Comparing Houston and New York

August 13th, 2014

City Journal highlights the cost of New York, and offers a number of comparisons about how much cheaper it is to live in the Space City than the Big Apple.

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Here is a breakdown of the cost of necessities.

The higher prices that inevitably result from these restrictions on commerce are a substantial burden to ordinary New Yorkers, who can’t regularly leave to shop in the suburbs. Just compare the cost of basic necessities in New York with that in other cities, especially those considered to have low levels of inequality, like Houston, Oklahoma City, Las Vegas, and Colorado Springs. The website’s cost-of-living index estimates that the average price of a quart of milk is 55 percent higher in New York than in Las Vegas, while eggs cost 34 percent more per dozen than in Houston; two pounds of apples cost 22 percent more in New York than in Colorado Springs. New York City retail costs are considerably higher even than other overregulated, heavily taxed metro areas such as Los Angeles, where food purchased at home or in restaurants costs 11 percent less. A 2006 Brookings Institution study of the impact of high prices on the urban poor maintained that New York’s high costs were a function of poor policies and could be fixed, if the city had the political will. “To lower these prices, public and private leaders must reduce the higher business costs that drive up prices for poor families,” the Brookings report noted.

All these factors—the expensive housing, fat tax bills, and high prices—have a direct and powerful effect on people’s daily lives. In a 2008 City Journal article, Glaeser calculated that, after including the costs of housing, taxes, and transportation, the average Houston family wound up with 50 percent more income to spend than the average New York family. The difference in real dollars: about $32,000 in spendable money for the typical Houston family, compared with just $21,000 for the New York family. (See “Houston, New York Has a Problem,” Summer 2008.) In a similar study of median incomes adjusted for cost of living in 50 metro areas, City Journal contributing editor Joel Kotkin and the Praxis Strategy Group’s Mark Schill determined that Houston workers enjoyed the nation’s highest effective pay: the annual average Houston salary of $67,279 was worth $75,256 when adjusted for the city’s lower-than-average cost of living. By contrast, in New York, the average annual salary of a worker, $77,640 on an unadjusted basis, shrank to $50,169 when corrected for the city’s high costs—above all, housing and taxes (see Figure 4). That left New York a poor 41st among metro areas in average annual effective pay.