords being able to choose which tenants they prefer.

Bear in mind that planning and zoning have impacts that go far beyond housing costs. They are also the main drivers of residential segregation, educational disparities, wealth inequality, traffic congestion, carbon emissions, and a long, long, lengthy list of other negative economic impacts that go well beyond affordability and growth. All those, however, are for another article.

The Connecticut local primaries are today; we have municipal elections coming up in November. All those sleepy zoning board and planning committee seats will be up for election, as well as other local offices that no one really notices that have a major role in housing and zoning policy.

For decades, we have allowed these local entities to severely restrict the housing supply in our state, for the most spurious, nonsensical reasons (Traffic! Wetlands! Noise! Town Character!), that often thinly veil an undercurrent of classism and racism.   When we go to the polls this November, we should have all this in mind.