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The real median household income in Chicago is about $60k vs $58K in LA. The cost of living index for LA is 136% the national average vs. 116% in Chicago. All easily accessible from the US census. Median family income in Chicago is $74k vs $63k in LA.
Chicago is no where near the 7th most expensive city in the world not even in the US is Chicago the 7th most expensive.
UBS study may be useful for high powered European bankers, but even then it isn't particularly accurate.
We all know Chet will continue to hold up the rather worthless UBS study as proof of Chicago's demise. No one believes it though, as it is so easy to refute.
Despite the FACT that I continue to LINK TO THE DATA and quote from it you and you fellow deniers seems incapable of pulling together a single data point from the study that would show any flaws.
It is ASTOUNDING the degree to which the shameless liars will distort data to defend their beloved little slice of heaven on earth.
My sincere hope is that when one really bothers to remove the blinders from their eyes they can see the dangerous disparities that threaten to make Chicago even more divided.
I did point out where the conclusion that Chicago is the 7th most expensive city in the world is erroneous.
But personal attacks and name calling aren't warranted, no matter what your interpretation of one's response is.
The study UNAMBIGUOUSLY shows that among the 71 global cities included the COSTS as shown by their well considered basket of goods, including rent, is 7th.
To suggest otherwise is not supported by data in this study.
(Funny how many others choose to use much more incendiary language about me and you don't say that is uncalled for...)
The study UNAMBIGUOUSLY shows that among the 71 global cities included the COSTS as shown by their well considered basket of goods, including rent, is 7th.
To suggest otherwise is not supported by data in this study.
(Funny how many others choose to use much more incendiary language about me and you don't say that is uncalled for...)
I guess I was unaware that there were only 71 cities in the world. I also suppose that we should all move to the insular, insignificant hamlet known as San Francisco--it mustn't be a global player since it didn't even get included in the study. And since San Francisco didn't even get ranked on the list, that means it must be cheap across the board, right?! Especially since, gosh, Chicago is the 7th most expensive city in the whole. entire. world. according to the title of this thread.
And I only called you out on the language because you have done the exact same thing to me in a very similar situation on this site.
I'll say it again for Chet's benefit as he is the only arguing that UBS is right. Chicago is not the 7th most expensive city in the world. Chicago is not the 7th most expensive city in the US.
It is ASTOUNDING the degree to which the shameless liars will distort data to defend their beloved little slice of heaven on earth.
My sincere hope is that when one really bothers to remove the blinders from their eyes they can see the dangerous disparities that threaten to make Chicago even more divided.
I personally don't like being called a liar, and in making this personal, you may have violated the TOS. I'll let a mod figure that out. I particularly don't like the label when it has become obvious you don't understand economic principles used in the study. The authors of the study aren't making a specific claim that Chicago is the 7th most expensive study in the world. They are saying that the prices, not adjusted for wages (what economists call purchasing power parity) would suggest that Chicago is the 7th most expensive city in the study.
Point by point issues below:
Quote:
Originally Posted by chet everett
NONSENSE -- The list of PRICE LEVELS on page 8 UNEQUIVOCALLY ranks Chicago at 7
Price levels were derived by taking the basket of goods at local currency rates and then using exchange rates to bring them to exchange rate parity. Those figures are on page 18. The important thing to note is that exchange rate parity is not the same thing as purchasing power parity, which the study never actually disclosed. These two concepts are not the same. People get paid at local prevailing wages in local currency, so to understand expenses (at least from a resident perspective), this is critical. Simple example of how exchange rates distort expenses but PPP does not. Assume the exchange rate is 2USD:1EUR, the average wage in two markets is 30USD and 15EUR, and the cost of a haircut is 15USD and 7.5EUR. Everything is the same if you convert one market to the other currency and haircuts cost 30 minutes of work in both markets. Exchange rate parity and purchasing power parity are one in the same in the first scenario. Now assume the exchange rate changes so that 1USD=1EUR and everything else remains the same. A haircut is now nominally twice as expensive in the USD market, but wages are also nominally twice as high due to exchange rate differences. On a PPP basis, the haircuts remain at the same cost. The study briefly touches upon this on pg 12 but they never explicitly calculate the entire basket of goods on an hours worked basis (to my knowledge). If you look at that table on that page, a Chicagoan is tied for 3rd least time worked for a Big Mac, 11th least time worked for a 1kg loaf of bread, 9th fewest minutes for rice, and 5th fewest for an iPhone. A lot of those goods aren't truly local. For things like a haircut (which is more heavily dependent upon local wages), the trend would be even more extreme. Ergo, the studies own numbers, on a wage basis do not support the notion that Chicago is the 7th most expensive city in the study. Btw, most reputable international studies on quality of life, economic performance, productivity, etc. use GDP, wages, output, etc based upon PPP figures, not at exchange rate parity. The issue above is the reason.
