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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.
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.
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.
So yeah, the "deep dive" necessary to find the effect of things like Illinois notorious "prevailing wage laws" that raise the costs of governmental spending undoubtedly will show up in the bureaucrat focused OES. Sadly, it also explains exactly why folks in union dominated occupations are being subsidized by workers in areas where such representation is less common -- Report: IL prevailing wage for construction workers unfair
These kinds of "disparities" also feed the fantasies of academic types that crave more levers to effect their agenda.
The data that UBS is admittedly much more focused --
Quote:
Our wage comparison covers 15 different occupations in administrative, business, communication, construction, educational, finance, healthcare, hospitality, manufacturing, retail, and transportation sectors.
and likely is not as distorted by the effects of collective bargaining, which varies widely in aims even when comparing European neighbors due to the unique safety nets that some countries provide to all citizens. http://www.worker-participation.eu/N...ve-Bargaining2
The sad fact is using even the official BLS data, the Los Angeles-Long Beach-Anaheim MSA has an even worse problem than Chicago-Naperville-Elgin MSA -- Unemployment Rates for Large Metropolitan Areas People that have no income are rather likely to find it hard to get by, and humans in that category are the focus of the reports you cite. In contrast, UBS' study focus on workers.
No doubt the same kinds of people that assume manipulating wages will not effect employment are largely those that also seem to wave away concerns about labor force participation rates -- Job market continues to improve, but labor force participation remains weak | Brookings Institution
Studies that include global comparisons, which is the real value of the 16th Edition UBS Price and Earnings Report, highlight the pernicious problems that head-in-the-sand academics perpetuate in the US while Eurozone policy makers deal with problems more directly -- The Participation Gap - The Financialist
Quite clearly those who refuse to acknowledge the different perspective offered by data that reflects not what you want to believe but the on-the-ground reality will only hasten the time until Chicago can no longer make excuses.
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.
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.
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.
Thanks, this is what most would refer to as a complete take down. Only a buffoon could continue to argue that LA is cheaper than Chicago.
Go throw around your "pro wrestling" metaphors with the rest of the fools that believe in the make believe world painted by Chicago politicians that want simpletons to believe the government is taking good care of them!
The reality-based world view of UBS and other banks is reflective of the true disparity that exists in Chicago and other places where the gaps between the well off and the underclass are tearing the once strong fabric of society to shreds.
Go throw around your "pro wrestling" metaphors with the rest of the fools that believe in the make believe world painted by Chicago politicians that want simpletons to believe the government is taking good care of them!
The reality-based world view of UBS and other banks is reflective of the true disparity that exists in Chicago and other places where the gaps between the well off and the underclass are tearing the once strong fabric of society to shreds.
The UBS "study" has been shown to be crap. You can go on and on blathering all you want, but the fact remains, Chicago is cheaper than both LA and Miami and is certainly not the 7th most expensive city in the world. It's humorous to watch you talk about predetermined conclusions. You are simply wrong Chet, admit it.
Again for a further schooling, LA has one of the highest rent burdens in the US.
The only BUNK is spewed by the fools that don't want to look beyond data that confirms their biases!
Quote:
Originally Posted by Vlajos
The UBS "study" has been shown to be bunk. You can go on and on blathering all you want, but the fact remains, Chicago is cheaper than both LA and Miami and is certainly not the 7th most expensive city in the world. It's humorous to watch you talk about predetermined conclusions. You are simply wrong Chet, admit it.
Again for a further schooling, LA has one of the highest rent burdens in the US.
The datasets that UBS used are OPEN SOURCE, pull down the data, refute their numbers.
Your reliance on sources that only support your delusion will not change the direction that Chicago is headed for -- a even more grotesquely segregated city where the battle between the supremely well off, a corrupt governing class, and a dysfunctional level of violence and unemployment cannot help but deteriorate.
The datasets that UBS used are OPEN SOURCE, pull down the data, refute their numbers.
Your reliance on sources that only support your delusion will not change the direction that Chicago is headed for -- a even more grotesquely segregated city where the battle between the supremely well off, a corrupt governing class, and a dysfunctional level of violence and unemployment cannot help but deteriorate.
Now you're being silly. The UBS sources have been refuted.
Now you're being silly. The UBS sources have been refuted.
It is really quite simple -- find data that shows the costs, with utilities, of new construction apartments of the types listed in the UBS are wrong and ask them to be corrected.
The study is not refuted by other surveys that include a much broader range of housing options.
It is really quite simple -- find data that shows the costs, with utilities, of new construction apartments of the types listed in the UBS are wrong and ask them to be corrected.
The study is not refuted by other surveys that include a much broader range of housing options.
You proved my point, thanks. Bizzaro cherry picked data used by UBS is the problem. Median rents are over 25% higher in LA. For sale housing is likely 50% higher in LA.
It is not "cherry picking" to specify a subset of housing options!
Quote:
Originally Posted by Vlajos
You proved my point, thanks. Bizzaro cherry picked data used by UBS is the problem. Median rents are over 25% higher in LA. For sale housing is likely 50% higher in LA.
The entire real estate market of LA or NYC includes factors that cannot be found in Chicago or Belgium or Indonesia so UBS thoughtfully included three specific kinds of rental units that they have found to be common enough to allow comparisons.
This a valid and laudable kind of study design.
Would prefer data from people running AirBnB crashpads? Somehow I don't think it is useful to compare the cost to rent a couch in a closet under a stairway is particularly valid ...
Of course for those with a bizarro world view that blightly ignore the economic reality of unsustainable conflict between kleptocrats and a dependent permanent population of jobless it is doubtful that any reality based data will break through the unquestioned faith in the status quo...
The entire real estate market of LA or NYC includes factors that cannot be found in Chicago or Belgium or Indonesia so UBS thoughtfully included three specific kinds of rental units that they have found to be common enough to allow comparisons.
This a valid and laudable kind of study design.
Would prefer data from people running AirBnB crashpads? Somehow I don't think it is useful to compare the cost to rent a couch in a closet under a stairway is particularly valid ...
Of course for those with a bizarro world view that blightly ignore the economic reality of unsustainable conflict between kleptocrats and a dependent permanent population of jobless it is doubtful that any reality based data will break through the unquestioned faith in the status quo...
No, it's not valid. New construction in Chicago is concentrated downtown, you know, the most expensive real estate market in the City. It is a ridiculous criteria to use. Median rent in Chicago is 25% less than LAs. Shoot, you can live in Lincoln Park where the average rent is about $1350 vs. $1750 downtown.
BTW, have you seen downtown median incomes? The lowest I found was $110,000 which is produces a rent to income level of 19%.
Give it up.
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The only buffoons here are those that refuse to acknowledge there are different kinds of studies!
