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September 17, 2010


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Higher housing costs have killed people in bigger cities.

I think this is ignoring the reasons for the higher cost of living. People want to live in these cities because they have amenities that can't be found in the Midwestern deserts.

I couldn't wait to graduate high school and leave my hometown and move to the big city because there was nothing to spend money on even if I wanted to. No movie theaters, no ice cream shops, and the roller rink burned down 20 years ago. Housing costs are a matter of supply and demand. No one wants to live there, so housing is cheap.

I for one want to move to expensive San Fransisco someday so I can live next to the beach and experience the California lifestyle. Lots of people get retirement homes on the coast for exactly that reason.

Californians universally think their place is different...that despite exceptionally high taxes and (still) absurdly high home prices, it is all justified. Not so! Biz and those with aspiring careers are realizing California is a place for the old money, as well as for the poor (whose entitlements vastly outstip minimum wage jobs). Very little incentive to work in a place with high income taxes, very high home prices, and free handouts to the lazy. I see the productive 20 and 30 somethings getting out of this state as fast as they can, after they spent their year or two living the California "lifestyle" and relocating to places thta have much lower costs of living.

This won't happen because there's no way CEOs and management teams want to live in the middle of nowhere. Yes, some CEOs fly/commute to their companies, but I'd bet most of them do not enjoy doing that.

I don't understand what "do things for employees without increasing payroll costs" means. Is he seriously suggesting that firms tell their existing valued coastally-based people that they aren't giving them a raise this year, but not to worry they are moving them to flyover country instead? And expecting that to go well!? I'm not buying the it's-gonna-get-huge tone, if this is such a great idea then why aren't firms doing it en masse already?

"This won't happen because there's no way CEOs and management teams want to live in the middle of nowhere" Well, often the CEO and her compadres are based in the big city but all the back-of-house stuff is performed elsewhere. You don't necessarily need HR in head office, or IT or accounts receivable or whatever. And elsewhere could be as simple as parts of New Jersey instead of Manhattan, in the case of some of the banks for example. It's politically-acceptable outsourcing :)

Wow the example of moving from San Jose to Austin, I would not consider Austin a hick desert. Maybe some of you should be a little more open minded. But then again you love your place you live and you pay a dear price to live there. Go ahead.

Conversely you could not pay me enough to move to some of these supposed nicer places. I have been to LA and it sure is not for me. I have been to Chicago and again not for me. My burb of Detroit suits me just fine but there is another thing to consider with this option. Can you move?

For me the answer is no. My wife is a tenured teacher of 24 years and in essence I am stuck in the location we are at until she retires. She provides half of the income of this household and in this economic environment her job is safe while mine is questionable. Even if I were to loose my job I could not move because of the way the union has things my wife would take a significant paycut if she were to move to another district because she would start out at square one and job security at square one to be first to be laid off.

So for us to move my living expenses would have to be practically non existant than what it is now seeing that my wife would be taking a 50% pay cut and I would not have a pay raise.

Ant then there is the intrinsic value of who's job is more secure? and that answer is my wife's

I always think about this as my husband and I are planning to move away from Ohio, mostly likely to Seattle, Boston, or another nearby city (Seattle and Boston are the major cities of the states we grew up in and we both have friends and family around there). The problem of course is the pay raises aren't going to increase proportionately enough with the cost of living. Still, both of us don't like living in Ohio for various reasons, and we save over half our income as it is, so we should be okay. It still stresses me out though. I blame me reading sites like FMF for that. ;)

I may have a lower cost of living if I were to live in Phoenix vs. New York City. However, if I lose my job in Phoenix, I'm going to have a much more difficult time finding a new one.

David's comparison would make sense if the advice was to leave San Jose for Colby, KS or Saratoga, WY.

But the cities listed were Austin, Dallas, and Phoenix. You can add in places like Denver, Kansas City, Orlando, and Atlanta. These aren't exactly small towns in the middle of nowhere with no ice cream shops; they're big cities with museums and sports teams and universities and all that other stuff. Even if you insist on living in Cali on the coast, places like Oxnard or Santa Cruz are substantially more affordable than the major metro areas, and not exactly boring middle-of-the-desert-nothing-to-do towns.

This is one of the reasons I have been thinking about leaving California.

I really don't think this is something that companies are doing with the express purpose of replacing raises. Frankly I think a company would be stupid to move for that reason alone and very stupid to tell employees they were doing them a favor by forcing them to relocate.

I mean hows that sound? :

"No raises this year but guess what... you get to move 2000 miles away! You're welcome!"

No I don't think so.

Companies do of course relocate for various reasons. When doing so they will try and get people to move along with them. They might pitch the lower cost of living as a good reason why the move is benefitial.

But I seriously doubt any sane employer would relocate people with the single intention of it being a replacement for increased wages.

Most people don't want to drop everything and move half way across the country to another state. Austin is great but my family and friends don't live there and I don't own property there etc. I actually like Austin quite a bit but am not about to drop everything and move there in order to save a few bucks.

Besides who is going to pay all the costs of relocation? I certainly don't want to foot the bill to sell my house, move must stuff and buy another house. If the employer pays that then why don't they just give me a raise instead. If they don't pay it then its a net loss to me.

This article in part ignores how cities end up with higher costs of living. If Microsoft was based in Topeka, then the influx of money in to that community would eventually inflate the basic wages of everyone, then these people would invest that money in lifestyle improvement, and the cost of living would increase as restaurants became fancier and more expensive, more service industry-type businesses spring up to cater to people with disposable income, etc.

It's the same principle as global free trade. Sure, the US is losing now because it is cheaper to import than to manufacture here, but as as money flows into other countries, internal consumption rises, and eventually there is cost parity. It takes a while and the transitions are rocky, but it all balances out eventually.

Any city with a low cost of living that becomes a successful industry hub will eventually lose the initial attraction of low costs.

"Cost of living" can very much be, as is said in IT, vaporware.

MasterPo has travelled extensively around the country these past few years. Other than the cost of real estate, certain taxes (property, sales, state income etc), and perhaps insurance costs are pretty equal coast to coast.

Leaving aside extremes like mid-Manhattan or downtown LA the cost for a gallon of milk (for example) isn't half in Belville, IL what it costs in Greenport, NY.

Any "raise" do to COL seems more marginal than extreme all other things being equal.

Why on earth would any company move the people? What a waste of money!

The smart thing for these companies to do is to move the JOBS, not the people. Instead of "Your job moved to China, bye, bye", it will be "Your job moved to Phoenix, enjoy the rest of your life in New York, bye, bye".

The specialized people will mostly refuse to move, but quit and easily find new jobs in their old cities, and the replaceable people will be replaced - even if they did want to move.

with newer models like ODesk, i think you will see partially a reverse effect where folks will move to their families and friends, not to a new place chasing some job


And I'm thinking about moving from SE Asia to California for another job with the same salary... time to re-think.


I currently live in Boston with my wife (we both work), and we will be moving south next year for various personal reasons. If we were to make $20k/yr less there, that would be equal if not a severe cut in income. Like MasterPo said, the differences are very small. It's just rent and home ownership that are killer, and additionally in the case of Massachusetts- state tax.

We'll be moving to a big city, which is why I liked Michele's statement about Phoenix. If I moved to even a small city like New Orleans, LA or Birmingham, Al, and I lost my job-- I'd be in tough shape to find another one as easily as I could here in Boston.

That said, it's a lot easier to be poor in Texas than it is in Boston.

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