Quote:
Originally Posted by chet everett
BALD FACED LIE -- This QUOTE lays out the FACT that THREE kinds of apartments were part of the methodology FOR EACH CITY and appropriately weighted .....Based upon how their numbers shake out, I assume that the survey authors are assuming 2 working people evenly splitting the sharable expenses (like rent) per month. SOME ONE CLEARLY CHOOSE NOT TO READ THE METHODOLOGY --
I read the methodology, but the authors aren't very specific on a number of things in their goods and services index: precise rent weights, the weighting of each and every component of the basket of goods, and within their raw data, how that ties to income and over what period of time we are talking about. Chicago's total expenditures on Goods and Services is $2791 in the raw data. I assume this is per month, because it is certainly not per year or per week. Any other time period does not make sense as those are the three commonly used time periods when dealing with household consumption. The three housing options range from roughly $2210-$2960 per month in Chicago. That is almost all of the goods and services (ie, total) outlay. Certainly you noticed this, didn't you? A typical family of three isn't buying everything else they need for a month on $580 or less per month, not the bucket they've selected anyway. Transportation and food alone would consume the remaining portion and then some. CTA passes for two adults and junior for the month would run $250 alone. The only way the numbers compute is if they assume that the average family has more than 1 worker and they then allocate these costs in a 3-person household to multiple workers. Either that or they've made some pretty egregious math errors/serious methodology omissions. These aren't lies. This is just how the math works.
Quote:
Originally Posted by chet everett
FOR CRYING OUT LOUD are you completely illiterate??
This really is unnecessary Chet. If you have an issue with any of the facts, I've presented, critique those. No need to stoop to this level. The facts themselves are true. You hurt my feelings Chet. Excuse me for a moment while I call my mom for a much needed ego boost.
Quote:
Originally Posted by chet everett
When you look at the hours it takes a "normal" worker to get the study's basket of goods, Chicago jumps further up the cheap list from about 11th to about top 5. WHAT?!? There is no "cheap list", only relative measures of "buying power" and there is little doubt that the US and Switzerland do very well in this category, but NO WAY that Chicago is significantly better than other US cities --
The "cheap list" is just re-ordering the expenses, adjusted for PPP from lowest to highest. It's not that difficult Chet. As for there being no way that Chicago is better than other cities, let's look at these types of studies and realize they are as much about the assumptions as they are about the computation or even methodology. There is an art to massaging these numbers and the authors used a specific approach. The basket of goods is for a European family. This is an assumption bias, because it ignores that relative prices of alternative goods influence consumption (substitution effects). An average European family might consume X goat cheese. That is more expensive outside of Europe, so including that in the basket (instead of Kraft American) will increase expenses for non-Euro households. If we adjusted the standard to a Mexican household, everyone else would have an avocado penalty. If we assume everyone is supposed to live in a 2300 sqft house in the suburbs, the US would look really good, and so on. They also use the geographic definition of "city" which ignores that some cities annex cheaper suburban locations and others are more restricted to more expensive locations. This is a bit strange because its not as if people can't live in the suburbs while enjoying city wages. The expense impact for Manhattan is different than NYC, which is different than the metro. Most studies view the economic reality in a more neutral manner by using urban or metro area to assess expenditure/wage structures.
