The claim of a difference is 'slightly' exaggerated (~1%) However, the overall inflation data is quite interesting.
- Best tracker of inflation - drinking
- Most inflated - Learning and having a roof over your head
- Least inflated - Changing location and playing dress-up (you or your home)
As always, rent seeking behavior is an issue (or a good investment area).
Getting smarter is getting more difficult (or at least more costly) and unfortunately compounds. If you are already educated and ahead, you don't have to pay those costs, and you have a higher vantage point from which to choose opportunities (like charging other people rent).
Not sure if I believe food - or else probably has a huge amount of spread within it. Some food has dramatically risen, others not (tuna - high, bread - low). Noisiness of food line probably reflects this. An unlikely friend in bulk negotiators like Walmart / Kroger / Amazon. "-> Tyson, Coke, Gen. Mills, keep your prices low."
Transportation is opportunity. Don't like where you are? Leave. Potential foraging range - up. Go live in India, where food is $4 a day, and rent is $100-200. Course, this helps baby boomers too. Retire in Kathmandu, Tangier, Santiago. Lots of money just goes further.
There's a good article I can't find that shows that the things you need are the things that have risen in cost the most while the things you want have risen the least. Hence, the inflation rating actually tracks only the homes you want a d is becoming disconnected from actual costs of living.
Unfortunately Medicare is a big deal that prevents boomers from retiring abroad. If you are rich and can afford private healthcare (even according it at a discounted rate in India or Thailand can be tough), then it’s a great idea, but then you don’t really need to.
So many people are confused about the meaning of this term lately, to the point where I think we might need to scrap it and come up with a new one. In traditional economics, rent-seeking is a bad thing, because it involves lobbying the government to increase one's revenues without performing any economically beneficial function. This is why the term has a negative connotation. Almost all economists think this type of behavior causes inefficiency.
Buying a house and renting it out does not fall under this category. In this case, you are performing a beneficial economic function (i.e. you are providing someone a dwelling, in exchange for money). There are related rent-seeking behaviors, such as lobbying the government to prevent building new housing stock for the purpose of increasing the value of your dwelling and the amount of your rents. But the act of investing itself? Not rent-seeking. Not considered bad by most economists.
"Rent" in the colloquial sense of payments pursuant to a residential lease is a different meaning from "rent" in the economics sense of the word. The use of this word falls into the trap of many words with differing colloquial and technical meanings. I don't see how abandoning a word's technical definition because of a competing colloquial definition helps anyone.
The problem is that rent seeking, in the colloquial sense, is an attempt to paint a normal activity, like getting paid rent for housing, with the same brush as bribery type behavior.
It's very similar to say, how Trump co-opted fake news to just mean any news he disagreed with. Original creators of the term fake news are rightfully mad because technically it should refer to news that is clearly factually untrue, like pizzagate.
This strikes me as lazy data science and full of overreaching conclusions, because nowhere is uncertainty/spread/variance discussed. What are the errors/variance on these estimations for each year and each spending category? Are these inflation differences statistically significantly different? Comparing 7% vs 8% is already cutting it close without even knowing this crucial information. The headline vastly oversteps the analysis itself, there is simply not enough information presented to make these conclusions.
This is one reason why peer-review is essential. This author can throw out a claim like millenials get inflation 14% worse than everyone else, failing to mention it's a difference of 1% over 7-8%, and moreover he did not even look at variance or statistical significance. This would not pass muster in a statistics 101 course, never mind a reputable journal.
> nowhere is uncertainty/spread/variance discussed
This is the standard for reporting on inflation data. Do you know of a reporting on inflation where they mention an uncertainty measure? For example when reporting on the difference between this year and last year's inflation number?
> failing to mention it's a difference of 1% over 7-8%
Quoting from the article:
> Over the past five years, millennials have seen their goods become 8.7% more expensive, Generation X 8%, and baby boomers 7.6%.
