I keep hearing about how salaries are lower where I live but that it’s OK because the cost of living is lower as well. I cry bullshit on that.
Granted, I’ve only lived in 3 different areas in my life, so this isn’t a huge sampling, but of the three, only one thing has really been different: housing costs.
I don’t get a discount on food because I live in an area where the salaries are lower. In fact, food where I live now (rural MI) is in many cases more expensive than when I lived in an urban area with more competition between grocery stores.
I don’t get a discount on gas. The pump price is the same here as everywhere else.
When I buy a car, they don’t give me the “Rural MI” discount. The MSRP is the same here as it is in California.
If I go on a trip, I pay the same amount as everyone else. In fact, I pay more for flights - not living near a major airport means flights cost more.
Housing costs are slightly cheaper. But not in the same percentage as salaries. FYI I make ~50% of what I did when I lived in a larger area. Housing, on the other hand, is more like 75-85%.
Seems to me that’s most of it. I moved from central ohio to LA 2 years ago and kept hearing about it was SOOOO much more expensive to live and I’d never make it, etc. The only thing that’s significentely more is housing. (good grief I can’t spell this morning). In second would probably be car insurance.
Some other things are different, like valet parking everywhere and other small things here and there, but food cost is about the same, gas cost is about the same, utilities, cable etc are all about the same. On the other side of it, I’m making a good bit more than I was before and actually have far more money in the bank then I’ve had in years.
Employers use “cost of living” as a way to set salaries. The job that pays $100K in CA pays $50K in the flyover.
Unless housing is ridiculously less expensive (which I realize is sometimes the case, if you’re comparing LA or San Francisco to Bodunk, Ohio), the difference in salary can’t be explained by cost of living altogether. A dollar is a dollar for most purchases, regardless where you live.
To be fair, I’m not the greatest example to use. I don’t own a car, so no car payment. I help my BF with a portion of the car insurance and gas sometimes. (I use public transport most of the time) I also don’t spend a lot of money on other things, I’m perfectly happy at home most of the time. As far as income, I was at a low point in my career before moving, still bouncing back from a lengthy illness, so the increase was more in my case than would be normal.
As to the cost of housing, we went from a 2 bed 2 bath townhouse for about 750 a month to a 2b2ba apt that’s about 350sq smaller for 1400. So just about double for less space.
What about property taxes? Aren’t they significantly less on less costly houses? I’m sure my house could range between $1,000 and $10,000 a year in taxes depending upon which city/province I was in.
Yes, in the US property taxes differ based on the value of the house.
The percentage also differ across state and sometimes county/city lines, though. I have a vague memory of my property tax being much higher in Michigan than when I lived in Colorado, but I don’t have the data to back that up.
My wife and I live in Washington, DC and my in-laws live in rural Arkansas. When they visit they are always commenting on how much more expensive things are in DC. I don’t know it might be we have different tastes and spend our money on different things than they do.
I’ve noticed that some things are slightly more here in LA then they were back in Ohio, but not really that much. The only big ones were housing and auto insurance.
It’s based on the assessment of the house plus where the house is located. Somebody living in a 2BR bungalow in a “rich” town is going to pay more than somebody living in the same exact bungalow in a middling town.
nearly faints at the mention of a $1K property tax
When I interviewed for a job in San Jose, CA, I was told going in that cost of living, especially housing prices were high. In talking to two or three of my potential co-workers, the comment was made that really it is the cost of buying a house and the amount of house/property with it that is outrageous. Rental prices on apartments are (possibly) slightly higher than in other areas, but the bigger difference is the value of houses. The comment from the guy who’d moved in less than a year ago was that he didn’t notice hugely higher grocery costs, restaurant meal prices, or various other prices. But housing costs, especially now that they were looking at buying a house is much higher, and salaries are significantly higher to accommodate that.
So that’s another vote for “yes” to the title question.
You also have to look at local taxes as a package deal: property taxes here in Texas are much, much higher than they were in Alabama, but there is no state income tax.
A few people have mentioned insurance in passing, but it’s no small thing. My car insurance in Alabama was half of what it costs here in Texas, and I suspect car insurance in the “expensive” states is twice again what I pay now. For a family, it could easily add a thousand or two a year to expenses.
Definitely. It’s like a universal joke here that all grads go straight to Alberta, do not pass go, do not collect $200. Yeah, you can make more money there, but hell. Housing prices are insane, and just looking at the price of car insurance and your plates would make anyone scream.
The largest part of cost of living is in the housing expense, but there are other factors.
It costs more to live in Washington than Idaho. Why? We have higher property taxes, higher minimum wage (the second highest in the country), larger gas taxes, and other quality of life taxes (litter, hazardous substances, etc.) that Idaho doesn’t have. That’s why my aunt and uncle moved to Lewiston ID rather than Clarkston WA–cost of living, even though much of the (construction) work the company does ends up being in Washigton.
I’m surprised food isn’t differently priced. I moved from the south suburbs (Tinley Park) of Chicago to Evanston, just over the north side of Chicago, and the prices in all the chain supermarkets are more here. We finally got a Food 4 Less (Kroger), and that has “south side” prices. But it’s small and insidious things that really add up. A can of soup, for example, might be only 10 or 20 cents more - but if you’re buying half a dozen cans, that’s an extra dollar. Added to a whole cart of groceries, and it’s easily $30 more a trip.
I found that even with shopping at ethnic markets and Aldi, my grocery budget needed to be expanded by a good 30% living up here.
Gas is consistently 20 cents more a gallon here, even though we’re within the same county with presumably the same taxes. I try to make sure I run low on gas whenever I go south to visit my mother so I can fill up the tank down there! The good news, of course, is that things are closer together so I don’t have to drive as far or as much, which means I don’t fill up as often.
Housing, of course, is a joke. A house that would get $180,000 in my mother’s subdivision would easily get $450,000 here, especially if the lots were as big.
And yet the median income is roughly the same:
Evanston: The median income for a household in the city was $56,335, and the median income for a family was $78,886.
Tinley Park: The median income for a household in the village was $61,648, and the median income for a family was $71,858
I don’t know how people do it. We’re still poor folks making nearly twice what my parents did at our ages, and with absolutely nothing in savings and still renting.
