Fun with numbers

Two odd items, both related to cost of living…sort of.

  • As noted in the set of movie impressions recently posted, Great Guy has as its hero a deputy chief inspector for a city’s bureau of weights and measures. I didn’t mention that the plot of the movie mostly relates to merchant fraud against consumers (and in one case billing fraud involving the city orphanage). As the hero is explaining the importance of the bureau and of resisting bribes, he says “half of people’s income goes to food,” or something along those lines. I thought, “Well, that was 1936, but damn, things have changed.” So I did a little checking. For very low income people in urban areas in the depression, that figure–more than 50% of income going to food–might be plausible. The average across the U.S. in 1930 was 24%, down from more than 40% in 1900 (these figures according to a Forbes report)–but a whole lot higher than the 8% reported for 2009. Taking another source, the USDA in a 1996 report, the overall average in 1996 was 14.1%–but for low-income households (those with household incomes between $5,000 and $19,999), it was 34%. And a more recent report from the USDA, dated 2004, gives a figure of 9.5% for urban households… So, basically, it’s fair to assume that most middle-class households probably spend 10% or less of income on food. And that is indeed a huge drop from 80 years ago, by any standards. (Not that all the reasons for that substantial drop are without negative consequences, but that’s a whole bunch of different posts.)
  • A column in Fortune, grumping about President Obama’s plans to raise various taxes, was particularly grumpy about the sense that he’s setting $250,000 a year and above as being affluent. The columnist whined about how that certainly wasn’t the case in Manhattan (and, of course, the cost of living in Manhattan should set the standards for what’s considered affluence everywhere, right?) So I did a little looking. Cost comparisons are really tricky–for example, one that I’ve looked at makes the assumption that a couple in Manhattan should live in a 2,500 square foot house to be middle-class, since that’s what they’d have in the Midwest. But even with those assumptions (which yield absurdly high housing prices in Manhattan), it appears that $250,000 in Manhattan is equivalent to $150,000 in Boston, $178,000 in San Jose or $130,000 in Chicago. Do I believe that $178,000 household income in San Jose should be considered affluent? Damn right I do. And, not to be unsympathetic to those poor folks forced to live in Manhattan on a mere $200,000 a year…you know, it’s apparently not much of a commute to drive those prices down by at least a third. People who work in San Jose do it all the time..and urban transit is a whole lot better around Manhattan than around San Jose.

Actually, it’s amusing reading some Fortune columnists, just as I’d probably find it amusing to read some Wall Street Journal or Forbes columnists. My heart really goes out to the New Yorkers struggling to make it on a mere quarter-million a year, and those bankers who were cruelly denied the extra $2 million bonus they were counting on last year. Life really is tough, isn’t it?

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