High-Priced California is About to Get Even More Expensive
I’ve been back in the office full-time for nearly three months now, but I still can’t get over how pricey everything has become. The chicken salad at the burger stand in our office building is $12.75. Add a Diet Pepsi ($2.75) and the tab becomes $15.50, add tax ($1.55) and it becomes $17.05, add 15 percent tip ($2.33) and all total, I paid almost $20 for chicken salad and a soda. Vexed, I only ate half and squirreled away the rest for the next day.
The uber-smart people at MIT recently updated their Living Wage calculator and to no one’s surprise, California ranked near the top when it comes to the minimum income necessary to cover living expenses – before taxes. To stay above the poverty line without government assistance, a single Californian needs an income of $38,823. Only Hawaii ($40,412) and the District of Columbia ($41,850) topped California.
While my parents would have told me to tough it out and be frugal, what if you are a parent? A household of two adults (one working) and two children needs $84,921 according to MIT, and a single mom with two children must earn a heart-stopping $103,990. And these are California averages – coastal cities like San Francisco and Los Angeles run even higher.
Worse, the Central Valley and Inland Empire are no longer refuges from the coast.
Jonathan Lansner, business reporter for the Orange County Register, writes that the Inland Empire has become a national inflation hot spot. Its cost-of-living is soaring 6.5 percent annually— tied for third-highest among the 23 metros tracked by the Consumer Price Index. “The CPI stats suggest that a few under-the-radar metros known for ‘affordability’ now are hammered by the cost of being discovered. It seems growing populations and workforces are outstripping supplies of local goods and services and creating an inflation problem,” says Lansner.
In California, the biggest inflation variables are housing and the price of oil. Californians pay the highest gasoline prices — $4.40 for a regular gallon of gas compared to an average of $3.17 for the rest of country according to AAA. And housing prices in the state are soaring. Sacramento’s hot housing market – where many Bay Area families fled – is expected to rise 18.7 percent over the next 12 months.
In the coming months, “inflation in California will outstrip the nation,” said Michael Shires, associate professor of public policy at Pepperdine University. This means that I had better get to the grocery store and buy a head of lettuce, admonished my friend and PRI’s creative director Dana Beigel. But she’s one to talk — after three decades of renting in the City by the Bay, she bought a house in Sacramento.
Rowena Itchon is Senior Vice President of the Pacific Research Institute.