01 September 2009

California Cost of Living 30% Higher Than US Avg

According to 2006 census estimates from the American Community Survey, the median household income in California was $56,645. In terms of ranking, that made California the sixth most prosperous state in the nation. But how did California fare, once the cost of living was taken into account? The answer is not very well. The economists who published the 2006 data, Bettina Aten and Roger D’Souza, did not deflate income data by the full 29.1 percent when calculating the real effect of cost of living. Rather, they exempted certain components of income, such as government transfer payments. Using this attenuated calculation, real median household income in California in 2006 was $47,988. In terms of ranking, that dropped California down to 31st place. (Were the data deflated by the full 29.1 percent, the state would have fallen all the way to 48th place.) _NewGeography_via_NewsAlert_
Very interesting. California ranks 48th out of 50 in prosperity, when its cost of living is taken into account. Unfortunately, things are just going to get worse, for the state that was once considered golden.

New York state would fall all the way to last place, out of all the states, if its 30% higher than average cost of living were considered.
All things being equal, people will live where they can maximize their standard of living. Not surprisingly, states that have seen the largest population growth in recent decades tend to be those with a low cost of living, notably in the South and in the Mountain West. On the other hand, states with a high cost of living have typically seen population growth lag. This is particularly true among certain Northeastern states that should have boomed, if nominal income were the best guide of how well a state is doing. Examples include Massachusetts, Connecticut and to a lesser degree, New Jersey, which has the second highest median household income in the nation.

In sum, the cost of living says a great deal about a state, its politics and its future. _NG
Businesses are fleeing California as if from a sinking ship. Meanwhile, Sacramento has learned nothing from California's growing distress. California state and municipal governments have made only token attempts to reduce costs. The sweet relationship between the California state legislature and public employee unions prevents any meaningful, saving reforms.

As California opens its treasuries to powerful unions, and undocumented aliens, it waves good-bye to larger numbers of employers, industries, retirees, and taxpayers. It doesn't look good.


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