One of the questions I get most often during my presentations is “what about the cost of living?”. Aren’t most of the high prosperity big metros in the country – where the knowledge economy is increasingly centered – places with very high cost of living? It is true we don’t correct income for cost of living differentials. Here is why.
It is only one half of the equation. The other half is what you get for your money. If costs were all the mattered we would all drive a Hyundai and none of us a Lexus. We start with a belief that consumers are rational, not dupes. They don’t over pay for housing or other basics when they choose a place to live and work. When they pay more they calculate what they are getting for their money.
So that fact that housing costs in Michigan are far less than in Chicago and Manhattan doesn’t stop many of our recent college graduates from going to those vibrant cities. Why? Because they are buying the neighborhood, not just the housing. Central Park is worth something as is the access to world class arts, culture and night life. It is no different than middle class families with children paying more for the same house in a community with better schools.
So the places with the highest per capita income are the most prosperous places in the country. And what most distinguishes them is that they have a high proportion of their residents with a four year degree or more. They are places where increasingly mobile talent chooses to live and work. You want to be one of those places! Michigan’s challenge is none of our big metros are any where near the top of list. Metro Detroit is 37th and metro Grand Rapids 45th in the proportion of adults with a four year degree out of 55 regions with populations of one million or more.