NALP Buying Power Index 2011, or, Why New York is Overrated

(On Campus Interviews, Summer Associate positions, Firm Reviews, Tips, ...)
Forum rules
Anonymous Posting

Anonymous posting is only appropriate when you are revealing sensitive employment related information about a firm, job, etc. You may anonymously respond on topic to these threads. Unacceptable uses include: harassing another user, joking around, testing the feature, or other things that are more appropriate in the lounge.

Failure to follow these rules will get you outed, warned, or banned.

User avatar
thesealocust
Posts: 8446
Joined: Mon Oct 20, 2008 8:50 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby thesealocust » Thu Jan 10, 2013 11:38 pm

ph14 wrote:http://www.nalp.org/buying_power_index_class_of_2011


Breaking news, New York is expensive. More at 11.

For a fun mental exercise, see if you can puzzle out why New York is expensive.

User avatar
ph14
Posts: 3225
Joined: Mon Sep 12, 2011 11:15 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby ph14 » Thu Jan 10, 2013 11:38 pm

thesealocust wrote:
ph14 wrote:http://www.nalp.org/buying_power_index_class_of_2011


Breaking news, New York is expensive. More at 11.

For a fun mental exercise, see if you can puzzle out why New York is expensive.


Too busy bathing in my pool full of gold coins that I saved by not living in New York.

User avatar
Blessedassurance
Posts: 2081
Joined: Mon Jun 27, 2011 3:42 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby Blessedassurance » Thu Jan 10, 2013 11:46 pm

Glad to see this post.

admisionquestion
Posts: 473
Joined: Sun Sep 26, 2010 12:16 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby admisionquestion » Fri Jan 11, 2013 12:02 am

This is great information to have laid out for people but this thread itself is misleading. Saying NYC is overrated is jumping to conclusions a bit too quickly.

The complaint I have is that people are likely to read this and say, "living in NYC with a salary of 160K is worse than living in Ft Worth with a salary of 85,000."

But debt is not dependent on cost of living...

Now mark them down to post tax earnings: Simple estimates using http://www.adp.com/tools-and-resources/ ... lator.aspx

102,627.19 NYC
61,868.75 Tex

Okay, then subtract out the amount you ACTUALLY need to live on post tax not including debt payments.

I would say 45K in NYC (I can attest to this being feasible) and (I'm really BS'ing here but the point will still be clear I'm gonna say 36*1.249 i.e. the same 45K in buying power) and you end up with a annual "profit" of:

102,627.19 - 45,000 = 57,627 NYC
61,868.75 - 45,000 = 25,868 TEX

Now, the question is: How quickly can you pay off your debt using this left over money, you start with 150K?

Imagine a 7% interest rate.

With the NYC payment schedule you COULD be out of debt in around 3 years. If you actually do that is up to you of course... but the point is that it is realistically possible. Even if you dispute the numbers exactly, the IDEA I am making is going to be true enough.

However, on the Tex budget, you COULD be out of debt in around 8 years.

Now, I understand that this is a VERY simple model... it does not factor in bonuses, raises, social pressures to spend that exist in NYC that don't in DFW and so on... However, I just wanted to raise attention to this since people are claiming NYC is "over rated"

User avatar
IAFG
Posts: 6665
Joined: Mon Jun 15, 2009 1:26 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby IAFG » Fri Jan 11, 2013 12:04 am

thesealocust wrote:
ph14 wrote:http://www.nalp.org/buying_power_index_class_of_2011


Breaking news, New York is expensive. More at 11.

For a fun mental exercise, see if you can puzzle out why New York is expensive.

Oh I know why! Really shitty zoning laws.

User avatar
dingbat
Posts: 4976
Joined: Wed Jan 11, 2012 9:12 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby dingbat » Fri Jan 11, 2013 12:07 am

admisionquestion wrote:stuff
and here I thought it was just more fun to live in NY than in wherever it was you're comparing it to.

User avatar
ph14
Posts: 3225
Joined: Mon Sep 12, 2011 11:15 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby ph14 » Fri Jan 11, 2013 12:10 am

admisionquestion wrote:This is great information to have laid out for people but this thread itself is misleading. Saying NYC is overrated is jumping to conclusions a bit too quickly.

