Monday, January 05, 2015

When Poverty is not Poverty and Wealth is not Wealth

The New York Times notices that states are not all the same. Richard Florida writes:
Red state economies based on energy extraction, agriculture and suburban sprawl may have lower wages, higher poverty rates and lower levels of education on average than those of blue states — but their residents also benefit from much lower costs of living. For a middle-class person, the American dream of a big house with a backyard and a couple of cars is much more achievable in low-tax Arizona than in deep-blue Massachusetts. As Jed Kolko, chief economist of Trulia, recently noted, housing costs almost twice as much in deep-blue markets ($227 per square foot) than in red markets ($119).
This is a perfect example of why the federal government should not be in the business of deciding who is poor and who is rich. Without cost of living, the largest of which is housing, setting minimum wages, poverty lines, and even tax brackets can never be fair. (And with so much variation across the country, attempting to consider cost of living at a federal level would quickly become unmanageable.)

We relocated from Washington DC to rural South Dakota in January 2013. The cut in pay was substantial--from nearly six figures to approaching the federal proverty line--but our actual standard of living did not decline. Housing costs were no longer consuming every other paycheck. But for federal policymakers, $27,910 in South Dakota is the same as $27,910 in New York City.

We do not need the federal government to penalize "red states" for the difficulties "blue states" have made for themselves (Mr. Florida's main concern later in the article). We need to let state and local governments know their own economies and serve their own people.

No comments: