Archive for Tuesday, April 29, 2014

Latest federal numbers show low incomes, high prices make Lawrence most expensive in the state

April 29, 2014


Maybe your wallet has been telling you for some time, but now there are government numbers saying it as well: Lawrence is the most expensive metro area in the state.

The latest figures from the federal Bureau of Economic Analysis show Lawrence residents are feeling the pinch in two areas. The city's cost of living, although lower than the national average, is higher than in any other metro area in Kansas. To make Lawrence's predicament worse, residents also earn far less than those in other Kansas communities.

How big is the difference, you ask? Well, take Manhattan for example. The college community just west of us on Interstate 70 has a cost of living that is about 3.6 percent cheaper than Lawrence's. The per capita, inflation-adjusted income for a Manhattan resident, though, is about $7,700 more than what Lawrence residents earn.

In other words, not only are there more dollars per person in Manhattan, but they buy more as well.

It is an equation that is true in the three other Kansas metro areas of Topeka, Kansas City and Wichita as well. The numbers also show Lawrence doesn't fare well on a regional basis, either.

Local reaction

Community leaders said they weren't pleased to hear the new numbers, but also weren't shocked.

"I guess I can't say it is real surprising," said City Commissioner Jeremy Farmer, who also is the executive director for the local food bank Just Food. "We are kind of an entertainment and service-oriented community right now. That is who we have grown to become. This speaks to the need for more primary jobs."

City Commissioner Mike Dever said the cost-of-living issue is one that he does hear about as he travels.

"I hear from people that Lawrence is a great town, but the cost of living seems higher than other places in the state," Dever said. "But I think some of that is outweighed by the quality of life. It is a community with a vibrant downtown, a lot of amenities and a lot of options for things to do outside of work."

Mike McGrew, chairman of the Lawrence Chamber of Commerce and also the leader of Lawrence-based McGrew Real Estate, said he's seen through his industry that real estate prices in Lawrence generally are higher than anywhere in the state other than Johnson County.

He said Lawrence's quality of life may support those prices, but he said the lower than average incomes highlight why Lawrence must have better success in attracting jobs.

"I think we already may be seeing the early signs of people saying, I would love to live in Lawrence, but I have to go where the jobs are," McGrew said. "We don't want that to be the answer. We have to have the jobs here."

The numbers

The new figures are part of a project by the Bureau of Economic Analysis designed to give people a better idea of how much it costs to live in various metro areas. It measured both income levels and how much it costs for goods and services such as transportation, education, household staples, entertainment and other categories based on 2012 data.

The cost-of-living component assigns every metro area in the country a score. A score of 100 is equal to the national average. Lawrence checked in with a score of 95.5, so its price index is 4.5 percent less than the national average. But most communities in the Midwest have prices less than the national average. Click on the chart below for details.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The BEA then used the price indexes for each metro area, along with national inflation numbers, to create an inflation-adjusted per capita income number for each metro area.

Lawrence checked in with an adjusted number of $36,103, which left it behind a host of communities, including several university communities that also have to contend with high numbers of students who typically bring the per capita numbers down. Click on the chart below for details.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The figures also measured growth rates of per-capita incomes in the metro areas. Lawrence fared slightly better in that category. From 2011 to 2012, Lawrence's adjusted per capita income grew by 1.38 percent.

That was still only good for the ninth fastest growth rate among the 13 regional communities examined by the Journal-World. But Lawrence wasn't ranked last in the state in that category. Manhattan, after several solid years of income growth, saw its per capita income totals drop by 3.96 percent, which was the biggest drop of any of the 13 communities. Joplin had the largest per capita growth rate on the list at 5.58 percent.


Leslie Swearingen 3 years, 12 months ago

You know, regardless, Lawrence just seems like home to me. Though I would like to revisit some of the great places I have had the luck to go to, I want to come home. I have been all over the country, Canada, Mexico and the Caribbean, but no place has the feel of home that Lawrence has. I can't really explain it, but if I suddenly came into a lot of money I would still live here and travel.

