Rent is So Expensive in San Francisco...

#Rent is so expensive in #SanFrancisco that its cheaper to live in #LasVegas and fly to work in the city everyday. http://t.co/4KjdRAGtEp

— Prof. Steve Hanke (@steve_hanke) October 18, 2015

S.F.’s Unemployment Rate Drops to 3.2 Percent

The Federal Reserve spigot pumping money into the Silicon Valley Corridor is working just fine.

Unemployment in San Francisco fell to 3.2 percent in September, according to preliminary unemployment numbers released Friday by the California Employment Development Department.

San Francisco's mayor ignored the spigot, though, and took personal credit.

“Today’s great news on employment is the result of our relentless focus these last five years on putting people back to work and bringing hope and opportunity back to our city,” San Francisco Mayor Ed Lee said in a statement.

-RW

The Top 10 U.S. States Where Chinese Are Investing in Real Estate

In San Francisco there are buses that take Chinese investors from one SF  building available for purchase to the next.

I understand that a group of Chinese inventors has also purchased land across the bay in Oakland in an area known as Jack London Square. They plan to spend billions on projects at that location. l have long considered JLS to be an unpolished jewel, perfect for development given its waterside views, boat access and proximity to SF.

So Much for 2012 Pastry, Gelato and Salami Workers in San Francisco

The People's Republic of San Francisco has boosted the minimum wage in the city to $10.00 per hour.

This is on top of a 1.5% city payroll tax and the requirement that employers provide nine paid sick days and provide health care. This brings the total cost to over $12.00 per hour.

The confused San Francisco Living Wage Coalition is hailing the new higher minimum wage as though it will help minimum wage workers, when it will in fact result in some minimum wage workers being laid off.

Wages, like all prices, are set by supply and demand. When you raise the price of a product above the market clearing price, the quantity demanded declines. Raising the minimum wage will, if it is above the market wage (and it appears it is in SF), will result in some workers being laid off at the margin.

Indeed, that appears to be exactly what will occur in SF.

SFC reports:

"I hate it," Daniel Scherotter said of the city's highest-in-the-country minimum wage.

He's the chef and owner of Palio D'Asti, an Italian restaurant in the Financial District, and a previous president of the Golden Gate Restaurant Association...

He said he recently cut his kitchen staff by eight workers and no longer makes pastries, gelato or salami in-house, thereby directing his money outside the city for those products.

And it won't boost the standard of living for others in the city, either. Scherotter explains:

"If you want to know why so many chefs are getting into the food truck, taqueria, quick-service game, that's why," he said. "Of course we all love tacos, but the fact is if you're operating on the 19th century model with full-service, that's got problems."...

"Who the hell would hire a teenager for $12 an hour?" he asked.

And there you have it, a perfect example of do-gooder laws hurting everyone. The higher minimum wage will hurt those just attempting to enter the wage force, making many unemployable. Leaving them to do nothing but roam the streets. The business owner isn't happy because he has to waste time finding ways around the onerous wage laws. And the consumer sees his standard of living drop, since fewer will attempt to enter the labor intensive restaurant business.

In other words, a trifecta of trouble, because of  basic economic ignorance in the land of heavy fog.

The Screwing of the Un-Hip, San Francisco Style

The Peoples Republic of San Francisco is the only city in California that taxes stock options. It is part of the city's payroll tax.

This is causing many hip, with it, firms to consider moving out of the foggy city.

Several tech companies, including Twitter, Zynga and Yelp, have told city officials that San Francisco's tax code makes it financially unfeasible for them to stay in the city, reports the San Francisco Chronicle.

It appears the city is going to do something about this. San Francisco Supervisor Ross Mirkarimi is calling for a two-year moratorium on taxing the stock options, but not a moratorium for everyone.

The temporary tax break would only apply to technology companies that are located anywhere in San Francisco, have 100 employees or more and are not traded on a public stock exchange. There are other proposals out there, but the Mirikarimi proposal captures the essence of this elitist city.

If you are part of the elitist crowd, you don't have to worry about mad dog, incentive killing taxes, or any other rules for that matter. If on the other hand,  you are not part of the in-crowd, say a property owner, you are nothing but a Capitalist Pig only good for turning into bacon (if these Regressives actually ate bacon) or to be taxed to death and prevented from constructing the type of structure you want on your property.

Operations that can turn a man into a woman are big here. Turning a diliapidated building into a modern structure is not.

I really think it's the fog.

San Francisco Downgraded, Including Emergency Earthquake Bonds

Moody's has in one day downgraded the city of brotherly love and the city of same sex love, putting a kabosh on the Beatles theory that "all you need is love".

Moody's Investors Service has downgraded to Aa2 from Aa1 the rating on the City and County of San Francisco's General Obligation Bonds and assigned an Aa2 rating to the city's General Obligation Bonds (Earthquake Safety and Emergency Response Bonds, 2010) Series 2010.

Moody's also downgraded by one notch our ratings on the city's various general fund obligations, including its abatement leases and settlement obligation bonds.

Moody's said:

The downgrade primarily reflects the city's very narrow financial position and the minimal prospect of material improvement in the near term. The city ended fiscal 2009 with a balance sheet that was weaker than at any time in the prior ten years and extremely weak by comparison with other similarly rated local governments. Its fiscal 2010 and 2011 budgets both relied heavily on one-time solutions, including draws on reserves, to close sizable projected budget gaps, suggesting that final audited results will show little balance sheet improvement. The lackluster economy cannot be expected to provide substantial relief in the near term. Recent reports from the state confirm that its fiscal challenges continue to loom large, which in turn injects revenue risk into the city's current and next year budgets. The defeat in the election earlier this month of a local pension and health care cost control measure suggests that little near-term fiscal improvement is likely to result from external political pressure...The city's ratings continue to reflect its position as a large, world renowned city with a diverse economy and strong resident wealth levels. Its moderate debt burden, which is conservatively structured, is also incorporated into the ratings.

The Worst-Run Big City in the U.S.

Keith Kelly emails:

This article backs up your past assessment of San Francisco: The Worst Run Big City in San Francisco

For those who may have missed it, this is what I have had to say about San Francisco:

They Have Lost Their Minds in San Francisco

I Told You It's a Crazy Crime Zone: The Mayor of Sacramento Robbed in San Francisco