The best and worst places to live if all you care about is money: Planet Money: NPR

Charleston, South Carolina, has one of the highest material living standards for college graduates in America

Michael Ciaglo / Getty Images

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Michael Ciaglo / Getty Images

Charleston, South Carolina, has one of the highest material living standards for college graduates in America

Michael Ciaglo / Getty Images

Natchez, Mississippi, is a city of about 15,000 people nestled on the Mississippi River. It’s pretty, pretty enough to be a popular wedding destination. It’s racially diverse. There’s a college campus, several art galleries, good southern steakhouses and restaurants, a brasserie, and decent nightlife. Natchez tourist agency said the town offers “a taste of true southern hospitality” and “a visit to Natchez feels like coming home”.

But Natchez may have even more appeal to them crudely 60 percent American adults who have not graduated from college. Fascinating news to study by Stanford University economist Rebecca Diamond and UC Berkeley economist Enrico Moretti finds that Natchez and the surrounding area offers one of the highest standards of living in America for workers without a college degree.

Natchez, Mississippi
Natchez, Mississippi

The conventional wisdom has long been that most workers – no matter their education or skills – should relocate to large metropolitan areas with lucrative and globally competitive industries, where they can join in on the action and climb the ladder. economic echelons. It is true that big cities offer each category of worker a higher salary, whether they fill out spreadsheets in an office or return burgers to McDonald’s. But there is, of course, another side to the equation: the cost of living. That a place offers a good financial deal is like a tussle between the income you can earn there and its cost of living.

“What we didn’t know before our project was: where did you get the most bang for your buck? Moretti said. “There is a race between your salary and local prices. Are you better off in a place that offers a higher salary but everything costs more? Or are you better off somewhere that offers you lower wages but everything is cheaper? “

Diamond and Moretti have spent four years pulling together and analyzing a massive data set that delves into the daily finances of three million American households. These households are spread across the country, from concrete jungles on the coast to small towns in the heart of the country, and everywhere in between. Diamond and Moretti obtained information on deposits and withdrawals from these households’ bank accounts and on credit and debit card spending. It allowed them to see how much people are making, how much they are spending and what they are buying. “We can see virtually all of the transactions that a household makes in a year,” says Moretti.

With their wealth of data, Diamond and Moretti constructed a Cost of Living Index that paints a vivid picture of typical prices and consumption patterns across America. Unsurprisingly, the most expensive area in America is the commuting area around San Jose, California, aka Silicon Valley. The most affordable area in America is the commuting area around Natchez, Mississippi. By combining this index with data on individual incomes, Diamond and Moretti are able to compare and contrast the material standard of living across America, not just in every location, but for different types of workers.

There is obviously much more to the value of living in a place than just the size of your paycheck minus the cost of the things you buy. Like the cultural scene, the opportunities for your children, the crime rate, the quality of schools and bars, proximity to hiking trails or surf spots, etc. It should therefore be emphasized that when we say “standard of living” we are only talking about average income minus taxes and expenses. This cold calculation misses out on a lot of intangible and invaluable things that can make a place cool. Additionally, this data is from 2014, and a lot may have changed since then, especially with the pandemic.

Nonetheless, Diamond and Moretti worked for four years to create an unprecedented snapshot of Americans’ finances. And we were curious: if you are, in general, a non-worker who wants to live in an area that offers the best balance between average income possibilities and the cost of living, what are the best and worst places in the world? America ?

Workers with a university degree

It’s no secret that so-called “superstar” cities like New York and San Francisco have an obscene cost of living. Housing is much more expensive. The same goes for hairstyles, energy, coffee, restaurant meals and groceries.

Still, according to data from Diamond and Moretti, the average salary of college graduates in places like New York and San Francisco makes a big difference.

“The big takeaway for college graduates is that expensive cities like New York and San Francisco are still a pretty good deal,” Moretti said. Of course, they are horribly expensive. But, educated workers have jobs that are so good that their incomes are more than enough to offset higher expenses. “San Francisco, for example, is in the top 20% in terms of standard of living in all places. New York is not far behind.

