discussion

Sun 8

Shenhao Sun

Francesca Astiazaran

English 106B

2/17/2020

Saving money in California is important

#Cost of living in California

Introduction and Background

Before coming to California, I had a lot of expectations for the state and always wanted to study here. Last year, my dream came true as I got an opportunity to come to the state to commence my university education. For the time I have been here, I have realized that life is not so easy as I used to think. The cost of living in the state is relatively higher compared to other states. Taxes are very high and this increases the prices of basically everything. I looked it up and found Jurisdictions across the United States have increasingly turned to local option sales taxes, or LOSTs, to fund transportation projects and programs. California is an enthusiastic adopter of these measures (Lessons Learned from 40 Years of Local Option Transportation Sales Taxes in California). The cost of living is a great indicator of the economy of a country or state. Analyzing it gives an idea of how expensive it is to live in California compared to other states. It also provides a hint on the wages of people living in a state depending on how they are able to sustain themselves with such a high cost of living.

The Significance of the Topic in my life

As a student living in California, the state’s cost of living affect me a lot. The money that I get from my parents as upkeep is hardly enough to sustain me. I am only able to spend on the most important things as I try to avoid spending too much on expensive things unless they are very necessary. Being an international student from China, I usually go to San Gabriel to have Chinese food. As much as I like Chinese food, it is often too expensive in California and I end up spending too much on food, not because I eat too much but because it is costly. Rather than visiting restaurants such as McDonald, I have learned to carry packed food for my lunch. Costs such as car insurance, apartment rent, and other bills are some of those that I cannot avoid, thus I am always keen on saving for these. From my own experience, the cost of living in California is very high and an investigation is needed to assess the reasons.

How the cost of living in California is being discussed in popular culture

The issue of the cost of living in California has been the topic of discussion in various popular culture platforms. For example, CNBC (Consumer News and Business Channel), a media house that deals with business news, reports that California is among the most expensive U.S. states to live in. According to CNBC, the midpoint of house prices in the state is not less than $540,000 while that for rent is about $3,000. These figures are almost double the U.S average which are $218,000 for house prices and $1,695 for rent.

CNBC reports that in some California’s most popular cities like San Francisco, the prices of homes and rent increase in a dramatic way. For instance, renting a house in San Francisco can cost more than $4,500 while purchasing a home can cost in excess of $1.3 million (Carter). Luckily, I live in San Bernardino, and my rent is a lot lower than these places, my rent is about $1,000 a month. The cost of housing is a key factor in determining the cost of living.

In addition to the high cost of renting or buying a home in California, it has also been indicated by Smartasset.com (a financial technology company that provides personal financial advice) that the cost incurred in meeting daily cost is also very high. While some everyday costs such as water fee and food are cheap in most cities in California, other costs such as transportation and taxes are quite higher. For example, the average cost of a gallon of regular gas is $4.09 in California, putting the state as the most expensive in terms of gas affordability. Besides the high cost of gas, motor insurance rates are also very high, thus making it very expensive for one to own and drive a car (Josephson).

Smartasset.com also reports that California has some of the highest income tax rates in the country. The income tax rate for the top income bracket is 12.3 percent. However, the income tax in California is a progressive one and those in the bottom tax bracket pay only 1 percent of their income as income tax. Those whose taxable income tops $1 million are deducted a surtax of 1 percent on top of the 12.3 percent tax, thus bringing the total tax rate for this category of taxpayers to 13.3 percent (Josephson).

According to the New York Times, the cost of construction in California is very high, making the prices of homes to rise steeply. A two-bedroom apartment that is often considered an affordable house in most states costs approximately $750,000 in San Francisco, California. In comparison, a similar apartment costs an average of $240,000 in the U.S. According to the federal government records, constructing a house in Illinois or Texas is about three times cheaper than building one in California (Fuller).

According to developers and housing experts, the high land prices and labor costs are some of the reasons why house costs are very high in California. The average wages per hour for a construction worker is approximately $90 in San Francisco (Fuller). Apart from the cost of land and labor, other factors contributing to the high cost of housing in the state include government fees, charges by construction companies, and permits. These costs account for about 25 percent of the total cost of building (Fuller).