In general I agree that more reporting should include measures of uncertainty. But I also think there are cases when talking about inflation where uncertainty measures are inappropriate.
You can have uncertainty in the average price of avocados, or in the number of avocados that millennials consume on average. But those aren't very holistic views of inflation.
If I define my holistic measure of inflation to be the CPI, then there's no margin of error. Its just a number that the Bureau of Labor Statistics publishes every month. I can say, for example, that the CPI for June 2009 was exactly 215.693. Or that the CPI increased by 1.47%, exact to the nearest 0.01%, between March 2012 and 2013.
On the other hand, if you want to ask whether the CPI is any good as a measure of inflation, then in general inflation isn't precisely enough defined to talk about that with a simple margin of error. There is no exact definition of inflation that we're trying to approximate, so we can't say things like "we're 95% confident that the actual inflation value was between 1.4% and 1.5%".
It looks like there's a principled way to compute it:
"Variance is a measure of the uncertainty caused by the use of a sample of retail prices, instead of the complete universe of retail prices. Each month the U.S. Bureau of Labor Statistics collects prices from a sample of approximately 77,400 commodities and services (C&S) quotes in approximately 21,500 outlets around the United States for the Consumer Price Index (CPI). In addition, we collect approximately 5,100 housing quotes each month."
[...]
"Margins of error are usually expressed as a statistic’s point estimate plus or minus two standard errors, so the margin of error on this CPI’s 1-month change is approximately 0.15 percent plus or minus 0.06 percent."
> This strikes me as lazy data science and full of overreaching conclusions, because nowhere is uncertainty/spread/variance discussed.
It's not just that, the premise itself is nonsense. Inflation measures the value of money. We measure inflation using the price of stuff because measuring it in nominal dollars is obviously self-canceling.
The relative difference in the price of stuff has nothing to do with inflation. Housing costs are high because of supply not increasing to match demand. If restricted housing supply increases prices by 5%, while supply and demand for clothing is unchanged but there is 5% inflation, then housing prices increase by ~10% while clothing prices increase by 5%. If there was 0% inflation then housing prices increase by 5% and clothing prices stay the same. The fact that housing prices increase by 5% relative to clothing prices has nothing to do with inflation at all. What would help millennials isn't less inflation, it's more housing.
If anything inflation helps them, because they hold significantly more debt (in the form of student loans and mortgages) than older generations, and inflation allows the debt to be paid with cheaper money. It also increases the nominal but not real price of housing, which allows implementation of policies that cause real housing prices to decrease without putting existing homeowners underwater.
I wonder how much higher it would be if medical costs were taken out. Housing is the biggest problem for my generation, but it gets almost no traction nor solution.
Housing is largely a problem to do with interest rates and mortgages inflating the land. The actual construction materials themselves (at least here in Canada) aren't too bad.
I keep wondering why someone doesn't kickstarter a town. It has all the right incentives. Make guidelines that enforce density in the core and do common sense things from day 1, like wire fibre to every domicile.
Because a collection of homes and buildings isn't a town. You need the buildings to be occupied by employers offering jobs and relevant services and you need the people in the homes to have those jobs. That's not something you can kickstarter.
I think it could be done, but you would need to have a lot of pieces come together the right way.
For instance: having a partnership with a University and/or several employers that want to setup a new campus, a large enough number of people willing to move, adequate funding to buy several square miles of wilderness and install some initial roads and infrastructure, a favorable local government that's on-board with the plan and doesn't want to throw up administrative roadblocks, a neighboring pre-existing community that can help bootstrap the infrastructure that doesn't mind another town moving in next door, and someone willing to run the whole thing as a non-profit rather than a money-making endeavor.
The upside if it attains critical mass is that the profit on the sale of buildable lots could finance a lot of the necessary infrastructure.
More than 50% of companies have positions that could telecommute and 24%+ of people telecommute fully or partly now.[2]
People do want to live in large cities because of all the cool shit there to do, and that convenience costs money.
You can afford a two-bedroom house in the south-eastern part of the US on $15/hour, which wouldn't even cover the costs of being homeless in SF or NYC.
I understand people want convenience and people want to be close to friends and family, but many of them (not all) could easily solve this problem by simply moving. People seem to think they are "owed" affordable housing regardless of where that housing is -- which is absurd!
So, in order for that 24 percent to be free to move where they please, that needs to be a figure where they can telecommute full time or where going to the office occasionally from farther away costs less than the amount saved by moving farther away. On top of that, all other household members would need to be equally portable, such as a working spouse or children attending school.
I got myself off the street in part by developing portable earned income and moving someplace cheap. It is something I am willing to recommend as a method. But my entire household was free to move. That isn't always the case.
That's not really the way to build TechTopia (or if thinking of fantastic (and sometimes silly) videogames, New Tesla City).
Mostly because all the places with good water / land areas have already been selected and are occupied by existing cities.
Logically the thing is to kickstarter/etc buying out some /tiny village/ that has good natural resources in the area and doing something more useful with the area. I also wouldn't mind if there were a modern (Gen IV) nuclear plant there with open-published safety monitoring / procedures. (Only shipments of the stuff to/from the site should be security concerns, and I'd appreciate a military escort for them anyway.)
> Housing is largely a problem to do with interest rates and mortgages inflating the land.
Interest rates and debt impact the value of a property, but do not impact the willingness to pay (i.e. the rental market). If rates were 10%, people would still be willing to pay $3k/month for a 1 bed in san francisco. The only difference is that buyers would have to adjust their offering prices due to the additional interest expense.
Please feel free to look up my bio in my profile. Then go play around with a basic mortgage calculator online. You will find that as you extend the length of the mortgage, the payments will approach the interest only payment level.
Also, in the late 80s, early 90s, interest rates were 15%. 10% is just slightly above historic norms.
It is 100% possible to reimburse a mortgage at 10%. Millions of people have done it.
Any basic mortgage calculator would show you that the mortgage is not viable, the interest would accrue faster than it can be paid back. The duration or the rate must go down.
In the 80s, the interest rate was higher and the duration was lower. People didn't make a 30 or 40 years mortgage to buy a flat.
It's a single equation with 3 variables. The monthly payment, the rate and the duration.
The payment is about 50% of the typical salary in the area. The rate is set by the economy. The duration is determined by the two other variables, it's not adjustable on its own.
If you raise rate, and assume pmt, fv constant you must increase n or decrease pv. My original point was that pv (loan value must come down) secondarily, n increases.
Pretty huge developments happen all the time. People generally want there to be jobs though, which I think is the bigger problem if you tried to do it in an undeveloped region.
"Over the past five years" - I feel that in order to formulate "a historical price index per generation" you need to look at inflation over the entire life of the generation. Baby boomers went through the seventies, when inflation was significantly higher than now.
My parents "suffered" through 14% interest rates, wages were rising at breakneck speeds and their mortgage was largely inflated away before they even paid any of it off.
By historical standards it was actually a great time, a single wage family could afford their own house. Such similar circumstances is impossible today in the same city.
This is a great example of how you can make up anything by aggregating unrelated statistical measures and then mislead people with a new definition on top of another woozy commonly used definition.
We can certainly argue the technical merits of how they created their 'generation-weighted price index', but differential impacts of inflation seems plausible on the face of it.
If you are looking for work in a big city, and big city real estate prices are growing much faster than nationwide, that is a real effect.
Well... sort of, but why call it 'inflation'? That certain age groups tended to act in certain ways and were impacted by differences in price trends in different ways -- that's accurate. What's misleading or confusing is to then redefining the already-muddled term of 'inflation' from an absolute index to multiple indices and then trying to say that because Index B went up more than Index A that some group of people were much more impacted by Index B than another people were by Index A.
The Fed has a price index that most entities in the US use to measure what it calls inflation. There are plenty of arguments out there that go into detail about how that index can be misleading and how certain institutional prerogatives encourage the people who maintain that index to keep it misleading (e.g. many entities are obligated to increase salaries and pension payouts tied to the CPI).
Sibling comment also asks this question, so I'll just respond here: inflation measures the purchasing power of some nominal currency, but that measurement is always relative to a basket of goods.
CPI is a basket of 'typical' consumer goods that an average person might buy. But if you're not the average consumer, then in what sense is CPI relevant to you, rather than to a macroeconomist?
I agree that there's a risk of confusion, but I think the confusion is inherent in what we're trying to measure (I have some dollars, how much stuff [that I care about] can I buy with them?), and not mainly a function of terminological confusion.
You could imagine a service like Mint that has all your spending data and calculating your own 'personal CPI', privacy considerations notwithstanding.
The various market baskets that make up the various inflation measures contain goods that will matter to some people more than others. And some of the big ticket items will disproportionately affect certain groups.
Want to live in a high-cost urban area and don't already own a home? Of course, rising housing prices will affect you more than someone who already owns in one of those areas or lives somewhere else.
Are pre-college? Education costs more relatively than it used to?
But, yeah, I don't think inflation measures ever claimed to be equably applicable to everyone, especially those measures that excluded some of the major costs precisely because they affect different groups.
>big city real estate prices are growing much faster than nationwide
Important point to make is that is not inflation. Inflation is a decrease in the purchasing power of a currency, and it can be inferred by the cost of many products going up across the entire market that currency is used. But one product going up in one segment of the whole economy is not inflation. What you're referring to is more accurately described as a local cost of living.
We just bought a house about two years ago. Say a younger couple living in our same area of town was renting. Our housing cost may have gone up 5% because of insurance and taxes, but the couple renting would have seen rent go up by 30% during the same period.
It's also a great example of using statistics to create a conclusion that fits a narrative, based upon statistically insignificant behavior.
This article is entitled, "Over the Past 5 Years, Inflation for Millennials was 14% Higher than for Baby Boomers". Yet, we find out in the last paragraph, indeed in the final sentence, that there is virtually no difference between groups over a longer, more significant period of 18 years.
There are three kinds of lies: lies, damned lies, and statistics.
Their use of the word significantly in this context does not refer to statistical significance. The percentages you are referring too are just basic metrics based on the last years data, not something that was t-tested. The longer time period changes the starting index, it doesn't really make this type of analysis more or or less statistically significant. As the author alluded, this could mean that economic mechanisms close this gap over time when it appears, or it could be a recent effect. Your criticism isn't really valid.
You are making a statement about statistics that isn't correct. Statistics is collecting and analyzing numerical data, which is what this article does. That is a truth, regardless of it being a different sort of analysis than what you believe to be the only model of statistics.
That is also orthogonal to what I wrote, which you seemed to intentionally misunderstand in order for you to argue.
I think the way that percentages were expressed in the headline was intentionally deceptive- 14% seems like a lot of inflation in 5 years! That makes for good clickbait. But the percent that is being talked about is the comparative difference between groups, per the line:
Over the past five years, millennials have seen their goods become 8.7% more expensive, Generation X 8%, and baby boomers 7.6%. This means that the price increase for millennials was 14% higher than for baby boomers.
I think the way that percentages were expressed in the headline was intentionally deceptive- 14% seems like a lot of inflation in 5 years! That makes for good clickbait.
Yep. That's my point. The article's premises do not support the conclusion. And, in actuality the end of the article contradicts its own conclusion.
But the percent that is being talked about is the comparative difference between groups, per the line: Over the past five years, millennials have seen their goods become 8.7% more expensive, Generation X 8%, and baby boomers 7.6%. This means that the price increase for millennials was 14% higher than for baby boomers.
