Buying Power Index Class of 2010 Forum

[RMstratosphere]

http://www.nalp.org/buying_power_index_class_of_2010

"The BPI was calculated using New York City's median reported private practice salary for the Class of 2010 and cost of living as the benchmark. New York City's BPI is thus 1.00. BPI's for other cities show how much buying power the median reported law firm salary for the Class of 2010 in that city provides compared with the New York City median."

In order, the cities with the highest BPI are:

1. Dallas
2. Houston
3. Atlanta
4. Chicago
5. Boston
6. Los Angeles
7. Birmingham
8. Washington, D.C.
9. St. Louis
10. Newport Beach

Other notables...
14. Palo Alto
23. San Francisco
43. New York City

[c3pO4]

According to one of my stats/cs friends, their methodology was SPS and makes no sense. For whatever it's worth. I tend to agree that having lived in SF, I can't believe their stats on how much cheaper it is than NYC. Also the idea that 70k in Atlanta = 160k in NYC is highly suspect to me. I know people who make 70k in ATL and they are by no means living anything close to the high life.

[5ky]

According to one of my stats/cs friends, their methodology was SPS and makes no sense. For whatever it's worth. I tend to agree that having lived in SF, I can't believe their stats on how much cheaper it is than NYC. Also the idea that 70k in Atlanta = 160k in NYC is highly suspect to me. I know people who make 70k in ATL and they are by no means living anything close to the high life.

tbf, people making 160k in NY aren't exactly "living the high life" either.

[Transferthrowaway]

According to one of my stats/cs friends, their methodology was SPS and makes no sense. For whatever it's worth. I tend to agree that having lived in SF, I can't believe their stats on how much cheaper it is than NYC. Also the idea that 70k in Atlanta = 160k in NYC is highly suspect to me. I know people who make 70k in ATL and they are by no means living anything close to the high life.

tbf, people making 160k in NY aren't exactly "living the high life" either.

160k in NYC is comfortably middle class.

[romothesavior]

According to one of my stats/cs friends, their methodology was SPS and makes no sense. For whatever it's worth. I tend to agree that having lived in SF, I can't believe their stats on how much cheaper it is than NYC. Also the idea that 70k in Atlanta = 160k in NYC is highly suspect to me. I know people who make 70k in ATL and they are by no means living anything close to the high life.

tbf, people making 160k in NY aren't exactly "living the high life" either.

160k in NYC is comfortably middle class.

70k in Atlanta is as well.

[RMstratosphere]

The figures are obviously a bit outdated (e.g., market rate in Chicago is not $145k) but I think the graph still provides a useful rough approximation of BPI.

[Grizz]

My bro bro (single guy) in ATL makes $50k, gets drunk every night, and spends his excess income on expensive guns.

[Anonymous User]

$50K in ATL is by no means a luxurious lifestyle, but it'll afford you a decent apartment in a decent neighborhood (read: ITP, north of Ponce; east of 75/85), car, and going out/shopping money.

[de5igual]

sorry, anon abuse. that was me.

[c3pO4]

I'll put it another way. I know people who make 160k in NYC and ppl who make 70k in ATL. Lifestyles of the NYC ppl are much more lavish.

[BruceWayne]

I'll put it another way. I know people who make 160k in NYC and ppl who make 70k in ATL. Lifestyles of the NYC ppl are much more lavish.

Then your Atlanta friends are very cheap.

[Grizz]

I'll put it another way. I know people who make 160k in NYC and ppl who make 70k in ATL. Lifestyles of the NYC ppl are much more lavish.

Then your Atlanta friends are very cheap.

Worthwhile thread bump

[klaatu]

THese things are always so dumb - living in NYC is a consumption choice. So yeah, a 70k salary in Atlanta is the same thing as 160k in NYC only if you think that an apartment in Atlanta is the same thing as an apartment in NYC. Which is sort of like saying that a Toyota Corolla is the same as a Bentley, since they're both cars.