Richard Heckler 3 years, 12 months ago

All of this sprawling new development that has been spreading like a disease and is based on smoke and mirrors is the problem. Not much is paying back and the city commission still does not get it. They just keeping saying yes to sprawling growth and handing out tax dollars like drunken sailors. Who is advising the City Commission? Why do they so readily accept wrong advice?

WE keep hearing that this is expanding the tax base when in reality it is expanding our tax bills as the Lawrence 1% are still laughing all the way to the banks and maybe some off shore accounts as well.

City Hall pays the Chamber of Commerce half a million tax $$$$$ annually for misleading advice?

Richard Heckler 3 years, 12 months ago

If flooded residential markets and flooded retail markets paid for themselves and were financially positive, we would NOT be subject to so many fee and tax increases. But with increased numbers of residential and retail real estate you have increased demand on services.

Historically the revenues generated by residential real estate and tax abated development does not pay for the services they require from a municipality. After 30 years of expanding the tax base one would be expecting tax refunds instead of tax increases.

Lawrence,Kansas CANNOT afford all types of corporate "tax abatements" no matter how these are disguised. For 26 years or more this community has been handing out tax abatement schemes like drunken sailors. That folks is a ton of tax dollars never being deposited into our tax dollar cookie jars.

How can an abated tax base ever pay back? This Free Lunch Economic Policy must stop.

Bill Moyers on the local free lunch menu

David Cay Johnston on the local Free Lunch menu.

From Sam Brownback on how to rip off workers income taxes.

Thomas Bryce Jr. 3 years, 12 months ago

Raising the Minimum wage will help, but all wages need to increase to stop Wage compression. Every time Minimum wage goes up, but upper wages stay the same, that means the work force is now working for wages Closer to the minimum wage.Skilled Trade wages have been stagnant for 3-4 Decades. I make what my Dad mad in 1971 doing essentially the same Skilled trades. Costs of living since then have doubled and tripled. Why have workers been Devalued? What gives? Profit! Money! Greed! When is enough,enough? If the Middle Class has no money to spend, the Economy Will Tank. What will the Rich do when the Dollar is Useless? Refusing to pay workers more in order to drive up profit is basically cutting off your nose to spite your face. You can't have a thriving economy with Just Rich People.

Susan McDaniel 3 years, 12 months ago

And this is a surprise to someone? It is a shame you cannot afford to live in your hometown. The only thing I see that has changed is we are now a bedroom community to KC and Topeka. Subtract the commuters and see where we are.

Scott Burkhart 3 years, 12 months ago

This is the most liberal city in the state and it has the highest cost of living and the lowest income. Does anyone, besides me, think there is some correlation here? Just asking.

Seth Peterson 3 years, 11 months ago

Probably not, because most of the rest of us understand context. Not to mention reading comprehension to see that these comparisons are against a select group of communities (both in and outside of KS) that are similar in nature to Lawrence - not against the entire state.

Dorothy Hoyt-Reed 3 years, 12 months ago

First of all, Scott, if we were that liberal, then we would not be kowtowing to developers at every turn.

Secondly, our problem is the emphasize on building retail and apartment buildings. The construction workers who build these structures probably make decent money, but then the jobs are apartment managers, grounds workers, sales clerks, etc. These are low paying jobs. We need to get some industry in this town. As one of the many liberals who do live here, I would like to see us building wind turbines and solar panels. Why aren't we trying to attract car makers or car parts makers?

Do people not want to come to Kansas, because of all the bad publicity we get from not funding our schools properly and spending too much time on giving tax cuts to the rich? Why aren't these rich "job creators" creating jobs with their tax cuts? When I was growing up Chambers of Commerce encouraged new business. Now they are just a political wing of the Republican party, and discourage new business that would create lots of jobs, so their members do not have to compete for workers with higher wages and benefits. Let's start looking at the people who have the real power, and not those of us who live here who are liberal. I for one do not have the money to start a business. As one of those liberals the only way I create jobs is as a consumer.