There is a subtle error in this analysis. If companies A and B both grow with A growing 300% and B growing 1% per year, it seems that A might be a better company. That is often why companies that don't make money are valued similarly to companies that do make money. Putting the perception aside, A may have only increased by $4 but B could have increased by $4,000,000,000. Therefore it is not correct to say that the increase of A was 29,999% higher than for B.
Comparing percentages always has the potential to invoke that sort of confusion, but FWIW I'm pretty sure the headline is written correctly. If it were subtracting percentage values from one another rather than dividing, it would be "percentage points" rather than "%".
That said, the article itself is just silly, a true puff piece. I think one could make a more substantive (and more interesting) argument around the idea of the "basket of goods" measurement as a basis for measuring inflation in the first place, as goods make up a smaller and smaller percentage of our total expenses.
Expensive health care is worst for older people (until you hit 65 and qualify for single payer)
Expensive education is worst for younger people, unless you are an older person who wants to pay for your children's education.
Expensive housing is (mostly) good for the old and bad for the young. If an oldster got settled in Palo Alto back in the 8-bit era, they've paid low taxes since they've never sold their house and will take a stupendous capital gain.
I feel like technology has led to such an efficient form of capitalism over the past 20 years, that there's no room left for any possibility of social mobility. It's this system where there is just enough room for you to live and get by, but never get ahead. Prices for everything are so efficiently optimized at this point that there is no more "wiggle room" for a working person to build wealth. The basic necessities of life have risen to perfectly match your income. It's a new kind of slavery. As a single male with no family or debt, making 3x the median wage, I am just barely doing ok. I literally can't even imagine how other people are still surviving.
Guys, downvoting aphextron isn't helpful. He's sharing his perspective.
I get that some of us are poor students living off of almost nothing, but try to listen when people talk about their own personal situation. People struggle with different things and we should try to learn from them instead of dismissing them.
Aphextron, I actually kinda get where you're coming from. Things like housing are appreciating so fast that you can be forced to rent, then pushed out of a neighbourhood that you helped gentrify because the rent is going up way faster than your ability to pay. The rent controls don't work because landlords can get around them, rarely get caught, and relationships can end without warning.
To be clear, I haven't downvoted aphextron, but I disagree with them. Here is my objection:
> The basic necessities of life have risen to perfectly match your income
No, the basic quality of life has risen to perfectly match your income. Houses are more expensive compared to decades ago, but they have nice things like indoor plumbing, electricity, and fire retardant walls; all of which would have been a luxury if you go back long enough. Medical costs have ballooned, but so has the quality of care, life expectancy, and medical technology; so many incurable diseases of generations ago are now easily cured, e.g. Hepatitis C.
There is an argument to be made that we should be able to afford all these things for less, that the price has risen above the rate of its utility, that we have reached the point of diminishing returns for basic necessities, and I agree with that to some extent.
There is also another argument (a libertarian one) that says government has illegalized poverty by raising the floor on the quality of goods and services. For example, if you want to build a 1920-style home (with asbestos-laced walls, without plumbing and electricity, without smoke or CO detectors, etc.) at 1920-level prices, you cannot legally do that due to regulations. The minimum quality set by government regulations have made everything more expensive and one should not be forced to abide by these quality rules if they want to break them knowingly and of free will. There was an story about a (Mexican?) car which was priced at 5000$ new. But it would not pass safety regulations in the US. In that country, you would have a choice to buy a safe car and pay the higher price for it, buy an unsafe car and pay a much lower price, or don't buy a car. In the US, you lose one of these choices and you are more severely affected if you are poor. I see the point in this argument, but I don't agree with it. I like raising minimum standards to match the level the society can afford as it gets more prosperous.
But in either case, let's not pretend we are paying more for getting the same or lower utility. We are living longer and better lives compared to generations past. If we are going to debate about prices across generations, we should also take quality and utility into account. Otherwise the comparison would be meaningless.
