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There is nothing special about the economic principles of "Living Wage Calculators", unless you are the kind of person that would advocate against things like uniform national minimum wage laws, (and need only see how Illinois' deviation from that has been ruinous to the employment of folks at the lower end of the economic ladder around here, but that is a whole other discussion).
The crux of the argument truly is about the data.
The MIT Living Wage Calculator uses the kinds of standard governmental data sources like HUD rent estimates and USDA food cost. As such it is not at all surprising that the Chicago-Joliet-Naperville MSA indeed has lower housing costs than Los Angeles-Long Beach-Santa Ana.
Instead UBS' study focus on the specific global city centers. As such it almost certainly should be expected that instead of the unrealistically low MSA rents from HUD for the MSA, the UBS numbers seem more reflective of what one would find for the kind of apartment described. It is also important to note, for folks not scraping by on subsistence level wages, but contemplating relocation, that the housing type is as typical as the limits of the study can make them.
I have little doubt that the HUD standards just don't make sense for the core of Chicago, and are all but impossible to find in any desirable suburb too --
Quote:
1 Adult 1 Adult 1 Child 1 Adult 2 Children 1 Adult 3 Children 2 Adults (One Working) 2 Adults (One Working) 1 Child 2 Adults (One Working) 2 Children 2 Adults (One Working) 3 Children 2 Adults 2 Adults 1 Child 2 Adults 2 Children 2 Adults 3 Children
Chicago-Joliet-Naperville
$8,430 $11,568 $11,568 $14,824 $9,688 $11,568 $11,568 $14,824 $9,688 $11,568 $11,568 $14,824
(monthly)
$702.50 $964.00 $964.00 $1,235.33 $807.33 $964.00 $964.00 $1,235.33 $807.33 $964.00 $964.00 $1,235.33
Los Angeles-Long Beach-Santa Ana
$11,445 $17,469 $17,469 $23,834 $13,641 $17,469 $17,469 $23,834 $13,641 $17,469 $17,469 $23,834
New York-Northern New Jersey-Long Island, NY-NJ-PA
$12,911 $17,216 $17,216 $22,303 $14,315 $17,216 $17,216 $22,303 $14,315 $17,216 $17,216 $22,303
UBS data seems much more believable for the core of these cities, and is surely a key component to the rank.
Quote:
Cities Furnished 2-room apartment Unfurnished 3-room apartment Normal
Chicago 2,520 2,960 2,210
Los Angeles 1,670 2,210 1,990
New York City 4,620 4,320 3,890
There is nothing special about the economic principles of "Living Wage Calculators", unless you are the kind of person that would advocate against things like uniform national minimum wage laws, (and need only see how Illinois' deviation from that has been ruinous to the employment of folks at the lower end of the economic ladder around here, but that is a whole other discussion).
The crux of the argument truly is about the data.
The MIT Living Wage Calculator uses the kinds of standard governmental data sources like HUD rent estimates and USDA food cost. As such it is not at all surprising that the Chicago-Joliet-Naperville MSA indeed has lower housing costs than Los Angeles-Long Beach-Santa Ana.
Instead UBS' study focus on the specific global city centers. As such it almost certainly should be expected that instead of the unrealistically low MSA rents from HUD for the MSA, the UBS numbers seem more reflective of what one would find for the kind of apartment described. It is also important to note, for folks not scraping by on subsistence level wages, but contemplating relocation, that the housing type is as typical as the limits of the study can make them.
I have little doubt that the HUD standards just don't make sense for the core of Chicago, and are all but impossible to find in any desirable suburb too --
UBS data seems much more believable for the core of these cities, and is surely a key component to the rank.
So you have now conceded that the UBS "study" is not useful to 99.9% of the world it appears. The US Census is clear that Chicago adjusted for Median Incomes is actually one of the most affordable large cities in the US. Chet, can you explain why you are so concerned with the plight of UBS Bankers and the cost the company's expats may face around the world?
To help you again fully understand how stupid the UBS study is:
So you have now conceded that the UBS "study" is not useful to 99.9% of the world it appears. The US Census is clear that Chicago adjusted for Median Incomes is actually one of the most affordable large cities in the US. Chet, can you explain why you are so concerned with the plight of UBS Bankers and the cost the company's expats may face around the world?
