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Cost of living

I keep hearing West coast and East coast are prohibitively expensive - then how is it people want to flock there for work.  I live in the midwest - a new immigrant (just 5 years) and have bought a $210,000, 3800 sq ft home in an "upscale" neighbourhood here.  The quality of life here is much much better here - as against California, where I would'nt be back from work till 7pm.. 

It is sad that businesses do not develop these areas to keep people in the area gainfully employed.  Why do businesses and employees want to keep to the coasts? 

Any thoughts?

KS
Thursday, April 22, 2004

I personally like the ocean view.

It is also probably a positive feedback issue. When there are a bunch of businesses in an area, they attract more businesses. Especially small ones that want to have local customers.

Of course in the age of the internet, maybe it doesn't matter whether you are next door to your customer or across the country, but still... It saves costs, and you can build a better relationship with your customers. They feel better too that they can call you up and get you over in case of a problem.

I used to live in Boston, and there were many (relateively) small local businesses doing just that.

grunt
Thursday, April 22, 2004

Not many would move to the middle of nowhere to work for the only employer in town, so industries tend to cluster.

Ron
Thursday, April 22, 2004

I moved my tiny software company to rural virginia for some of the above reasons.

Housing, even 2 miles from a university, in a nice town, is about half what I'd pay in a comparable location in Portland, Oregon.

Schools are better. It's quieter. Close to outdoor recreation. Better situation for my kids.

However, many businesses need a critical mass of people and other businesses.

E.g., we do NOT have:
1. Good local print shop (for creating our catalogs)
2.  Local CD duplication.
3.  Programming user groups. (Portalnd had VB, Delphi, and lots more).

Mr. Analogy
Thursday, April 22, 2004

It all depends on how you measure quality of life.  If a nice house in suburbia makes you happy, then good for you.

I live in Boston, which is pretty far up on the 'prohibitively expensive' list.  It's expensive, but I love it!  I don't own a car (by choice) because I can walk to local shops, restuarants, and bars.  If I need to go downtown or over to Cambridge, public transportation is just a few blocks away.  The city has character and history, but is surprisingly young-- there are something like 65 colleges/universities in the boston metro area.

On top of that Boston has a thriving high-tech community, so there are more possibilities for finding exciting technical work here than you might find out in the mid-west.

Steve H
Thursday, April 22, 2004

>On top of that Boston has a thriving high-tech community...

Which is why when I lived in boston a few months back, I heard about out-of-work developers getting by as cab drivers...  Whether they were good developers or not is anyone's guess...

...
Thursday, April 22, 2004

Two main reasons. Business will tend to be located or HQ'ed close to the founder's hometown. (Dell, MS, Berkshire Hathaway)

Even when businesses relocate, they will tend to move close to the CEO hometown. (some law similar to the Peter Principle but can' remember)

Furthermore, the Business Week a couple of weeks ago, in its top managers/companies listing showed how some places, especially metropolitans like NYC tend to produce more top CEOs of big companies, both in absolute terms and per capita means that the most companies not already in the midwest will not move.

Sorry, but the unless something drastic changes, the small towns and places in the middle of nowhere are pretty f*cked.

Tapiwa
Thursday, April 22, 2004


The coasts have a ready and large population of qualified workers who don't need to move to find work.

Remote areas will tend to have a harder time to find qualified people. Qualified people who move to remote areas will have a bigger finding work if they need to. (E.g. if the local, primary employer lays you off, it is very hard to find alternative work without moving.)

It's a self-sustaining feedback loop kind of thing.

njkayaker
Thursday, April 22, 2004

You also have to consider that pay is greater when you live in areas with a higher cost of living.  It isn't usually so much higher that it totally offsets the higher cost of living, but it helps.

chris
Thursday, April 22, 2004

Let me get this straight:

The cost of living where you are is low.

The cost of living where, say, I am is high.

Salaries where you live are lower than where I am.

Tell me again how this doesn't make sense?

www.MarkTAW.com
Thursday, April 22, 2004

The salary that I get - where I am living is on par with salary my counterparts are getting in, say, California.. so I am thinking - why does my counterpart (my friend) want to run out of this city - as fast as he could?

KS
Thursday, April 22, 2004

and.. he calls back to say - you know - I pay double the rent, 4 times car insurance - 3 times day -care, I come back late from work - so weekends are family times (only- as against everyday here).. But seems resigned to take that decision...?????

KS
Thursday, April 22, 2004

KS said he lived in the midwest.  He didn't say he lived in a podunk town.  He could be in Chicago, St. Louis, Cleveland, etc.