The complaint I have is that people are likely to read this and say, "living in NYC with a salary of 160K is worse than living in Ft Worth with a salary of 85,000."

But debt is not dependent on cost of living...

Now mark them down to post tax earnings: Simple estimates using http://www.adp.com/tools-and-resources/ ... lator.aspx

102,627.19 NYC
61,868.75 Tex

Okay, then subtract out the amount you ACTUALLY need to live on post tax not including debt payments.

I would say 45K in NYC (I can attest to this being feasible) and (I'm really BS'ing here but the point will still be clear I'm gonna say 36*1.249 i.e. the same 45K in buying power) and you end up with a annual "profit" of:

102,627.19 - 45,000 = 57,627 NYC
61,868.75 - 45,000 = 25,868 TEX

Now, the question is: How quickly can you pay off your debt using this left over money, you start with 150K?

Imagine a 7% interest rate.

With the NYC payment schedule you COULD be out of debt in around 3 years. If you actually do that is up to you of course... but the point is that it is realistically possible. Even if you dispute the numbers exactly, the IDEA I am making is going to be true enough.

However, on the Tex budget, you COULD be out of debt in around 8 years.

Now, I understand that this is a VERY simple model... it does not factor in bonuses, raises, social pressures to spend that exist in NYC that don't in DFW and so on... However, I just wanted to raise attention to this since people are claiming NYC is "over rated"


But other cities in Texas pay $115,000 (Houston) and $135,000 (Dallas). And there are biglaw firms there that pay $160,000 I believe. But what was more striking to me was other top tier American cities had so much more buying power: Los Angeles (1.648), Boston (1.594), Washington D.C. (1.527).

User avatar
BruceWayne
Posts: 2032
Joined: Sat Aug 14, 2010 9:36 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby BruceWayne » Fri Jan 11, 2013 12:10 am

It doesn't matter if debt is not dependent on COL because taxes and your biggest fixed expense--housing--does; in fact extraordinarily so.

If you are getting payed 135K in Atlanta with a much lower tax rate and where even luxury apartments are only going to be $1100 (and if you're interested in watching your money $800) a month, you are going to come out far ahead of 160K in NYC where a decent 1 bedroom will cost you $2500 a month if you're lucky. The fact that you will be up or outed from your NYC firm job by year 4, whereas you have a legit chance of lasting as much as 7 or 8 years in Atlanta, seals the deal. For a city like Atlanta we're talking a 200% difference in COL but only a 135 vs. 160k salary difference.

User avatar
thelawyler
Posts: 902
Joined: Wed Apr 13, 2011 9:00 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby thelawyler » Fri Jan 11, 2013 12:12 am

dingbat wrote:
admisionquestion wrote:stuff
and here I thought it was just more fun to live in NY than in wherever it was you're comparing it to.


We're on TLS - we don't know what fun is.

admisionquestion
Posts: 473
Joined: Sun Sep 26, 2010 12:16 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby admisionquestion » Fri Jan 11, 2013 12:30 am

BruceWayne wrote:If you are getting payed 135K in Atlanta with a much lower tax rate and where even luxury apartments are only going to be $1100 (and if you're interested in watching your money $800) a month, you are going to come out far ahead of 160K in NYC where a decent 1 bedroom will cost you $2500 a month if you're lucky.



Please don't call my 1300 a month Manhattan 1br indecent.

User avatar
IAFG
Posts: 6665
Joined: Mon Jun 15, 2009 1:26 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby IAFG » Fri Jan 11, 2013 12:31 am

admisionquestion wrote:
BruceWayne wrote:If you are getting payed 135K in Atlanta with a much lower tax rate and where even luxury apartments are only going to be $1100 (and if you're interested in watching your money $800) a month, you are going to come out far ahead of 160K in NYC where a decent 1 bedroom will cost you $2500 a month if you're lucky.