To help you again fully understand how stupid the UBS study is:
Lord knows, I am. I'm thinking about passing the hat for these malnourished ex-pats, because I know that it's impossible to find a 2BR apartment in Chicago for less than #2400...
Lord knows, I am. I'm thinking about passing the hat for these malnourished ex-pats, because I know that it's impossible to find a 2BR apartment in Chicago for less than #2400...
For the umpteenth time:
Quote:
Cities Furnished 2-room apartment | Unfurnished 3-room apartment | Normal
Chicago 2,520 | 2,960 | 2,210
I have BOLDED the NORMAL option.
Further:
Quote:
Housing is a basic need, and its prices depend greatly on regional preferences and demographic trends. ...We only looked at newly built apartments with a bathroom and a kitchen. Prices included utilities (energy and water taxes), but not the use of a garage. ...To capture local standards, our survey asked for the price of an apartment of typical size, location, and amenities for the respective city.
I really do not believe that the UBS survey is useful to only a narrow slice of people.
What I find curious is comparing some of the salaries in the MSAs from MIT Living Wage Calculator to other sources.
All much HIGHER than
You'll note the wage data above, from the MIT Living Wage Calculator, appears to correlate with the UBS data --
Both data sets show how much of a challenge it is to afford either life inside Chicago or even the MSA comparing the two areas...
Great, except the median income in Chicago is 23% higher than in LA, so proportionally people in LA make less. Must not be a lot of those management jobs. And the US Census clearly shows that LA is 130% more expensive than the national average, vs Chicago which is 115% more expensive. So all the sudden that management job is actually making less in LA than Chicago.
We won't touch Miami which is very poor for working people.
Quote:
Cities Furnished 2-room apartment | Unfurnished 3-room apartment | Normal
Chicago 2,520 | 2,960 | 2,210
I have BOLDED the NORMAL option.
Further:
Quote:
Housing is a basic need, and its prices depend greatly on regional preferences and demographic trends. ...We only looked at newly built apartments with a bathroom and a kitchen. Prices included utilities (energy and water taxes), but not the use of a garage. ...To capture local standards, our survey asked for the price of an apartment of typical size, location, and amenities for the respective city."
Please, do tell, how can UBS' definition of NORMAL not be NORMAL?
{I assume you realize that census includes the many people that are not in fact employed to arrive at median incomes, while the UBS study specifically focus on earning.}
There is nothing special about the economic principles of "Living Wage Calculators"....
What is special about it is that it sets a very explicit and easier to define income standard: what do you need to take care of the basic necessities? Looking at the average introduces a slew of additional assumptions related to discretionary spending patterns in a basket of goods, and as I mentioned before the basket doesn't really look the same market to market within a country, let alone between countries across the world.
This is why economists argue about substitution effects, point of sale/procurement biases, etc. Our executive and legislative branches even got into the act recently debating unchained (non-substituted) vs. chained (substituted) CPI recently.
Quote:
Originally Posted by chet everett
The MIT Living Wage Calculator uses the kinds of standard governmental data sources like HUD rent estimates and USDA food cost. As such it is not at all surprising that the Chicago-Joliet-Naperville MSA indeed has lower housing costs than Los Angeles-Long Beach-Santa Ana.
Instead UBS' study focus on the specific global city centers. As such it almost certainly should be expected that instead of the unrealistically low MSA rents from HUD for the MSA, the UBS numbers seem more reflective of what one would find for the kind of apartment described. It is also important to note, for folks not scraping by on subsistence level wages, but contemplating relocation, that the housing type is as typical as the limits of the study can make them.
Nope. Two problems with sticking with urban centers:
1) matching issues. You can't take regional wages and compare them to city costs. Some workers with jobs in the city will live outside the city. Some residents of the city will work outside the city. You'd really need to be able to identify who is working where and say something to the effect of, "What are the wages of people who work and live in the city vs. expenses for the city?" Because some people will substitute suburbs for the city and vice versa.
