Many American families chose where to live in the USA based on the cost of living in various cities. Living on a fixed budget is difficult enough but it is infinitely harder if the cost of living in a given area is high. There is a debate in Congress these days about raising the Minimum Wage but tying it to the cost of living. Many in Congress argue that even with a raised minimum wage, it will be difficult for many to make ends meet. Most Union contracts are negotiated based on the cost of living meaning that any increases are tied to the cost of living. In short, the cost of living is many respects tied to the quality of life for millions of Americans.
Also watching the cost-of-living index, or how much it takes to purchase certain essentials, are economists concerned about rising inflation. The COL index may be different in various cities which again determines the quality of life of people living there. If it cost one 25% more to buy a refrigerator in Los Angeles than it does in Charleston, that can make a big difference in a family’s life.
It is, of course, a much different picture for an Orthodox Jewish family who faces significantly higher costs for such basic living expenses as kosher food, Torah education, and camping to name just a few items. Housing is more expensive because of the need to live near shuls, yeshivos and mikvaos. But there are smaller communities where other ordinary living costs are so much lower that it mitigates the extra cost of living a life as an Orthodox Jew. One good example is housing, which can be significantly lower in many smaller communities. These are some of the factors that gave rise to small frum communities in Dallas, Houston, and Atlanta to name just a few cities. Thankfully, kollelim and other institutions helped facilitate the growth of these bourgeoning communities.
One study I came across in 2015 showed that the cost of food annually for an average American family of four was $6,500- $7,000 while it would be $17,000 for a family of similar size in the Orthodox community. This fact does not even address the fact that the average frum family today is larger than 4. The average American family consisted of 3.15 persons in 2020, down from 3.7 in the 1960s, which is why that family is so much less costly to feed. I have often used the following statement in some of my lectures and seminars to audiences that do not understand an Orthodox Jewish lifestyle: “We have 52 holidays a year before we have our first holiday, and at each of these weekly holidays we buy food like you would on some of your big holidays.” They also do not have any concept of all the simchas and dinners we have and the economic impact of these events.
Most American families chose where to live based on job opportunities and the educational institutions (usually public). Once satisfied, it is easy for them to pack their belongings and move to a less costly city. Take the Seville family that moved from Long Island to Charleston, North Carolina. According to Stacy Seville, they considered Charleston’s cost of living of 100, a great number in the Cost-of-Living Index. Stacy loved the fact that it was right in the foothills of the scenic Blue Ridge Mountains, has a taste of the outdoors within city limits (in the form of a 21-mile path that weaves in and out of parks and downtown), and it also has access to some of the most mesmerizing parks in the state, like the Blue Ridge Escarpment. Without kosher food or yeshiva tuition to consider, the choice was easy especially since she and her husband both landed jobs in the local municipality, he as a supervisor in the emergency services department and she as an assistant to the commissioner of parks, a job she says she loves because of her passion for the outdoors.
A centerpiece of the Biden administration’s economic proposals is its pitch to double the national minimum wage to $15 an hour. Whether Biden’s proposal makes it to a final vote in the pending pandemic relief bill or returns later in the year as free-standing legislation, it faces an uphill battle for enactment in the way it is proposed. Republicans and Democrats alike aren’t happy with what they call “a one size fits all” meaning that the living standards would be equally applied to urban and suburban areas despite the fact that each has a different cost of living standard. Workers in urban, high-income, high-cost counties (like Bergen in New Jersey, Fairfax in Virginia and San Francisco in California) would be eligible for a federal minimum wage several dollars higher than the national standard. Those working in low-income, low-cost rural counties would be subject to a commensurately lower minimum wage, unless their state’s local mandate is higher. Some communities like in heavily populated Jewish areas fear that the higher minimum wage will cause prices to rise at food stores, restaurants, and other retail establishments.
As it happens, we live in some of the most expensive places in the country. California is often used as an example of a very expensive place to live in. Take the Silicon Valley, for example. More than half of the homes in San Jose, the state’s third largest city, are priced over $1 million. If you are live on the West Coast and are kosher, you will pay much higher prices because of the high cost of transportation.
Not only young couples look at cost of living very closely; it is also a crucial barometer for retirement, especially for those who lived on a fixed income (i.e., social security). Not everyone has a lucrative pension or a significant savings account.
A 2019 report from the Federal Reserve found that nearly one in every four American adults have no retirement savings. During the economic crisis brought on by the COVID-19 pandemic, that share has likely grown. Despite stimulus payments and enhanced unemployment benefits, millions of Americans have reduced retirement account contributions or stopped them entirely – some have even been forced to make withdrawals.
Depending on the state, the cost of a comfortable retirement varies from as little as $858,000 to as much as $1.5 million. Generally, states in the Northeast and the West tend to be more expensive places to retire, while those in the Midwest and South are less expensive.
Many people often think of cost of living as a necessary evil and do not pay much attention to it. But the deeper you look into it, you recognize that cost of living is one of the most important economic categories that certainly demands our attention.