Are expensive cities economically threatened by an inability to house low-income workers? Cities like New York, San Francisco, and others enjoy booming local economies that support high-paying jobs in industries like finance and technology. This and other factors have driven the price tenants are willing to pay for rent to astronomical levels, pricing out lower-income workers who then have to make long commutes or take public transit to get to work.

Where I live, the average rent is $2,000, and both that figure and the area affected by inflated rent prices expands every year. As this progresses, help wanted signs and aggressive recruiting for low income jobs have become far more commonplace, indicating a labor shortage in these industries that is steadily increasing as the difficulty of commuting from areas with reasonably priced rent increases.

My city is by no means in a dire labor shortage situation, but I thought it might be interesting to consider a hypothetical city where the area of price-inflated rent becomes so large that basic upkeep from low-paying jobs that "make the world go 'round" is no longer feasible. Is this a real threat to the success of these cities? That is to say, is a labor market correction likely to drive wages up enough to sustain a workforce of extremely long-distance commuters?

Bonus:

Assuming this is a real threat, are rent regulation (San Francisco), high-quality public transit (New York), or anything else effective long term solutions?
Something missing from more traditional analyses is that a significant number of people may move to a new (expensive) location, take a job that pays a wage insufficient to cover living expenses, and burn through their savings until they're forced to relocate.  This happens quite often in "fashionable" locations such as San Francisco.

This is actually a strong argument in favor of a higher minimum wage in such places, even taking a "hard-line" position that such laws only result in the loss of low-paying jobs &mdash; because such jobs are a "trap" that lures people (with savings) into an unsustainable situation in which they are exploited until they run out of savings, at which point they are replaced by somebody else with savings to exploit.  Eliminating all jobs that pay wages insufficient to actually live (on an ongoing basis) in expensive markets guarantees that such "exploit the newcomers" economies cannot persist for very long.