False. $45k in 2005 is only $73k today, when adjusted for inflation[1]. Even if you use the most generous interpretation of "2000s" to mean 2000, that's only $82k.
If you are a healthy person living frugally then I think the inflation in your personal basket of goods is actually higher than the fed numbers would dictate (esp for rent and housing).
https://comptroller.nyc.gov/reports/spotlight-new-york-citys...
The entire "Recreation commodities" category (which includes other stuff like "Sporting goods" and "Pets and pet products") is only weighed at 2%, compared to 13% for food and 37% for shelter. Even if it's down 50% the impact on the overall CPI is negligible.
>assume you only buy new cars (only up ~25% since 2000, but used cars are now almost as expensive as new whereas they used to be available for half the price or less),
???
There's clearly a "Used cars and trucks" category.
>and underweight housing (basically doubled since 2000, worse if you need to move to a HCOL major urban center for employment).
The index is called "Consumer Price Index for All Urban Consumers", not "Consumer Price Index for Young Urban Professionals". Not everyone is a recent graduate who recently moved into a high COL city and paying for a market rate apartment. For every person fitting that criteria, there's probably also a retiree who owns their house and/or lives in a rent controlled apartment.
The discussion here is about the cost of living difference for tech workers who I assume are clustered around NYC.
$45K in NYC in 2005 is not equivalent to $73K today for most such people. It is likely closer to $100K today, as the above poster said.
https://fred.stlouisfed.org/series/NYXRSA
https://fred.stlouisfed.org/series/CSUSHPINSA
The same is also true if you use 2005 or 2009 as your start date. I agree there is variance in theory, but in practice it has been about the same as the national.
I’m sure getting it that low means ignoring housing, and making everything in the “basket of goods” worse.
No. https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
>and making everything in the “basket of goods” worse.
Given that food, energy, and shelter makes up the bulk of the CPI, I'm not sure how this can be done. The most plausible thing I can think of is "food is less nutritious than before", but I doubt that's an actual factor. "Food is getting less nutritious so I'm forced to shop at whole foods" isn't exactly a popular sentiment.
I wonder if there is a similar measure for time kids spend in school. My kid comes home early every Wednesday, and there’s are ~15 other early dismissal days during the school year too.
I would bet almost everything that relies heavily on labor has been increasing in price faster than official figures for the basket of all goods and services.
Look at the junk in this section for exampe
> Cereals and bakery products
And ofcourse all the items in fruits and vegetables had the highest inflation.
>> Cereals and bakery products
>And ofcourse all the items in fruits and vegetables had the highest inflation.
A simple check shows this is false. The "Cereals and bakery products" category went up by 28.6% since January 2020, compared to 17.9% for "Fruits and Vegetables". You get similar conclusions if you use compare against January 2005.
The first is you're using the Nationwide averages as opposed to the regional numbers for New York where a lot of these increases are much greater than on the nation.
The second thing is the way it includes housing is by using a thing called the owners imputed rent. And what that does is it tries to back out the rental from a housing unit. The problem is in New York City rent has been rising way faster than that.
30 is the cpi's consistently underestimated a number of its own provisions because of the way it does hedonics and substitution. It basically says that while meat might have risen 50% people switch to fish now and it uses in lower value for inflation.
The CPI over the last 30 years have been so massively game it's almost useless anymore
Another commenter has pointed out new york house prices actually rose slower compared to the rest of the country.
https://news.ycombinator.com/item?id=42043147
>The second thing is the way it includes housing is by using a thing called the owners imputed rent. And what that does is it tries to back out the rental from a housing unit. The problem is in New York City rent has been rising way faster than that.
Most Americans own their home. OER might not be perfect, but pretending that they pay market rent doesn't make much sense either. Even for people who don't own their home, new york has rent control, which provides similar inflation protections compared to owning a home.
>30 is the cpi's consistently underestimated a number of its own provisions because of the way it does hedonics and substitution. It basically says that while meat might have risen 50% people switch to fish now and it uses in lower value for inflation.
The part about hedonic adjustment is misleading. While it's true that such adjustments are used. It's only used for small minority of categories (basically clothes and technology), and doesn't include stuff like food (like in your example).
Meanwhile the part about substitution is straight up false:
https://www.bls.gov/cpi/factsheets/common-misconceptions-abo...
> In January 1999, the BLS began using a geometric mean formula in the CPI that reflects the fact that consumers shift their purchases toward products that have fallen in relative price. [It continues by saying it allows substitution withing categories and not between categories.]
This is exactly what I was saying. It has become a cost of living index, not a measure of inflation anymore. The hedonic adjustments can be laughably hand-wavy (it is a very difficult problem on how you measure inflation when using CPUs -- the real answer is you shouldn't and CPI's basked is a bad bad way to do it). That FAQ is always pretty funny and defensive (a lot of "give us a break -- it doesn't really affect anything much").
> Even for people who don't own their home, new york has rent control, which provides similar inflation protections compared to owning a home.
This is one of the huge issues. (1) Not sure if you live near NYC, but ask any new yorker about how much rent control has helped -- the answer is usually pretty low. don't have a heart attack looking at this rental rise in the last 5 years https://comptroller.nyc.gov/reports/spotlight-new-york-citys...
However that isn't the important part - rent control shouldn't effect measures of inflation -- this is precisely why CPI is bad. You can't legislate away inflation, you mere push the money around and prices rise asymmetrically but you still have the fundamental issue that CPI no longer even tries to measure -- too many dollas chasing too few goods. So you stop some of using those dollars on housing -- they just bid of something else instead.
CPI is a terrible horrible very bad measure of inflation. Its been that way since the 70s at least when the concept was turned on its head.