The final issue is the standard of living used in this particular study. It looks to be a reasonably comfortable standard of living, which in and of itself requires additional discretion. How comfortable? Using what cultural reference? A more neutral way of looking at this would be to look at urban/metro areas. Living wage calculations take out a lot of the standardization/discretion issues, because they estimate the money required to support various household types for the essentials: safe housing, food to sustain people nutritionally, medical insurance, transportation, taxes, a JC Penny wardrobe, and a SuperCut level of service for other things. None of this "leave the city" cost or extravagant wardrobe stuff. MIT has a living wage calculator that I know personally has been vetted internally by their economists/urban policy folks prior to online publication. Google if it you wish. It is also used in peer reviewed journals. In other words, I would take it more seriously than a UBS study, because the UBS study is functionally nothing more than a marketing touchpoint.
Here are some areas that are more expensive, based upon living wage standards in the United States: SF, San Jose, LA, Boston, DC, NYC, Miami, San Diego, Riverside-SB, and even Baltimore. Chicago is statistically even with Seattle and Philadelphia (all +/-1%). It is also closer in cost to Atlanta than Miami/Baltimore and it's also closer to a low cost metro like Indianapolis than it is to the upper end (SF). In other words, Chicago is not particularly expensive.
If you want to look at wage adjusted ability to deliver on living wage requirements, there is plenty of occupation-specific data available courtesy of the OES data set on the BLS web site. Taking a random job that is pretty similar no matter where you are and almost delivers on living wage requirements, we can see how Chicago compares to the 20 largest metros in the country. The job I picked was HR Assistant (not payroll/finance). The person that files your HR forms, schedules your job interview, and probably doesn't know what a balance sheet is or how to calculate payroll net of taxes. The wage for that job in Chicago meets 96% of the living wage required to minimally sustain a family of three in which one adult works, one adult stays home, and the third member of the family is a child. That is actually the third best out of the 20 largest metros in the country. You could adjust this for appliance repairmen, tire changer, hotel desk clerk, insurance salesman, take your pick. Chicago will be among the cheaper places no matter what you pick. Every once in a while, a higher cost metro like a BOS might surprise up the rank because for whatever reason, that occupation is really in demand in that market at a given time. Overall though, none of the usual suspects are as relatively cheap as Chicago. Note that living wage is not necessarily a comfortable living. It is effectively a layoff and 30 days from being subject to eviction. But it does meet the needs of the household as long as the money comes in and it is much easier to calculate across urban areas rather than looking at beer or movie ticket prices.
Quote:
Originally Posted by chet everett
Most of the places ahead of Chicago are tax/finance havens in countries where they can afford to pay people doing these sorts of jobs really high wages: Zurich, Geneva, Luxembourg. OMG -- Do you not understand what NET INCOME means? AFTER TAXES!!! In fact, the study even SPECIFICALLY CALLS OUT their changes --
I'm talking about this on a net income basis. You've misunderstood my point either due to your own incompetence or my inability to explain the issue. When you look at costs to support a standard of living (from the study) and compare those to local wages, Chicago looks very cheap. Many of the cities above it (Zurich, Geneva, Luxembourg) tend to be financial magnets due to low taxes/favorable financial laws. They attract a lot of high wage jobs and economically function in their own quirky bubbles. They remain relatively affordable to your local Schmo sitting in a filing room because those countries/firms make it a policy to keep wages for lower tier jobs fairly high. The country doesn't have a minimum wage per se, but functionally, wages in the service sector are high because the country keeps immigration low and the labor force relatively small. The high powered finance guy from South Africa working for his firm's Geneva office basically subsidizes the net wage boost for the file clerk. This can only happen because the city is a low tax jurisdiction with super secret banking laws. That's why the South African bank has an office in that city and that is why their employee is sitting in that desk working, brining in cash that can help pay that file clerk handsomely. Other "bubble/niche" economies do things differently. Dubai and Doha like low wages they can get from importing modern day slaves. Hong Kong has low wages that make living there very expensive because many of the locals (and the Filipina maids you see roaming the streets every Sunday on their day off) make dick. Wage enhancement for your working class Joe in these regions isn't a policy preference.
Let me know if you're having trouble with the economic principles/study nuances. I'm here to help Chet.
Last edited by Chicago76; 09-30-2015 at 12:57 PM..
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What other explanation can there be?