Why do people flock to the coasts, you ask?  Because historically commerce builds up around port cities.  Even the midwest cities I listed above are on navigable water.  This is true for the majority of the world.

yet another anon
Thursday, April 22, 2004

I guess - what I am asking is - for far less a salary - companies can find good labor if they can "outsource" work to these areas than off-shore - why would'nt they do it?

KS
Thursday, April 22, 2004

"Why do people flock to the coasts, you ask?  Because historically commerce builds up around port cities"

Only difference - we have better transportation and communication in this century than last

KS
Thursday, April 22, 2004

Why don't you ask him?  Maybe he wants to live near the ocean?  or prefers the weather?  Maybe he wants to live near the culural amenities you can find in larger metropolitan cities.  Maybe he wants to be around a lot of people.  Maybe he wants to see something different and not have to drive 10 hours to do so.  Everyone has their own sense of standard of living. 

I wouldn't want to live in some tiny city in the middle of Kansas even if I got a pay raise and could expect a lower housing cost because there's not a lot to do in a tiny city in the middle of Kansas.

chris
Thursday, April 22, 2004

People get comfortable where they are.  Live near friends and family, etc.  some people grow roots.  Others can relocate and start over. 

Whether a cheaper house can offset your lower salary can be answered by your spreadsheet.

Bella
Thursday, April 22, 2004

The tricky issue is that startups tend to be where
the good engineers are at - particularly since they
are often started by good engineers - and moving
out of Silicon Valley isn't the first thing that occurs
to an engineer contemplating a startup.  Since startups
ultimately grow into big companies, they tend to
accumulate here, and have to be pretty big before they
contemplate outsourcing to other parts of the country
or offshore.

Relocating to cheap parts of the country does happen,
but it often results in recruiting problems since the
really good engineers who are willing to work in
startups often aren't interested in moving somewhere
where the work is both low paid and the company may
be the only game in town.  Similar logic follows for
marketing types and people who would be willing to
be in early-stage executive teams.

x
Thursday, April 22, 2004

Here's something I realized a while ago...

if you can make a salary in line with the cost of living of the area you live, it's in your best financial interest to work in the most expensive place in the world!

Why? Because when you retire, you can then live anywhere in the world you choose. You'll have way more saved up than if you lived in the cheapest place in the world (and made the lower salary to go with it). If you had worked there your whole life, the only place you'd be able to live when you retired is right there (which may be fine with you).

But yeah, if you can make $30,000 a year in Kansas City or $60,000 year in New York, assuming the overall cost of living in New York is twice that of Kansas City, go to New York! You'll have twice as much money saved up when you retire, in theory!

Josh No-Spam Jones
Thursday, April 22, 2004

A satellite photo composite of the the USA as seen at night form satellite.

http://www.noaanews.noaa.gov/stories/images/usa-nightlights1994-1995b.jpg *

I thought this would be cool since we're talking about where people live. Compare to this population chart.

http://ite.pubs.informs.org/submissions/example/images/la1.gif **

*from http://www.noaanews.noaa.gov/stories/s2015.htm which has some cool photos of the recent blackout.

** http://ite.pubs.informs.org/submissions/example/

Thanks to Google Images.

www.MarkTAW.com
Friday, April 23, 2004

My namesake is partially right. If you get a higher salary but that is more than offset by the higher cost of housing, then at least you will be able to sell the house and retire to some other place with a load of spare equity.

Of course, when you do this you will find that your children and grandchildren will only visit you at Thanksgiving, and that only the first couple of years after the move, and you will be bored sick because there are none of the amenities you are used to, and none of the neigbours will be interested in fraternizing with somebody who has just arrived.

The problem with living in a small town is that you may find your property is pretty much unsaleable so you're stuck. A colleague of mine has a house in the Rust Belt - not too big by American standards at !,500 sq feet but still Ok for a family of five. He paid $24,000 for it fifteen years ago, and it is now worth $32,000. Every now and again he picks up flyers about real estate in Florida, but after a couple of minutes with Excel he puts them away until next year.

Stephen Jones
Friday, April 23, 2004

There are number of reasons why people live in expensive places, even if their salary isn't enough to compensate for the high COL.

- They grew up in the area, or moved there when it wasn't so expensive, and now they don't want to leave family and friends.

- They moved to the area and didn't realize how expensive it really is until they actually started living there.

- They are willing to endure the high COL so they have more job choices available (can quit or get laid off, and land another job in the same city or even the same street).

However, some areas like Silicon Valley are so ridiculous that I don't know why anybody making less than six figures would stay there. I've seen reports on TV about $45,000 accountants living in homeless shelters because they couldn't afford the $1500/month to rent a studio.