“We are living longer and better lives compared to generations past”
I appreciate all your writing, but statistics show lifespans in the U.S. are declining and housing is out of reach for increasing populations. On a mass society level that means something is very wrong and has been for some time. (Lots of folks like to also blame drug use but those have been around for ages.)
I think you’re missing the big picture.
“No, the basic quality of life has risen to perfectly match your income.”
> I appreciate all your writing, but statistics show lifespans in the U.S. are declining
Living in Canada, my perspective is a bit different. We have not observed the drop in life expectancy that the US has. But then again, let's keep things in perspective. Even after the drops, life expectancy in the US is higher than even early 2000s, let alone 60s or 70s:
If it is any consolation I've upvoted all you. I think in many ways things are better (I don't even think when I put stuff in my grocery basket, and I buy "expensive" humane stuff) but in many ways things are harder. Programmers are in a social class where certain goods are really expensive in either time or money or both and because housing is so out of reach for some people it just feels impossible to even get a downpayment.
I also really think that two forces have simultaneously make the west worse. First, we try to educate everyone in the same subjects until they're almost adults. It's dumb. The level of skill you can get working with wood or computers from the age of 5 just pales in comparison with what you can pickup at 18. There should be a baseline, absolutely, but there should also be a measurable amount of tailored specialization from a young age. The second thing that is making the west worse is an absolutism on thinking about rights around property. Car-centric cultures are so stupid and inefficient. Everyone builds their own pool. Everyone builds their own gym. Nobody is happy because we're all separated from each other.
Where do you live, and what on earth are you spending your money on? Housing may be absurdly costly in many cities but $5.5k a month after tax (assuming you're American) is enough to do much better than "barely ok" almost anywhere. Are you significantly in debt or living above your means?
>Where do you live, and what on earth are you spending your money on?
Bay area
~$5,000 net monthly
$2500 Rent/PGE
$1000 Car/Insurance/Gas/Parking/Phone/Internet
$500 Food/Clothing
$500 IRA
That leaves ~$500 monthly discretionary income, which I usually try to save as much as possible but inevitably gets eaten up by all the stupid little things in life that cost too much nowadays. I can't even imagine supporting a family on this income and it is far higher than most people will ever see.
Yes, housing is extremely expensive in the Bay Area. However, consider your options before deciding that there's no way to save more. I pay $500/month for your "Car/Insurance/Gas/Parking/Phone/Internet" category (old car, cheap MVNO, don't take the car to places where they charge for parking) and $300 for food/clothing. And that's for a family of 3. I do pay a bit more than you for Rent/PGE ($2750 all told) but again, family of 3 -- we need the second bedroom (and lived in a 1-bedroom for the first two years after my son was born anyway).
I'm certainly not saying that my choices are the "right" ones, but I am saying that if you make saving for the future a high priority it's possible to do at your income level, even in the Bay Area.
Living the Bay Area and paying $2,500 for rent, you have $1,000 net discretionary income. Even if you decide not to shrink your expenses or grow your income, you are still in a great position.
PS One day you will realize that things you once thought important are actually unimportant. If you keep saving for that day, you will be in fine shape. There is no need for angst, today. If I might make a recommendation - run some numbers as to where you will be if you decrease your expenses, increase your income, save more, etc. Do all that, forecasting for a set period of time, and do not pay any financial advisors or ask anyone else. Just use your own efforts to investigate. If you do that, I believe you will make the best decision for what to do.
Money is relative, $500 a month is nothing. It will take a year of savings to pay the deposit if he ever has to move out, or to cover the rent if he ever gets unemployed.
You're talking about things that have nothing to do with my comment.
But, on your point - you did the math wrong. He has $12,000 discretionary income not $6,000. He likely already paid his last month's rent of $2,500, and he already mentioned savings. So, it makes no sense for you to infer that it will take him a year to move if he loses his job.