2)Municipal boundaries are non-economic constructs that influence average pricing in their little cost index. MSAs reflect commuter-worker patterns. Cities do not. LA is a classic example. A lot of people I know who formerly lived and worked in the cities of NYC and Chicago work in DT LA today. They don't live in the LA city limits, even though they are single professionals. Santa Monica is expensive. It isn't in LA. It is completely surrounded by LA though. Ditto Beverly Hills. Manhattan Beach is a preferred location for many "urbanites" but its not in the city. All three of those areas would be very, very attractive to expats regardless of family structure if they were to move to LA. They are also closer to DT LA than much of the actual city of LA. Northridge, is twice as far away from DT LA as Santa Monica, but its in the city. Same with Staten Island vs. Hoboken right over the river in NYC.
Regardless of whether or not you want to look at cities or metros, the rent numbers are off. The most recent ACS indicates that 30% of the 3BR apartments in the city have a gross rent of $1000 or less. Average is much less than stated. Using Zillow (which is biased toward the nicest areas, because you're not going to see many listings for a place in Englewood), a 1300-1500 sft 2+ and 2+ is about $2400. For LA, the same is $1000 more. Their hypothetical rentals should have a similar disparity. They don't. Why? The study numbers don't add up.
Quote:
Originally Posted by chet everett
I really do not believe that the UBS survey is useful to only a narrow slice of people.
What I find curious is comparing some of the salaries in the MSAs from MIT Living Wage Calculator to other sources.
Quote:
Los Angeles-Long Beach-Santa Ana, CA
Management $108,740
Business & Financial Operations $70,760
Computer & Mathematical $86,010
Architecture & Engineering $87,360
Life, Physical, & Social Science $71,440
Community & Social Service $46,190
Legal $102,380
Education, Training, & Library $54,560
Arts, Design, Entertainment, Sports, & Media $59,840
Healthcare Practitioners & Technical $80,850
All much HIGHER than
Quote:
Chicago-Joliet-Naperville
Management $98,780
Business & Financial Operations $66,150
Computer & Mathematical $78,460
Architecture & Engineering $73,410
Life, Physical, & Social Science $64,930
Community & Social Service $42,620
Legal $73,420
Education, Training, & Library $49,970
Arts, Design, Entertainment, Sports, & Media $47,210
Healthcare Practitioners & Technical $65,650
You'll note the wage data above, from the MIT Living Wage Calculator, appears to correlate with the UBS data --
Quote:
Cities
Gross hourly pay
Net hourly pay Net annual income
Los Angeles 115.1 116.0 121.1
Chicago 102.0 101.1 111.2
Both data sets show how much of a challenge it is to afford either life inside Chicago or even the MSA comparing the two areas...
I think your math is upside down, because the story is completely the opposite. Comparing the two cities/metros, LA is the much less affordable. The living wage calculator suggests that LA is roughly 13.5% more expensive than Chicago. The job category data you're trying to compare is actually from the BLS OES series where they break down metro averages for various job categories: May 2014 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates
Keep in mind you were looking at general categories. An installation/repairman category includes the guy who fixes your dryer and also the guy who fixes nuclear reactors, so it is useful to look at the subcategories. The Maytag guy isn't going to be able to make the upgrade to fission reactors. Looking at this on three levels:
Overall wages: LA is 5% higher. Not enough to offset the 13.5% cost difference.
Major categories: Out of 22 major occupational categories, LA's wage difference is great enough to overcome COL in only 5. Wages in 7 of 22 categories are less than Chicago's without the COL adjustment.
Looking at subcategories, you can dive really deep. There are 350+ categories of jobs with employment count and wage estimates for both LA and Chicago with a pretty good sample size in each location (1,000 or more employees). After factoring in COL difference:
1 in 80 jobs in LA in these categories will have a 30%+ comp advantage over jobs in the same category in Chicago. BUT: In Chicago, 1 in 14 jobs will have a 30%+ comp advantage over the same job in LA. 1 in 35 jobs in LA will have a 20%+ comp advantage over the same in Chicago. BUT: 1 in 4 jobs in Chicago will have a 20%+ comp advantage over LA. 1 in 15 jobs in LA will have at least a 10%comp advantage over Chicago. Finally, in Chicago 1 in 2 jobs in these 350+ categories of jobs carries a 10%+ wage advantage over the same job category in LA.
So yeah, I don't really get the point you're trying to manufacture about how Chicago is a more challenging place in terms of affordability/wages than LA.
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Again the data is clear...