In a post shred on NFIB California Facebook page, The Economist explains that people are moving from California to Texas due to high cost of living in the former state. Many people are relocating to cities in Texas because the daily cost is cheaper than in California cities. Although immigrants from abroad find California an attractive destination, the number of Americans moving into California are less than those moving out (The Economist). Many of the emigrations are as a result of the unbearable cost of living in California. I agree with this. I often follow Chinese people living in California on Instagram. Many Chinese complain about the high cost of California. So a lot of people are moving to lower cost states like Texas or Ohio.

The significance of the topic from an academic perspective

The issue of the cost of living in California is an important topic in various fields of academics, particularly economics, planning, demographic studies, and marketing. My major is marketing, so this problem will enable me to apply some professional knowledge of marketing, which is also very helpful for me to learn marketing. Economists can use the topic investigate what is causing the price of land and labor to increase and how people are using these resources to satisfy the housing needs. Economists can also do a research to answer the question how the rising costs in California impact the residents. Planners and demographers can analyze the various population characteristics in the state and how they relate to the available resources. For example, diverse groups of people can be analyzed depending on whether they reside along the coast or inland. Other population characteristic that can be used to classify population include age, income level, and the number of children or dependents a person has. This information also can be used by marketing researchers to identify various market segments and the types of products suitable for them. China has a much larger population than the United States. But China has a high rate of land utilization, which will also solve some of the housing price problems. I found that the utilization rate of land in California is not very high, which is also worth studying.

In my library research, most of the scholarly materials available identify the cost of housing as the root cause of the high cost of living in the state of California. For instance, a book by Alamo, Uhler, and O'Malley (2015) states that homes in California have been quite costly than any other part of the country. I also found another book titled Generation Priced Out: Who Gets to Live in the New Urban America, with a New Preface by Randy Shaw. This book also talks about how the high cost of housing and rent in the state are contributing to the high cost of living (Shaw). It therefore means that housing is a key factor in determining the high cost of living in California, and this has been identified by academic researchers and authors.

Conclusion

The cost of living in California has been identified as one of the highest in the country. The rise in the state’s cost of living is attributed to high cost of housing than any other factor. The high cost of homes in the California is caused by the expensive land and high cost of labor. Further, the fees charged, including taxes, permits, and fees by construction companies are all contributing to the high costs of housing.

Living in California is so expensive that many unaffordable residents leave the state. But a lot of rich people are moving into California. I like watching NBA very much, many stars want to join Los Angeles Lakers or Golden State Warriors, the reason is they like the life in California, they will have more media exposure in California, the most important is they can afford living expenses. But for students like me who don't have enough financial resources, living in California still has some difficulties.

People should care about the cost of living in California because it may affect their quality of life in one way or the other. Residents and those planning to move into the state are likely to lead a low quality life especially if their incomes are not can afford with the state’s cost of living. With a high cost of life, middle and low-income person of California would find themselves struggling to spend much of their income on daily necessities, like me. In such a situation, they will not be able to save for their self-development. There seems to be no way of seeing the high cost of living in California differently. However, if someone is not extremely rich, he/she should avoid settling in the state. California should be left for the richman.

Works Cited Alamo, Chas, Brian Uhler and Marianne O'Malley. California's High Housing Costs: Causes and Consequences. Sacramento, California: Legislative Analyst's Office, 2015. Web. Carter, Shawn M. This is the No. 1 source of financial stress in California—and it’s not debt or the high cost of housing. 24 August 2018. <https://www.cnbc.com/2018/08/23/the-top-source-of-financial-stress-in-california-isnt-pricey-housing.html>. Fuller, Thomas. "Why Does It Cost $750,000 to Build Affordable Housing in San Francisco?" 20 February 2020. The New York Times. https://www.nytimes.com/2020/02/20/us/California-housing-costs.html. 21 February 2020. Josephson, Amelia. The Cost of Living in California. 28 May 2019. <https://smartasset.com/mortgage/the-cost-of-living-in-california>. Michels, Greg. Governments of California 2019. Municipal Analysis Services, Inc, 2018. Web. Shaw, Randy. Generation Priced Out: Who Gets to Live in the New Urban America, with a New Preface. Berkeley, California: Univ of California Press, 2020. Web. The Economist. "Many people are moving from California to Texas." 20 June 2019. The Economist. Web. 21 February 2020.