Go to Middle America, Young Men & Women


A few weeks ago, Eamon Moynihan reviewed economic research on cost of living by state in a newgeography.com article. The results may seem surprising, given that some of the states with the highest median incomes rated far lower once prices were taken into consideration. The dynamic extends to the nation’s 51 metropolitan areas with more than 1,000,000 population (See Table).

There is a general perception that the most affluent metropolitan areas are on the east coast and the west coast. Indeed, 8 of the 10 metropolitan areas with the highest nominal per capita income in 2006 were on the two coasts. These included San Francisco, San Jose and Seattle on the west coast and Washington, Boston, New York, Hartford and Philadelphia on the east coast. Middle-America is represented by Denver and Minneapolis-St. Paul. However, as anyone who has lived on the coasts and Middle America knows, a dollar in New York or San Francisco does not buy nearly as much as a dollar in Dallas-Fort Worth or Cincinnati.

Per Capita Income: Purchasing Power Parity
US Metropolitan Areas over 1,000,000 Population
    2006 Per Capita Income  
Rank Metroplitan Area Purchasing Power Adjusted Nominal Nominal Rank
1 San Francisco $46,287 $57,747 1
2 Washington $45,178 $51,868 3
3 Denver $44,798 $44,691 8
4 Minneapolis-St. Paul $44,326 $44,237 9
5 Houston $42,815 $43,174 11
6 Boston $42,571 $50,542 4
7 Pittsburgh $41,716 $38,550 20
8 St. Louis $41,613 $37,652 27
9 Milwaukee $41,572 $39,536 19
10 Baltimore $41,451 $43,026 12
11 Seattle $41,448 $45,369 6
12 Kansas City $41,329 $37,566 28
13 Hartford $41,104 $44,835 7
14 New Orleans $40,935 $40,211 16
15 Philadelphia $40,725 $43,364 10
16 Dallas-Fort Worth $40,643 $39,924 17
17 Cleveland $39,997 $37,406 30
18 Indianapolis $39,843 $37,735 26
19 Chicago $39,752 $41,591 14
20 Richmond $39,282 $38,233 22
21 New York $39,201 $49,789 5
22 Birmingham $39,057 $37,331 31
23 Cincinnati $38,691 $36,650 36
24 Nashville $38,680 $37,758 25
25 Detroit $38,670 $38,119 24
26 Charlotte $38,632 $38,164 23
27 Miami $38,555 $40,737 15
28 San Jose $38,505 $55,020 2
29 Jacksonville $38,413 $37,519 29
30 Louisville $38,262 $36,000 41
31 Oklahoma City $38,156 $35,637 42
32 Las Vegas $37,691 $38,281 21
33 Salt Lake City $37,381 $35,145 45
34 San Diego $37,358 $42,801 13
35 Rochester $37,066 $36,179 38
36 Columbus $37,058 $36,110 39
37 Atlanta $36,691 $36,060 40
38 Memphis $36,501 $35,470 44
39 Tampa-St. Petersburg $36,260 $35,541 43
40 Portland $36,131 $36,845 35
41 Buffalo $36,091 $33,803 48
42 Norfolk (Virginia Beach metropolitan area) $35,418 $34,858 46
43 Raleigh $35,087 $37,221 32
44 San Antonio $34,913 $32,810 50
45 Providence $34,690 $37,040 34
46 Austin $33,832 $36,328 37
47 Phoenix $33,809 $34,215 47
48 Sacramento $32,750 $37,078 33
49 Los Angeles $32,544 $39,880 18
50 Orlando $32,095 $33,092 49
51 Riverside-San Bernardino $25,840 $27,936 51

Purchasing Power Parity: Things change rather dramatically when purchasing power is factored in. Some years ago, international economic organizations, such as the Organization for Economic Cooperation and Development, the World Bank and the International Monetary Fund began using costs of living by nation to compare national economic performance, rather than currency exchange rate. This practice, called “purchasing power parity” is based upon the recognition that there may be substantial differences in the cost of living between nations.

This can be illustrated by comparing Switzerland and the United States. For years, Switzerland has had a higher per capita GDP than the United States on an exchange rate basis. Switzerland’s gross domestic product per capita was $53,300 in 2006, nearly 30% above that of the United States ($42,000). However price levels in Switzerland are so high that incomes do not go nearly as far as the exchange rate would suggest. Once adjusted for purchasing power parity, the Swiss GDP per capita in 2006 drops to $39,000, well below that of the United States. Much of the difference has to do with regulation. The more liberal economy of the United States produces a lower cost economy than in Switzerland, or for that matter most of Western Europe. The US economic advantage would be even greater measured on a household basis, since US households include nearly 10% more members (generally children) than those in Western Europe.

The same concept was applied by the Department of Commerce Bureau of Economic Analysis researchers in their review of purchasing power parities between US metropolitan areas in 2006. When purchasing power is factored in, five of the top metropolitan areas in nominal per capita income (not adjusted for purchasing power) drop out and are replaced by other metropolitan areas rarely thought of as among the nation’s most affluent.

