I really wish I didn't have to explain such simple economic concepts to journalists, but since you are so hell bent on believing 250,000 is rich no matter what, I'll attempt it.

You seem to be trying to make the point that cost of living differences don't matter because you could always move to a cheaper place. (You call people who "want" to live on the coasts yuppies).

That doesn't quite add up, considering you probably wouldn't be able to earn the same salary at the cheaper place.

250,000 is just a number. It means absolutely nothing unless it can be associated with some goods/products. Why does it make me rich if I live in a place where the salaries are 2X but the cost of living is 4X? In terms of standard of living, aka purchasing power parity, I have a LOWER standard of living than if I moved out. That means I can buy LESS stuff than the people you claim are not rich.

So in summary, according to your extremely flawed logic, I am rich because I live in an area that is expensive but pays more money. You think I should just move out of my expensive area, but you conveniently forget that the salary would be gone along with it.

So to examine flawed logic:

You ask why it makes you rich to live where the salaries are 2x but the cost of living is 4x, then say your salary would disappear if you moved to the cheaper place... but in the hypothetical place you're discussing, your purchasing power (more specifically your discretionary income) would be 2x as much... you'd be reducing your salary by 50%, but your cost of living by 75%.

well sure. If I moved to say, Austin, I'd probably make 100K instead of 250K...and since 80K in Austin buys as much as 250K here...I'd come out ahead.

so, buy your logic, anyone making 80K in Austin is rich. ok, I'll go along with that.

thefool75:

well sure. If I moved to say, Austin, I'd probably make 100K instead of 250K...and since 80K in Austin buys as much as 250K here...I'd come out ahead.

so, buy your logic, anyone making 80K in Austin is rich. ok, I'll go along with that.

Yes, except your last sentence. The author is the one who said 250000 is always "rich," I refuted that point.

By my logic people in the coasts making 250000 are NOT rich, thus people living in texas with the equivalent standard of living (which would be about 125000 in Austin) are also NOT rich.

Salaries without taking into account PPP are completely meaningless. If I wake up tomorrow and everything costs twice as much as today, I am half as rich. There is nothing magical about specific numbers that automatically makes it mean "wealthy." The fact that the author just insists that 250000 automatically makes you rich without regards to PPP means he needs to take a basic course in econ.

Austin's a very nice little city. I made less than $80k most of the years I lived there, and had a nice house in an older neighborhood just north of Hyde Park.

The BankRate calculator puts Austin at $117k compared to $250k in NYC, and is specifically exclusive of taxes, so you'd probably have more discretionary income in Austin at $100k than NYC at $250k. No state or city income taxes, about the same sales tax.

My point was simply that the initial poster in the thread was using numbers that supported the "earn a bit less where it costs a LOT less" line of reasoning. That was a hypothetical case, as is yours about Austin (probably.) It's awfully hot this time of year in Austin (but no picnic in NYC on some days, I'm sure) but it almost never snows in the winter.

oh I can see how it would be an argument for moving to Austin.

I'm just saying that since most would agree that 100K in Austin is NOT rich...then they're also agreeing that 250K in Manhattan is NOT rich.

what's bamboozling people, including Gross, is considering the raw number and not the actual purchasing power. they're hung up on 250k as some magic talisman instead of a purely relative number. (ultimately, I think non-NYers have a hard time comprehending the cost of housing here...)

thefool75:

oh I can see how it would be an argument for moving to Austin.

I'm just saying that since most would agree that 100K in Austin is NOT rich...then they're also agreeing that 250K in Manhattan is NOT rich.

what's bamboozling people, including Gross, is considering the raw number and not the actual purchasing power. they're hung up on 250k as some magic talisman instead of a purely relative number. (ultimately, I think non-NYers have a hard time comprehending the cost of housing here...)

Gross actually sounds alot like my grandma. She has been living in her low-cost of living community so long she thinks in terms of absolutes. She has no comprehension that things can cost different amounts in different places.

NYC is not the only expensive area in the US. Try buying a condo in the San Fran north beach area, its flush with tech-millionaires looking for urban life.

Ok, so purchasing power parity differs from place to place.

But does the value of a gallon of milk or a gallon of gasoline really double or triple in NYC versus Memphis? Does the cost of a doctor's visit really triple in New York City compared to Austin?

Or are we only talking about housing prices? And maybe auto prices? And maybe education? Yes, a burger or a pizza may cost a little more in NYC or San Fran, but is an apartment really worth that much more than in Bismarck or Pheonix?

So maybe there are financial market forces inflating housing prices, and education, and certain high value purchases in certain regions?

I argue that the financial industry in general inflates high value items for financial market schemes regardless of their market real value.

There needs to be greater government oversight of the financial industry which now reflects 20% of the entire economy, a balloon which is sure to burst if not properly tempered.

Usama2:

Ok, so purchasing power parity differs from place to place.

But does the value of a gallon of milk or a gallon of gasoline really double or triple in NYC versus Memphis? Does the cost of a doctor's visit really triple in New York City compared to Austin?

Or are we only talking about housing prices? And maybe auto prices? And maybe education? Yes, a burger or a pizza may cost a little more in NYC or San Fran, but is an apartment really worth that much more than in Bismarck or Pheonix?

So maybe there are financial market forces inflating housing prices, and education, and certain high value purchases in certain regions?

I argue that the financial industry in general inflates high value items for financial market schemes regardless of their market real value.

There needs to be greater government oversight of the financial industry which now reflects 20% of the entire economy, a balloon which is sure to burst if not properly tempered.

Purchasing power parity already accounts for the cost of food an all else. It is a cumulative cost of living measure. A gallon of milk might not but that much more expensive in NYC but the TOTAL cost of living is.

I think there should have been greater government oversight of the financial industry. Now its already too late. Wall street already drained the coffers of America and has now sold the country into long-term poverty.