[r6_philly]

THese things are always so dumb - living in NYC is a consumption choice. So yeah, a 70k salary in Atlanta is the same thing as 160k in NYC only if you think that an apartment in Atlanta is the same thing as an apartment in NYC. Which is sort of like saying that a Toyota Corolla is the same as a Bentley, since they're both cars.

That's a bad example. There are qualitative/objective differences between a Corolla and a Bentley, but an apartment in NY may be the same as an apartment in ATL (size, amenities, quality of materials, layout, etc.). The difference is the surroundings/outside the actual housing unit, which is of course subjective. Buying power measures what you can buy objectively - if an apartment has the same size, build material, layout, and features, but cost $1000/month in ATL and $6000/month in NYC. That's what buying power measures.

It would be like comparing a Bentley costing $250k here in US but costing $1M in China or something like that. They look at price index of the SAME commodities.

[Wholigan]

This is not going to be exactly accurate, because they are using the same "basket" of products for each city and ignoring the fact that you will be less likely to use certain consumer products in some markets. For example, it factors in the cost of owning, insuring and parking a car in Atlanta, vs. doing so in NYC. Of course, the cost to do this is exorbitant in NYC, and therefore very few associates will own a car in NYC. Same goes for house/apartment size - it pulls the cost for the same number of square footage in all locations, when realistically, you would just have a smaller apartment in NY than you would in a market where housing is cheap.

Further, even if all of the assumptions were accurate, this chart is only useful for someone without costs which are fixed no matter where you live (e.g. loans). For someone paying off student loans, the payment on your loans is going to be exactly the same whether you live in NYC or Atlanta. For example, if you will be paying $2k/month on loans (or $~3k/month in pretax salary), you would need to deduct $36k/year from those gross salary figures before doing the conversion. Anyone still want to argue that for someone with loans, $124k in NYC is the same as $34k in Atlanta?

[r6_philly]

Further, even if all of the assumptions were accurate, this chart is only useful for someone without costs which are fixed no matter where you live (e.g. loans). For someone paying off student loans, the payment on your loans is going to be exactly the same whether you live in NYC or Atlanta. For example, if you will be paying $2k/month on loans (or $~3k/month in pretax salary), you would need to deduct $36k/year from those gross salary figures before doing the conversion. Anyone still want to argue that for someone with loans, $124k in NYC is the same as $34k in Atlanta?

No, use IBR. And you pay less taxes. They should use after-tax/take-home income for comparison.

[Wholigan]

Further, even if all of the assumptions were accurate, this chart is only useful for someone without costs which are fixed no matter where you live (e.g. loans). For someone paying off student loans, the payment on your loans is going to be exactly the same whether you live in NYC or Atlanta. For example, if you will be paying $2k/month on loans (or $~3k/month in pretax salary), you would need to deduct $36k/year from those gross salary figures before doing the conversion. Anyone still want to argue that for someone with loans, $124k in NYC is the same as $34k in Atlanta?

No, use IBR. And you pay less taxes. They should use after-tax/take-home income for comparison.

Well, yeah, but the table the OP linked to was designed to calculate biglaw salaries, which wouldn't qualify for IBR.

[r6_philly]

Well, yeah, but the table the OP linked to was designed to calculate biglaw salaries, which wouldn't qualify for IBR.

IBR is actually applicable up to a very high income amount for borrowers married with dependents.

for example. Combined income with 2 kids, with $200k in loans

IBR/month: $2080 ($200k income) $1580 ($160k income) $1080 ($120k income)
Standard: $2301/Month (same $200k loans)

[klaatu]

THese things are always so dumb - living in NYC is a consumption choice. So yeah, a 70k salary in Atlanta is the same thing as 160k in NYC only if you think that an apartment in Atlanta is the same thing as an apartment in NYC. Which is sort of like saying that a Toyota Corolla is the same as a Bentley, since they're both cars.