NoName
Friday, April 23, 2004

Cost of living isn't the only factor in where people live. I live in the Pacific Northwest. Right now everything here is green, flowers are out, the temperature is mild. Earlier this week I was in the midwest and new england. Everywhere was brown, dead, brown grass, not a leaf on a tree anywhere and cold enough I could see my breath. I love living where it's green year round and I can be outside without freezing or melting. I moved here for that and I will stay here for that, regardless of $ factors.

PS: don't be getting any ideas - we're full up out here :)

Angela D.
Friday, April 23, 2004

I don't remember the exact numbers, but some reasrch showed that more than half the population dies within 30 miles from the hospital where they were born.

And I bet most people don't even get out of theis state, even more thair country, to know enough that there are other, much better places to live.

As "patriotism" is the gift of one loving his/her country above all others, just because he/she happened to born there, our place of life is pretty much decided by where our parents decide to raise us.

Mauricio Macedo
Friday, April 23, 2004

Mauricio,

Good point. I've been all over this country, and what I read literally on the streets of Boulder Colorado (it was etched into the pavement) is true. "What is a city, but it's people?" Really, I think, what defines a city to me are things like the weather, commuter accessibility, bicycle friendliness, and most of all, the people. What social places exist?

Dance clubs & diners that never close & museums are great, but how often do you go to the museum anyway? Probably not even as often as you take a vacation, so why not try to find happiness in a less hectic area?

The most important thing in any location is the people you meet & connect with. Where you grew up, you may have lifelong friends, and that could justify the high cost of living. Or maybe you fall in love in college with someone from another state and move there. Everything else is just a distraction.

www.MarkTAW.com
Friday, April 23, 2004

I couldn’t care less where the company I work for is located. Like many of us – and soon nearly all of us – I work from home and a broadband connection, reliable power source and reasonable time zone are my only work requirements.

I’ve lived around the world and in every type of neighborhood from rural to suburban to city. My observation is that people like me most often end up in the “great cities”, like Boston, London or San Francisco, because those places feed our brains.

I’m within walking distance of concert halls, bookstores and coffee shops. There’s no way I’d swap that for a giant SUV or (disgustingly) a house full of servants.

anon
Saturday, April 24, 2004

Why is a house ful of srvants disgusting and a giant SUV not? The servants don't pollute the atmosphere or contribute siginificantly to global warming, and by paying them you are spreading the money around and ensuring their children can go to school and not suffer from malnutrition.

Stephen Jones
Saturday, April 24, 2004

> I've seen reports on TV about $45,000 accountants living in homeless shelters because they couldn't afford the $1500/month to rent a studio.


LOL, pure bullshit media hype. 

$45k still takes home ~ $2500/mo.  If you make $45k and can't find a place to live, it's b/c you're mentally ILL, not b/c of your salary. 


* Find a house share
* Find a cheap sublet. 
* BUY a studio (cheaper than renting)
* Buy a 2BR, and rent out the other bedroom, and live for free, after the tax breaks.    or Buy a 4BR house, and rent out 3 BR's.,.. etc.

Bella
Sunday, April 25, 2004

What's truly disgusting is $6 coffee at trendy coffeeshops.  And the brainless drones who fork over their paychecks there.  Addicts.

Bella
Sunday, April 25, 2004

Josh,

Good point about living in expensive areas.  Strictly financially speaking, whereever you are, if your going to work 50 hours a week and spend 33% of your gross pay on a mortgage, it might as well be a $550k mortgage as opposed to a $150k mortgage.  In the end, you own a $550k asset vs. $150k asset. 

Same logic applies for pensions.  Your NY/CA pension will be like getting a full time salary if you move to another part of the country for retirement.

Bella
Sunday, April 25, 2004

Bella,

A $45K salary can't buy anything bigger than a doghouse in Silicon Valley. As high as the rent is, buying is NOT cheaper than renting there. It might have been cheaper when the landlords bought the place 8 years ago, but not now.

What most people who make less than six figures there end up doing is living far outside the valley and commuting 1-2 hours each way.

T. Norman
Sunday, April 25, 2004

http://www.craigslist.org/roo/
I see HUNDREDS of house-shares for well under $1000.

If you make $45k, you find roommates, or commmute, or buy a studio.  But only a mental case would go to a homeless shelter.  End of story.

Bella
Sunday, April 25, 2004

Doesn't matter if he could find ways to share an apartment that would fit within his budget.  The point is that the place is so damn ridiculous that somebody earning $45K can't afford to live on his own. I'd say he's more of a mental case for not leaving the valley.  $45K accounting jobs can be found in any state.

T. Norman
Monday, April 26, 2004

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