And another question. If the free market is suppose to work on supply and demand, then why is rent so high? When I first moved to this town, I could understand that. You had to have an apartment lined up for next year by March, or you were homeless. Now we have for rent signs up year round. Why aren't the rents cheaper, since there seems to be more supply than demand? Is it because the owners can claim it as a loss on their taxes, so they can afford to keep some empty? Maybe we should take away that subsidy, and give them a tax break if they provide some affordable housing for low income families.

Fred Whitehead Jr. 3 years, 12 months ago

I repeat the above.... Why is this a front page item? I have lived here over 40 years and this town has been the most expensive location I have ever lived it. I should have stayed in Oklahoma. My bad.

George Lippencott 3 years, 12 months ago

I looked up some census bureau statistics on our fair town.

• We have higher turnover than Kansas as a whole • We have a significantly higher number of people in the 18 - 24 age cohorts than the state • Home ownership is 2/3 what it is in the rest of the state • Rents are higher – perhaps more demand

Three key statistics I could not find are

Refined data on population turnover but there is almost certainly a high level associated with our student population • non-wage income such as scholarships, student loans and social service benefits (probably not trivial) • education level

One could interpret this information in a number of ways. I propose that we recognize that in our fair town we

• have a lot of students who work part time and have lower resulting measured income • have a significant number of well-paid professionals working for the university (also a lot of low paid administrative and trades jobs) • have fewer mid-range blue collar jobs when compared with the rest of the state. • have significant income not captured by the census statistics • have a significant population of well-educated citizens striving to improve our city

For me that suggests a possible explanation for the data discussed in the article. We may

• have a bifurcated economy resulting in lower measured income per capita.
• have a shorter term perspective among a significant portion of our electorate.
• have a higher demand for services and amenities • have more available resources than the census bureau captures

IMHO these factors drive up our tax rate (one of the higher in the state) and our cost of living My comments above are not intended to be judgmental but just one possible explanation for the perspective in the article.

Scott Burkhart 3 years, 12 months ago

Best explanation I have heard. Thank you, George.

Chad Lawhorn 3 years, 12 months ago

Hi George: My understanding is that non-wage income such as public scholarships, student loans and social service benefits are included in the personal income calculations. I didn't ask a BEA official that, so I can't be certain, but it appears to fall under the category of transfer payments, which are one of the components of personal income.

Regardless, I'm curious why you think Lawrence's income/affordability situation would be so much different than other college communities. This article noted a few — Ames, Manhattan, Columbia — but there are certainly others. For 20 years I've heard that income is naturally going to be lower in university communities. But what the numbers seem to show is that some university communities have below average incomes and some don't. Why is Lawrence in the category that has lower than average incomes? I have a hard time thinking it is a measuring issue, since the BEA is using the same measuring criteria for all the communities. Thanks, Chad

James Howlette 3 years, 11 months ago

Richer parents = less need for students to work while attending college. That's my guess.

George Lippencott 3 years, 11 months ago

I do not think we are particularly different - sorry if appeared that way. I would observe that Manhattan has Riley as a major contributor to the economy there (mid level jobs) Columbia has a state capital which supports a number of mid level jobs. I know nothing about Ames except I think I remember a big government contractor plant some where near there.

We just do not have those type employers to fill in the mid level jobs

George Lippencott 3 years, 11 months ago

I could not find any data on non -wage income. I am not certain however that student loans are reported as income as they are loans (they do contribute to buying power). My research on income and taxes suggested that we do not consider a lot of non-wage income as income when we report income data but that is another area that I find difficult to research - maybe you as a reporter could find out from the BEA??

And yes we have to remember that the parental income contribution is reported where the parents are so our students could have a part time job here with a limited income while their parents contribute significantly to our economy by supporting their kids.

Clark Coan 3 years, 12 months ago

Why do people in Ames, Iowa, a college town, make so much more than Lawrencians? This despite thousands commuting every day to better paying jobs in JOCO and Topeka. Fewer union jobs? Or is that employers just don't want to pay a living wage?

George Lippencott 3 years, 11 months ago

Where do you get the data that thousands commute to Topeka and KC while holding high paying jobs??

More significantly if they commute from here there income is reported here where they live.

Need to know more about Ames!

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