That's a bad example. There are qualitative/objective differences between a Corolla and a Bentley, but an apartment in NY may be the same as an apartment in ATL (size, amenities, quality of materials, layout, etc.). The difference is the surroundings/outside the actual housing unit, which is of course subjective. Buying power measures what you can buy objectively - if an apartment has the same size, build material, layout, and features, but cost $1000/month in ATL and $6000/month in NYC. That's what buying power measures.

It would be like comparing a Bentley costing $250k here in US but costing $1M in China or something like that. They look at price index of the SAME commodities.

I'm not sure that this distinction between subjective and objective really holds. An apartment in NYC is not the same as an apartment in Atlanta for the reason that it's in freaking NYC and not in Atlanta, and it doesn't matter whether the "objective" measurements such as size are equal. You never heard that the three most important things in real estate are "location, location, location"?

In other words, a 70k income in Atlanta may be able to afford you a certain size apartment *in Atlanta* but not in NYC, so it's really not the same thing at all.

[ColtsFan88]

THese things are always so dumb - living in NYC is a consumption choice. So yeah, a 70k salary in Atlanta is the same thing as 160k in NYC only if you think that an apartment in Atlanta is the same thing as an apartment in NYC. Which is sort of like saying that a Toyota Corolla is the same as a Bentley, since they're both cars.

That's a bad example. There are qualitative/objective differences between a Corolla and a Bentley, but an apartment in NY may be the same as an apartment in ATL (size, amenities, quality of materials, layout, etc.). The difference is the surroundings/outside the actual housing unit, which is of course subjective. Buying power measures what you can buy objectively - if an apartment has the same size, build material, layout, and features, but cost $1000/month in ATL and $6000/month in NYC. That's what buying power measures.

It would be like comparing a Bentley costing $250k here in US but costing $1M in China or something like that. They look at price index of the SAME commodities.

I'm not sure that this distinction between subjective and objective really holds. An apartment in NYC is not the same as an apartment in Atlanta for the reason that it's in freaking NYC and not in Atlanta, and it doesn't matter whether the "objective" measurements such as size are equal. You never heard that the three most important things in real estate are "location, location, location"?

In other words, a 70k income in Atlanta may be able to afford you a certain size apartment *in Atlanta* but not in NYC, so it's really not the same thing at all.

LOL, you win,

Anyone know where Indianapolis falls on the list?

[Julio_El_Chavo]

160k in Houston FTW.

[AreJay711]

160k in Houston FTW.

Yeah, this.

Also, DC is pretty cheap if you live in Alexandria or Arlington VA or down by the Navy Yards (AreJay's surefire real estate investment of the next 5 -10 years).

[r6_philly]

In other words, a 70k income in Atlanta may be able to afford you a certain size apartment *in Atlanta* but not in NYC, so it's really not the same thing at all.

That's correct, but then why bother with the comparison. The premise is that we can compare these sort of objective value without counting the subjective preferences. Otherwise no amount of income in ATL can compare to any income in NYC because you can't buy a life of NYC.

[ColtsFan88]

In other words, a 70k income in Atlanta may be able to afford you a certain size apartment *in Atlanta* but not in NYC, so it's really not the same thing at all.

That's correct, but then why bother with the comparison. The premise is that we can compare these sort of objective value without counting the subjective preferences. Otherwise no amount of income in ATL can compare to any income in NYC because you can't buy a life of NYC.

Exactly bro! NYC for lyfe.

[Wholigan]

Well, yeah, but the table the OP linked to was designed to calculate biglaw salaries, which wouldn't qualify for IBR.

IBR is actually applicable up to a very high income amount for borrowers married with dependents.

for example. Combined income with 2 kids, with $200k in loans

IBR/month: $2080 ($200k income) $1580 ($160k income) $1080 ($120k income)
Standard: $2301/Month (same $200k loans)

Even for the small percentage of associates who would qualify for IBR working biglaw, it's probably not worth using it unless you are desperate. If you qualify for IBR with $200k in loans and use it, you will never pay off any principal, only interest, and if you're not in public service, you have to pay the loans for at least 25 years before remaining balances are forgiven. Most people would rather use that biglaw salary to try to get out from under the loans.