You need to understand that when people bitch about the "cost of living", they're not speaking in broad terms. They're speaking in specific terms, inclusive of their insane budgetary choices that they believe are mandatory to be seen as high-status.
Yes, you can live just fine on the median income. But in order to have your ego stroked as the super important high class person that you obviously are, you have to spend some money. Choosing to live in NYC in the first place is certainly part of that, the rest is just gravy.
It reads like you are projecting your own beliefs of what New Yorkers and tech workers are like, and then screaming about that intersection.
The problem with your retort is it ignores the very context I outlined above. The present rate of inflation appears more manageable, but because most of it is driven by absurd inflation in shelter and transport costs (homes and cars), those two areas are starkly higher than inflation overall - as much as 50% or more, in some metros.
So while your napkin math makes for a good soundbite, the reality is that it just hides the complex truth of inflation. So yes, while $45k might be inflation-equivalent to $73k today, that purchasing power is significantly different. $43k in the 2000s could buy you a starter home in most states, albeit not in most metros; nowadays, $73k can’t even cover basic necessities in many states and all metros, not without significant sacrifices.
So my point still stands.
[0]: https://www.fns.usda.gov/cnpp/usda-food-plans-cost-food-mont...
[1]: https://www.fns.usda.gov/cnpp/low-moderate-liberal-food-plan...
It's more a focus on how people "feel" about their situation than it is math. It's resonant to me.
https://kyla.substack.com/p/the-vibecession-the-self-fulfill...
As in "people feel as though they want to be paid more"? You may find the idea interesting and resonant, but how does that affect anything? It's still true that they're on more than journalists, regardless of how they feel.
Those are literally part of the CPI.
>interest rates
The "C" in "CPI" stands for consumer. Unless you're taking out loans to buy your groceries, interest rates shouldn't be a factor on your expenditures.
But they're not.
I'm curious about what portion of those that are living on $74k or less are doing so solo, and how many are only able to do so by racking up debt / getting support from family / etc.
I live in an area less expensive than NYC and, at least anecdotally in my circles, if you don't have a partner (or other assistance like roommates, parents, or something along those lines) it seems pretty damn rough to get by on ~70k.
1. A Tesla Model 3, on which I spend 1k a month with insurance
2. 1.5k rent for a studio in a good safe location with utilities
3. Rest on groceries, eating out movies etc.
If I decided to get a cheap car, I could easily have 600$ or more to spend on housing etc. So it would be tight but as a single 20s male, I would make it with 50k a year after taxes. Everything else just goes into savings. I think people have lavish tastes, or no control over their spending if they can’t make do with 70k a year after taxes.
I actually can't think of an EU Capital where that's achievable anymore, bar possibly the socialist outlier of Vienna. In Dublin a good studio is at least 2k, and you'll pay 52% tax on earnings over €70k as well...
I don't think the median income is after taxes, is it? That would be more reasonable, for sure. My comment was made in reference to friends who make $70k/yr before taxes.
I live alone in a 2br. I don't have assistance from family or a partner.
Now, I do not live in a luxury building, and I am not building up a nest egg from my salary. And I rent. But when people think about the costs of NYC, a lot of people forget that you don't need a car, car insurance, or gas.
Where you get into trouble is if you're paying a stupid large amount for rent. It is very possible to pay 1-2k / month in rent. Most people who move to the city at that budget live with roommates initially, but most find a really good deal, sometimes rent controlled, organically through networks after a year or two of living here. Deals are hard to find as they should be, but certainly exist, and most longterm locals have a great deal.
What is false?
I didn't make any claims other than saying that in my circles I see some of my friends and colleagues have trouble making it by on $70k. I'm not sure how you would be able to tell me that I'm wrong about that. I'm happy that you are able to make it on $70k, though.
Okay, then let's make this rigorous.
Falsifiable Claim: People live a life of struggle on 70k a year in new york, where struggle is defined by constant worries of physiological needs, safety, and security, as categorized in Manslow's hierarchy of needs. https://www.simplypsychology.org/maslow.html
Falsified by counterexample.
QED.
For a lot of people, they may mean 'struggle' in the sense of living below where they want to be, which is relative. Maslow's hierarchy is helpful to categorize.
Can we maybe just have a normal conversation without trying to flex our superior debating skills?
I was curious how many people that make the median wage in NYC are living comfortably solo -- that's it!
You're making up claims, disconnected from my comments, and then falsifying them yourself in some sort of weird self-debating comment.
You are robbing from your future to live in the present.
This might be ok for you specifically as you are making a gamble on your ownership of the startup paying off. Perhaps you have a family safety net. Or Perhaps you are ok with taking the risk that you don’t have enough money in your older years.
It’s not really ok for standard employees to live that way. The USA social contract is that each person must self-fund their own retirement. Deferring that savings to “later” has truly staggering costs in compound-interest-years lost.
The majority of standard employees live this way, or with less.
So you can't actually afford to maintain your lifestyle, unless your retirement plan is a revolver.
Just because it's possible, doesn't mean most are willing to take the set of preferences in my head that allows me to be so cheap and rewire their own brains like that.
The Soviet Union "officially" had the highest production of food per capita in the world, yet they had to import food. Because you cannot eat government statistics.
If you did a 30 second search, you'd see it's factored into the CPI, with "Shelter" (which further breaks down into rent and owners' equivalent rent) making up 36% of the CPI basket.
https://web.archive.org/web/20241009171432/https://www.bls.g...
Unless owners are completely in the loop in terms of the rental market (which they likely are not, they don't rent), they may not come up with good estimates for what an equivalent rent would be.