Is New York City Not So Expensive After All?

This is one of Levain Bakerys $4 cookies. Can you have your cookie and eat it too?
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  • This is one of Levain Bakery’s $4 cookies. Can you have your cookie and eat it too?

If there’s one thing that’s even more dependable than death or taxes, it’s that New York is an obscenely expensive place to live. But wait! What if that’s all in our heads? What if the fact that some of us spend 50% of our gross income on rent doesn’t really indicate anything at all? What if the fact that we are told again and again that New York (Manhattan and Brooklyn, at least) is the most expensive place to live in the country is nothing more than a terrible lie?

So could it possibly be true that, despite all anecdotal evidence to the contrary (i.e. we think people who can afford to drink when it’s not happy hour are loaded) New York is actually a reasonably affordable place to live? Sure! Yes! Well, at least, it’s not so expensive if you’re rich. If you’re poor, it’s actually more expensive than other places. Wow. What a shocking twist. In a New York Times article titled, “Who Says New York Is Not Affordable?” Catherine Rampell tackles the issue of New York’s soul-crushing, unfathomably expensive reputation, and determines that the problem isn’t the crazy-high prices in this city, rather it’s the fact that many of us who live here are just too poor. At least, I think that’s her point?

Rampell writes that “New Yorkers assume that we live in the most expensive city in the country, and cost-of-living indexes tend to back up that assertion.” So far, we’re with her. But then Rampell assures us that the numbers don’t really apply to everyone. It’s not really as expensive as you think! Or at least, “it turns out that living in New York is actually a relative bargain for the wealthy.” Which, good for them. The wealthy must be so relieved to know that, in addition to all the other privileges that their wealth affords them, they also benefit even more from living in New York than they would if they lived in other parts of the country.

Why exactly do the wealthy benefit from living in New York with a bunch of other wealthy people? Well, “part of the reason high-income residents get good deals…results from a particular economic system. Highly educated, high-income New Yorkers are surrounded by equally well-educated and well-paid people with similar tastes. More vendors compete for their business, which effectively lowers prices and provides variety.” So, the more money you have to spend on things like “sensible, unstylish walking flats from Harry’s Shoes” which are $480, or the “oatmeal-raisin cookies at Levain Bakery [that] cost $4 each,” the less-inflated those prices will seem. $4 cookies and $480 shoes for everyone! Right?

Not so fast! Are you aware that not everyone’s wealthy? What should those poor souls who don’t even earn the cost of one pair of Harry’s Shoes in a week do? How do they survive in this city? Only barely! They only barely survive. Ugh. Rampell, after crowing about how awesome it is for the wealthy people in New York, notes that “when you look at the cost of living for low-income people based on their tastes and preferences, New York’s poor turn out to be even poorer than you think.” The thing is, although it’s nice that most New Yorkers make over minimum wage, this actually means that they can’t take advantage of many federal programs because the income requirements for those benefits are incredibly stringent: “In New York, the poor are ‘getting disqualified from a lot of these programs because they’re being paid $10 an hour rather than $7.50 an hour,’ says David Albouy, an economist at the University of Michigan, ‘which can sort of artificially put them above the poverty line or wherever the threshold is.’” Lovely.

What does this mean for New York then? It means that New York will continue to be a magnet for wealthy people, who have been flocking to New York in greater and greater numbers, slowly taking over neighborhoods that used to boast some economic diversity. And it also means that fewer and fewer people from the lower economic rungs of society will be able to live here at all. And this includes people who are earning incomes in the mid-five- figures, incomes that would make you middle class almost anywhere else in the country. New York will continue on its path to being a truly two-tiered society of the have-nothings and have-way-more-than-most-people-can-possibly-imagine. And what should people in the middle do? Move to Houston or Charlotte, “because the local governments have realized their comparative advantage is in deregulation, not in fancy cookies.” Or, you know, just go cry quietly in the corner of the apartment you share with three other people. And then eat a cookie.

Follow Kristin Iversen on twitter @kmiversen

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  1. i’ve only lived in NYC for the past 10 years, but since having moved here from the Southwest, I can only conclude NYC is exponentially cheaper than suburbia.

    I don’t own, so i pay no property tax. i don’t have a car so i don’t pay for gas, upkeep, insurance and parking-i just ride my bike to LGA