The Cost of Living Index (COLI) measures average cost of a basket of consumer goods that virtually every household in the United States needs to purchase on a continuous basis to sustain itself. It includes: groceries, housing, utilities, transportation, healthcare, and a variety of commonly used services. However, the ACCRA COLI is a bit more specialized as economists use it as an apples-to-apples comparison of costs between major US urban areas. ACCRA is the American Chamber of Commerce Researchers Association. Investopedia Jobseekers use the current COLI to negotiate salaries and to decide whether or not to relocate to a more expensive city. Human resources departments and executive managers review costs as a factor to determine how competitive their salaries are to other companies in a given area. Not to be confused with the Consumer Price Index (CPI), which the US Bureau of Labor Statistics produces and also determines the change in value of Treasury Inflation Protected Securities (TIPS).
Now that I’ve got a bit of background out of the way, what I really want to get into is a Business Insider article I came across that covered the minimum living wage threshold for San Francisco. As of 2018, families of four (4) that earns $117,400 annually are considered low-income households if they live in the foggy city. Business Insider US Housing and Urban Development (HUD) says the Median income is now $118,400 as the rising influence of Silicon Valley wealth to the south has pushed out families that had lived there for generations. Many can no longer afford to pay property taxes, and what was once considered “well off” is long gone now. As a comparison, $20 an hour in my hometown of Beaumont, Texas, is great money. You have a good job if you make $40,000 a year, and it could buy a home for you not long ago. Sleepy southeast Texas and the Lone Star State is an attractive destination for relocation, because it’s affordable and there is no state tax. In fact, the business friendly environment has attracted many companies to base large operations in Houston, San Antonio, and the Metroplex. Companies can avoid paying higher salaries required for offices in large coastal cities, such as New York, Los Angeles, and the Bay Area. A family can buy a nice, affordable home when they relocate and save money. For years, Manhattan held a reputation for being the most expensive city in the US to pay rent but not any longer.
There doesn’t seem to be any end in sight, either. And expensive housing has, unfortunately, exacerbated the numbers of homeless people in San Francisco and other notable west coast cities. Chambers of Commerce welcome the economic growth, but the increasing wealth is leaving city officials with fewer options as they battle the uncontrollable issue. So, what’s next? Major employee head taxes are coming to the ballot near you this fall for the voters to decide. Seattle City Council got spanked just recently when it voted on the issue and undoubtedly San Francisco City Council took notice. A hot election year is in the making for national and local issues, and I can’t wait to review changes to come in 2019!