I'd consider that too low a salary premium to justify Bay Area rent. There's an aspect of "because people are willing to put up with it" to "why are prices so high in some areas."
Socking away 10% of your take home income for retirement is not "barely making it".
Also, do you have a 401k contribution coming out as well? I assume the $500 IRA is a Roth IRA?
By that same argument I could make $200K, sock $5000 per month away in savings and say "I only have $500 in discretionary funds each month! I'm barely making it!"
That's basically my point though. I'm doing just OK, not getting rich or anything, just not worried about bills and able to save for a retirement. But this used to be the standard for American families. Not the 90th percentile outlier. The economy has changed so fundamentally that it's either get rich or die.
That is definitely a localized phenomenon. I don't live in the Valley and my expenses are generally lower than that. (Or at least they are if I translate my expenses into single life. Though my "rent"/mortgage is just straight-up lower than that and you'd probably cry to see what I get for it.)
I tend to agree with you. In your position, you need to really want to live in SV for it to be worth it; you're paying a huge premium for the benefit of paying that huge premium.
There are plenty of major metropolitan areas where the salary vs cost of living make a lot more sense.
I live in one of the 25 most affluent counties in the US and just bought a brand new build 5 bedroom 3.5 bath house 2900 square feet for a little over 320K.
>High marginal income tax rates are designed to keep you from building wealth-- the capital-holding classes don't want the competition for assets.
This was my first thought as well when looking at the new Republican tax brackets. They're throwing peanuts at the poor in the form of a minuscule tax break, while simultaneously cutting off their ability to ever actually build wealth by raising the middle rates.
I actually just had this thought the other day. It used to be that most people didn't even pay income tax. I realized that income tax is like "regulatory capture" for the wealthy and acts as a barrier from the poor/middle class from moving up. If we really want to touch the rich, we would have to have more capital gains tax, wealth tax, inheritance tax etc.
I was making 90k in the Boston area within the past few years.
On that salary I was able to support two adults, pay back student loans faster than needed, max out my 401k (company match up to $10k or something like that) and build saving at a rate of about $1k/mo, go out to dinner every 3wk or so and have enough to direct meaningful amounts into my hobbies and other discretionary spending.
That said, if you try to live like you're wealthy (shopping at whole foods, $2k+ rent, going out to drink, take uber everywhere, expensive cable, phone and internet, etc, etc) and generally hemorrhage money I can see how one could live little better than paycheck to paycheck on 90k in the Boston area.
One thing that probably distinguishes Silicon Valley from other high-cost areas is that it's almost uniquely difficult to get out of the high cost zone while maintaining anything like a reasonable commute.
Metro Boston/Cambridge is pretty expensive these days as are some especially tony suburbs but you can get out toward reasonable property/rents relatively quickly. And, with the exception of newer outposts of companies from SV and elsewhere, a lot of existing tech is outside the city anyway.
If you are making $90k and living in SF you should be looking at studios or for roommates, not at one bedrooms. A one bedroom in a city like SF is a luxury.
Isn't that kind of the point of the original comment? That cost of living rises by location in almost perfect parallel to wages? So even though they make a relative lot of money, their standard of living doesn't actually increase much.
No, your standard of living absolutely won’t increase. I would actually say almost everyone living in that kind of city is (perhaps unknowingly?) choosing to sacrifice in that column. Depending on what you value, however, your quality of life may increase dramatically. And any efforts in frugality will likely yield a greater absolute return than they would in a less costly locale.
Wages don't rise exactly like that. There's a threshold under which it doesn't make much sense at all. If you're making under 100K - and certainly under 50k - I wouldn't be surprised if you could be much more financially comfortable in, say, Dallas. Chop your rent budget in half, lower your tax burden, you'll probably get a bigger chunk of monthly spending money.
I'm not saying 90K is a lot, but it is complete hyperbole to say it isn't sufficient to live in the Bay. 90K is right up there with the highest median household incomes.
