By Adonis
Anyone who has ever had the pleasure of witnessing a California sunset off the coast of a nearby beach has also most likely had the pleasure of purchasing an eight-dollar beer and a gallon of gas for around six dollars. Common vacation destinations or even regions that people desire to live come at a tremendous cost today. For the average millennial or Gen Z professional, the question of whether the juice is worth the squeeze is an ever-present one.
How do we assess cost of living? We have to look at the consumer price index (CPI) to understand what we’re getting ourselves into when we move to a more expensive area. What is the CPI? The average cost of a basket of goods in a region. The CPI is what explains why people are better off making 60 grand per year in Albuquerque than 200 grand per year in Manhattan. What explains this phenomenon?
In a city or municipality that relies heavily on public services, higher taxation is a necessary component to fund said resources. In addition, if the average income is higher on the spectrum, spending tends to increase. When this occurs, aggregate demand increases as well causing prices to rise. A higher minimum wage, known as a price floor, tends to follow in these regions as well.
This makes daily expenses higher that they would otherwise be in a lower-income region. How does this effect the culture?
The author of this post has noticed through personal experiences that the average demographic of the inhabitants of these more expensive areas tends to be upper-middle class professionals in their forties or older. The younger crowd are generally dependent of family income well into their thirties. This is a less-than-ideal scenario for younger professionals attempting to make it on their own.
In addition to the higher prices one may face daily, the higher insurance premiums, taxes, tuition, and barriers to entry for small businesses provide additional hurdles for young professionals. One must be wary of specific regulations pertaining to these regions.
If one is attempting to start a business or attend college courses, then performing these actions in a “more desirable” region of the country could bedevil or even impeded progress for no other reason than the cost of living. For the sake of investing in long-term success, perhaps it’s worth sacrificing a beautiful daily sunset and perfect weather for some extra money in the bank.