Please don't call my 1300 a month Manhattan 1br indecent.

how many sq ft and if it is a walkup how many floors

admisionquestion
Posts: 473
Joined: Sun Sep 26, 2010 12:16 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby admisionquestion » Fri Jan 11, 2013 12:35 am

IAFG wrote:
admisionquestion wrote:
BruceWayne wrote:If you are getting payed 135K in Atlanta with a much lower tax rate and where even luxury apartments are only going to be $1100 (and if you're interested in watching your money $800) a month, you are going to come out far ahead of 160K in NYC where a decent 1 bedroom will cost you $2500 a month if you're lucky.



Please don't call my 1300 a month Manhattan 1br indecent.

how many sq ft and if it is a walkup how many floors


4th floor and 650

User avatar
Tiago Splitter
Posts: 15489
Joined: Tue Jun 28, 2011 1:20 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby Tiago Splitter » Fri Jan 11, 2013 12:53 am

BruceWayne wrote:It doesn't matter if debt is not dependent on COL because taxes and your biggest fixed expense--housing--does; in fact extraordinarily so...If you are getting payed 135K in Atlanta with a much lower tax rate...

The tax differences aren't that big. And the biggest fixed expense for people with 200K+ in debt is loan repayments.

Now when the comparison is 135K in Atlanta vs. 160K in NYC then of course Atlanta is better (ETA: The table says median in ATL is only 90K), but that's not what the guy you were responding to was pointing out. He was saying that the calculator in the OP isn't as useful for someone with big law school debt because the calculator suggests making 85K in DFW is better than making 160K in NYC regardless of debt. This might not even be true if you've got no debt to worry about, and it's certainly not true if you do.
Last edited by Tiago Splitter on Fri Jan 11, 2013 1:01 am, edited 1 time in total.

User avatar
Tiago Splitter
Posts: 15489
Joined: Tue Jun 28, 2011 1:20 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby Tiago Splitter » Fri Jan 11, 2013 1:00 am

ph14 wrote:what was more striking to me was other top tier American cities had so much more buying power: Los Angeles (1.648), Boston (1.594), Washington D.C. (1.527).

Yeah it was certainly news to me to find that making 104K in Orange County is the same as making 160K in NYC. I mean are you fucking kidding?

User avatar
ndirish2010
Posts: 2950
Joined: Mon Dec 14, 2009 4:41 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby ndirish2010 » Fri Jan 11, 2013 1:03 am

Just would like to complain that Indianapolis is not on the list. Several cities on the list are less "major" than Indy.

imchuckbass58
Posts: 1245
Joined: Mon Mar 16, 2009 3:24 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby imchuckbass58 » Fri Jan 11, 2013 1:13 am

Tiago Splitter wrote:
BruceWayne wrote:It doesn't matter if debt is not dependent on COL because taxes and your biggest fixed expense--housing--does; in fact extraordinarily so...If you are getting payed 135K in Atlanta with a much lower tax rate...

The tax differences aren't that big. And the biggest fixed expense for people with 200K+ in debt is loan repayments.

Now when the comparison is 135K in Atlanta vs. 160K in NYC then of course Atlanta is better (ETA: The table says median in ATL is only 90K), but that's not what the guy you were responding to was pointing out. He was saying that the calculator in the OP isn't as useful for someone with big law school debt because the calculator suggests making 85K in DFW is better than making 160K in NYC regardless of debt. This might not even be true if you've got no debt to worry about, and it's certainly not true if you do.


Cost of living indexes are also notoriously flawed because they're composed of a very select basket of goods that doesn't typically reflect overall spending (food, housing, transport). Aside from debt, there are many things you buy that cost the same everywhere (an iphone, books, cars, a TV, etc).

User avatar
dingbat
Posts: 4976
Joined: Wed Jan 11, 2012 9:12 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby dingbat » Fri Jan 11, 2013 8:41 am

Tiago Splitter wrote:
ph14 wrote:what was more striking to me was other top tier American cities had so much more buying power: Los Angeles (1.648), Boston (1.594), Washington D.C. (1.527).