Among the three west coast nominal leaders, San Francisco remains as #1, in both nominal and purchasing power adjusted per capita income. Seattle dropped from 6th to 11th position. However, the real surprise is San Jose, which dropped from 2nd position to 28th.

The east coast regions ranked among the top 10 metropolitan areas in nominal income also were decimated by their high costs, with only Washington (which rose from 3rd to 2nd) and Boston (which fell from 4th to 6th) remaining. New York fell from 5th to 21st, Hartford from 7th to 13th and Philadelphia from 10th to 16th.

The two non-coastal metropolitan areas in the nominal top 10 remain, with Denver rising from to 3rd and Minneapolis-St. Paul rising from 9th to 4th.

It can be argued that Middle-America replaced the five metropolitan areas dropping out of the top ten. Houston, long one of the most disparaged metropolitan areas among urbanists, occupies the 5th position (compared to its 11th ranking in the nominal list). Three of the new entrants are confirmed members of the Rust Belt: Pittsburgh (7th), St. Louis (8th) and Milwaukee (9th). Finally, there is a new east coast entrant, blue-collar Baltimore (10th).

The Impact of Taxes: But that is just the beginning. Taxes also diminish the purchasing power of households. Unfortunately, there is virtually no readily available information on state and local taxation by metropolitan area. There is, however state and local government taxation data at the state level. If it is assumed that this data is representative of metropolitan differences (weighted proportionately by state in multi-state metropolitan areas), there would be changes in rank among the top 10. Denver would displace Washington in the number two position, closing more than one-half the gap with San Francisco. Even more surprisingly, St. Louis would move ahead of both Boston and Pittsburgh to rank 6th. Kansas City would leap over #11 Seattle, Baltimore, Milwaukee and Pittsburgh to rank 8th, trailing #7 Boston by $25, not much more than the price of a Red Sox standing room ticket. Pittsburgh would occupy the #9 position and Milwaukee #10 (See Figure).

More than Housing: The largest differences in purchasing power stem from housing, with east coast and west coast metropolitan areas having generally higher housing costs. As a result of the housing bust and the larger house price drops in those areas, purchasing power adjusted incomes could recover relative to those of Middle America. However, the high cost of living on the east and west coasts extend to more than housing prices. Generally, according to proprietary (and for sale) ACCRA cost of living data, the west coast and east coast metropolitan areas have higher costs of living even without housing. These differences are largely in grocery costs, which probably reflects the anti-big box store planning regulations and politics that exist in many of these areas. Grocery costs in the more affluent middle-American metropolitan areas tend to be lower.

Other Surprises: Outside the top 10 most affluent metropolitan areas, there are other surprises. Urban planning favorite Portland ranks 40th, just above Buffalo. Rust Belt Cleveland ranks 17th, a few positions above New York. Kansas City, with its highly decentralized civic architecture, ranks 12th, just behind Seattle. Indianapolis (17th) is more affluent than Chicago (18th) and both are more affluent than New York.

Five of the bottom 10 metropolitan areas are in the south, including Virginia Beach, Raleigh, Austin, San Antonio and Orlando. But perhaps the biggest surprise of all is that four of the five lowest ranking metropolitan areas are in the southwest: Phoenix (47th), Sacramento (48th), Los Angeles (49th) and Riverside-San Bernardino (51st).

The Dominance of Middle America: But among the 10 most affluent metropolitan areas in the nation, six or seven may be counted as Middle-America (depending on how Baltimore is classified). Only three are from the original group that supplies 8 of the top metropolitan areas when purchasing power is not considered.

Related articles:
Gross Domestic Product per Capita, PPP: World Metropolitan Regions
Gross Domestic Product per Capita, PPP: China Metropolitan Regions

Photograph: Pittsburgh

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

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A few weeks ago, Eamon

A few weeks ago, Eamon Moynihan reviewed economic research on cost of living by state in a newgeography.com article. The results may seem surprising, given that some of the states with the highest median incomes rated far lower once prices were read Beelzebub manga taken into consideration. The dynamic extends to the nation’s 51 metropolitan areas with more than 1,000,000 population (See Table).
There is a general perception that the most affluent metropolitan areas are on the east coast and Fairy Tail watch the west coast. Indeed,

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just sayin'

I can see Baltimore's rust belt characterization, but it is not "Middle America". (It is on the Chesapeake Bay, which connects to the Atlantic, and it is 45 minutes from DC. No one would call D.C. "Middle America" a.k.a. the midwest.)

Sorry for the quibble. This is intersting data.

America's heartland's future? Increasingly bleak

Culled from:

"In cities across America a collapsed manufacturing base has been further damaged by the recession and has led to conditions of dire unemployment and the creation of an underclass. Richard Feldman, a former Detroit car-worker and union official turned social activist, sees disaster across the country. Sitting in a downtown Detroit bar, he lists a grim roll call of cities across America where decline is hitting hard and where the official end of the recession will make little difference."

David Parvo
Most Senior Fellow
THE Placemaking Institute