Overall, Diamond and Moretti find that the standard of living of college graduates across America varies much less than that of other workers. The jobs they get essentially offer a comfortable cost-of-living adjustment, so that on average college graduates can afford a relatively similar lifestyle no matter where they live in America.

However, there are still significant differences in living standards. The five places – technically, the “commuting zones”, therefore these places and the area around them – with the highest standard of living for university graduates:

  • McAllen, Texas
  • Houston, texas
  • Huntington, West Virginia
  • Beamont, Texas
  • Charleston, South Carolina

The five places with the lowest standard of living for college graduates:

  • Medford, Oregon
  • Provo, Utah
  • Salem, Oregon
  • Olympia, Washington
  • Asheville, North Carolina

Workers with only a high school diploma

“For less educated households, the situation is quite different,” says Moretti. Although they are always better paid in places with higher cost of living, their incomes do not adjust as strongly as for university graduates. Thus, living in these areas, if they do not receive outside help from their family or the government, makes them financially worse. “Expensive cities offer a significantly lower standard of living than more affordable communities,” says Moretti.

The five places with the highest standard of living for those with only a high school diploma:

  • Gallup, New Mexico
  • Summersville, West Virginia
  • Natchez, Mississippi
  • Graham, Texas
  • Marquette, Michigan

The five places with the lowest standard of living for those with only a high school diploma:

  • Asheville, North Carolina
  • San diego, california
  • Manhattan, Kansas
  • Medford, Oregon
  • Jacksonville, North Carolina

Workers without a high school diploma

While there is a large dispersion in living standards for those with a high school diploma but no college diploma, there is an even greater dispersion for workers without a high school diploma.

“The differences in standard of living between places are very important for high school dropouts in particular,” explains Moretti. “A family led by a dropout who moved from the most expensive city in the United States to the most affordable city would gain 26% in terms of consumption. There is a significant improvement in what she can afford to buy.

The five places with the highest standard of living for those with less than high school education:

  • Summersville, West Virginia
  • Paris, Texas
  • Gallup, New Mexico
  • Galesburg, Illinois
  • Cadillac, Michigan

The five places with the lowest living standards for those with less than high school education:

  • San diego, california
  • Cheyenne, Wyoming
  • Los Angeles, California
  • Miami, Florida
  • Asheville, North Carolina

The bigger picture

It should be pointed out that some of the more expensive places in the country, like San Francisco and New York, do not appear at the bottom of any of these lists for having a low standard of living, even for those without a degree. ‘secondary studies. We asked Moretti about it, and he said the reason is simple: they might be more expensive, but they also offer higher wages than any of the lower ranked places in their data.

That said, Moretti says expensive cities like New York and San Francisco are still at the bottom of the list for those who haven’t completed college and those who haven’t completed high school. They offer a fairly low standard of living for these categories of people compared to most of the country.

As a result of this project, says Moretti, he came to believe that large, expensive cities offer significantly lower standards of living than he previously believed. Yes, they remain beacons of opportunity for brains as well as for those with sophisticated pedigrees or good connections. “But my thinking has evolved on less educated workers,” he says. “To them, expensive cities seem to be a lot less of a bargain than it looks when you just look at the higher incomes they earn there.”

So why aren’t we seeing a massive exodus from extremely expensive cities? I mean, we have been. Over the past decades, college-educated workers have flocked to expensive cities, and uneducated workers have flocked. The old working-class neighborhoods are filled with young working people. Those who remain often have acquired rights in rent-controlled apartments or live in social housing or receive support from their families. The market is not shouting so loudly at these people to leave. And, of course, there are a bunch of non-financial reasons to stay where they grew up and have friends and family.

Moretti also says it’s also possible that many people just don’t know that moving to work and living elsewhere could be a much better financial deal. “Before launching this project, we weren’t even clear on which places had the best deals for different types of workers,” Moretti said.

So you’ve heard it here, folks. Some of you might be thinking about leaving Asheville or San Diego and heading to Natchez.