Yeah it was certainly news to me to find that making 104K in Orange County is the same as making 160K in NYC. I mean are you fucking kidding?

depends on where in OC you're living (or where in NY for that matter). If they're comparing garbage grove to Manhattan, yeah that sounds realistic. The other way around, comparing Bensonhurst to Newport beach, the opposite would be true.
I have a feeling that these things count Manhattan south of 110th street, but for other locations it averages the whole city

NotMyRealName09
Posts: 1394
Joined: Mon Nov 09, 2009 5:50 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby NotMyRealName09 » Fri Jan 11, 2013 2:24 pm

Just saying, in a place like Detroit (actually the suburbs) the 3000 sq ft home is alive and well at $100k a year.

User avatar
jkpolk
Posts: 896
Joined: Thu Nov 10, 2011 10:44 am

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby jkpolk » Fri Jan 11, 2013 2:49 pm

ndirish2010 wrote:Just would like to complain that Indianapolis is not on the list. Several cities on the list are less "major" than Indy.


lol'd

User avatar
Wholigan
Posts: 763
Joined: Sat Jan 29, 2011 4:51 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby Wholigan » Fri Jan 11, 2013 3:14 pm

What admisionquestion said is spot on about loans. Of course your first year associate salary is not going to take you as far in NY as most other places, but it's not to the extent suggested by these ratios, due to the basket of goods that imchuckbass brought up. Most first year associates going to NY won't be paying for things like car ownership or private schools that drive up the ratio in a place like NYC.

Also, if you look past first year, a 4th year in NYC is typically at 210k + 20k bonus for $230k total comp. I believe that most other markets that start at $160k are going to be 30-40k behind at that point in terms of gross comp.

dixiecupdrinking
Posts: 3141
Joined: Sun Oct 26, 2008 2:39 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby dixiecupdrinking » Fri Jan 11, 2013 3:59 pm

NYC is expensive. Not as much more expensive as these calculations make it seem. There are luxuries you could have anywhere else on a decent salary that you can't have in NYC unless you're rich, and there are luxuries you can have in NYC that you can't have in most other cities at any price. The end.

bhan87
Posts: 850
Joined: Mon Mar 12, 2007 8:08 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby bhan87 » Fri Jan 11, 2013 4:05 pm

Whoopdeedoo NY is expensive. But wait, aren't most of the legal jobs there? Buying power in other cities > buying power in NY, but buying power in NY >>>>>>>>>>>>>>>>>>>>>>>>>>>> buying power with no job.

keg411
Posts: 5935
Joined: Tue Apr 21, 2009 9:10 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby keg411 » Fri Jan 11, 2013 4:55 pm

bhan87 wrote:Whoopdeedoo NY is expensive. But wait, aren't most of the legal jobs there? Buying power in other cities > buying power in NY, but buying power in NY >>>>>>>>>>>>>>>>>>>>>>>>>>>> buying power with no job.


Basically this. If you can get a $100k+ job outside of New York in a low COL area, you either got lucky, have major ties, or your grades are awesome (and I don't cout SF, LA, or DC as low COL areas).

User avatar
ph14
Posts: 3225
Joined: Mon Sep 12, 2011 11:15 pm

Re: NALP Buying Power Index 2011, or, Why New York is Overrated

Postby ph14 » Fri Jan 11, 2013 5:00 pm

keg411 wrote:
bhan87 wrote:Whoopdeedoo NY is expensive. But wait, aren't most of the legal jobs there? Buying power in other cities > buying power in NY, but buying power in NY >>>>>>>>>>>>>>>>>>>>>>>>>>>> buying power with no job.


Basically this. If you can get a $100k+ job outside of New York in a low COL area, you either got lucky, have major ties, or your grades are awesome (and I don't cout SF, LA, or DC as low COL areas).


I wouldn't consider them "low" COL areas, but they certainly seem to have a leg up on New York:

Los Angeles - 1.648
Boston - 1.594
Washington D.C. - 1.527
San Francisco - 1.219 (Plus 3 suburbs at 1.456.)
Chicago - 1.192 (The $100,000 median in Chicago surprised me. I thought it would have been a bit higher and thus end up higher on the buying power rankings.)




Return to “Legal Employment”

Who is online

The online users are hidden on this forum.