While I’m passionately interested in Bitcoin, one of my other primary interests is data science. While I’m not an economist by trade, I often find myself skeptical when a blog or other publication throws numbers at us and expects us to read the numbers the way they did. Such an article popped up on BostInno relatively recently, discussing a recent interactive map published by the Bureau of Labor Statistics. The map visualized average weekly salary in 2013 by county, and it showed about what you would expect. Here’s a shot of the map:
Darker means higher salary, and the map divides the country into what appears to be quintiles. The usual suspects are the darkest-colored, from Massachusetts to Maryland to Alaska. BostInno already mentions that cost of living has to be part of the equation, but doesn’t particularly go into detail on this point. Everyone knows rent is sky-high in more wealthy areas, such as New York and Silicon Valley, but I thought it would be interesting to see how this map would look if it were somehow adjusted for cost of living. Is the “adjusted salary”, so to speak, of wealthy counties as high?
What this boils down to is whether higher salary actually translates to higher living. Obviously higher salary and higher cost of living are anything but mutually exclusive, but it’s not as if there’s a linear relationship between the two. Thanks to a generous discount by the folks over at The Council for Community and Economic Research, I was able to access cost of living data at the county level for 2013. They provided a Cost of Living Index for each county, with the average cost of living having an index of 100. Greater costs of living lead to a greater index. Indices ranged from 84.3 (Zapata County, TX) to 188.3 (Kings County, NY). This is an interesting skew, suggesting that costs deviated right from the average far more than they deviated left.
A simple operation to see if and where in the US higher salary means higher living is to divide the county salary by its cost of living index. This gave me a generally single or double digit number that I’ll call “adjusted salary” for our purposes. The majority of the counties fell between 6 and 8 for adjusted salary. Next, we’ll examine California, a traditionally wealthy state with enough counties for reasonable examination. Similarly to the Bureau of Labor Statistics, I divided the counties in the US into quintiles, and visualized California by color – darker being more wealthy by adjusted salary. So let’s compare the maps. First is a simple zoom-in on California on the BLS map:
This is a relatively dark map. Many counties near San Francisco, Los Angeles, and San Diego are the darkest color, or the highest quintile of weekly salary ($786 weekly and above). All the rest of the counties except for two of them are in the top 3 salary quintiles, and California has exactly zero counties in the bottom salary quintile ($587 weekly and below). The adjusted salary map tells a very different story:
A much more lightly-colored map (and poorly designed, but nobody said I was a graphic designer), by any stretch of the imagination. Well over half of the state falls into the bottom two quartiles (A score of 6.5 or less for adjusted salary). Only the usual suspects, the counties in and around Silicon Valley, along with San Diego county, are in the top quintile (7.7 or more for adjusted salary). Even Los Angeles county didn’t make the top quintile. It would seem the vast majority of California, though they bring in a high salary, are paying significant amounts of said salary to rent, groceries, transportation, healthcare, and the like.
So does this mean it’s not worth it to live in the five Californias that aren’t Silicon Valley? Don’t let me or anything said here tell you the answer to that. What I’ve come to learn, and what I hope most of us know is that numbers can be construed to say anything. This was a rather simple data study, but one that I hope makes us think about life in high-salary parts of the country. If you’re paying pennies on the dollar for rent and gas, don’t you have much more of your paycheck left over for leisure (which may also be less expensive in regions with a lower cost of living) even if your paycheck is less than someone doing the same job in New York?
I’d love to do more data studies like this in the future, so perhaps this won’t be strictly a Bitcoin blog as I move forward (expect plenty of Bitcoin talk anyway, maybe just not every single post). In addition, I’m nearly done designing my own website so I don’t have to live within the constraints of WordPress much longer. Expect big things in the next few weeks!
Thanks again to both the Bureau of Labor Statistics and The Council for Community and Economic Research for the use of their data!