$3500 if you want to live in a new building. I've been looking at 1 bedrooms and rent has come down in SF. Not hard to find one for less than $2500 now (in a good neighborhood).
That's what I don't get. People with high rent are typically living in one of the most expensive areas of the country. They are still wealthy, they are just spending it on living there.
In many cases, drug companies come up with ways to keep prices high. For instance, asthma drugs are reconfigured with different delivery mechanisms that allow them to get new patents for what are essentially long-ago-discovered drugs.
> Although the FDA advisory committee recognized that the expenses would go up, Hendeles says, it also believed that the companies would help defray the added costs for individuals.
If that's the naïveté of the officials who police the health industry, I'm not surprised that healthcare costs have exploded. Why bother competing when you can have your competition ruled illegal and the ensuing oligopoly allowed with a pinky-swear to not fuck over patients?
You could slice up inflation in all sorts of ways: by city, state, homeowner versus renter, how long ago the home owner bought their house, singles versus families, where they want to college (if anywhere), and so on.
Remember that inflation is supposed to measure the prices paid by the average person, but most people make some purchases that aren't average.
This result shouldn't be surprising to anyone who has thought about what the construct of money/debt actually does.
Every bubble in the history of finance has always been the overvaluing of one asset in exchange for the devaluing of other assets. By overvaluing houses today, we are screwing over every field that requires property/land, retail stores for example. And renters which are predominantly youth. Now, the overvalued houses don't actually consume value directly - they give money to the people who have these assets or are employed in their use - home owners, property management companies - construction companies - etc etc.
Money has always allowed for bias and inequality in resources and work allotted. One sector like housing in exchange for sacrificing other sectors. Or sacrificing one nation/locale's wealth in exchange for another - ie. many 3rd world countries/ exchange rates. Or sacrificing young peoples' prosperity in exchange for old peoples' - inflation / housing / medicare / social security / stock market inflation.
Money is a tool for giving value, and hence prosperity, unequally for any kind of sociological category of people by way of empirical categories of valuables.
I don't hate capitalism but it is unavoidably discriminatory.
The very act of a loan is essentially an exchange of value temporally - why shouldn't the natural consequence be to see money as a way of moving allotted value around both spatially, sociologically, and temporally?
Official inflation numbers are based on a basket of goods that are thought to be representative for the purpose of broad economic policy.
But it's certainly true that inflation is not the same for all goods or for the basket that is highly relevant to one person or to one firm or industry.
So like any economic policy it has winners and losers. Just because the policy may be reasonable does not mean that the winners and losers are irrelevant.
During the startup boom many developers saw their wages inflating rapidly in spite of little skill growth. Some also saw their rent increasing if they lived in the bay area.
Landlords in the bay area saw their income increasing, and firms hiring developers in the bay area saw the cost associated with wages inflate rapidly.
The mistake this article makes is that it puts all its eggs into the young vs old theme when really this is a fairly obvious consequence of a dynamic economy.
- Best tracker of inflation - drinking
- Most inflated - Learning and having a roof over your head
- Least inflated - Changing location and playing dress-up (you or your home)
As always, rent seeking behavior is an issue (or a good investment area).
Getting smarter is getting more difficult (or at least more costly) and unfortunately compounds. If you are already educated and ahead, you don't have to pay those costs, and you have a higher vantage point from which to choose opportunities (like charging other people rent).
Not sure if I believe food - or else probably has a huge amount of spread within it. Some food has dramatically risen, others not (tuna - high, bread - low). Noisiness of food line probably reflects this. An unlikely friend in bulk negotiators like Walmart / Kroger / Amazon. "-> Tyson, Coke, Gen. Mills, keep your prices low."
Transportation is opportunity. Don't like where you are? Leave. Potential foraging range - up. Go live in India, where food is $4 a day, and rent is $100-200. Course, this helps baby boomers too. Retire in Kathmandu, Tangier, Santiago. Lots of money just goes further.