Chelan-Douglas Trends e-Newsletter


Yogi Berra once said "A nickel ain't worth a dime anymore." While intended to be funny, the truth is nickels and dimes provide different consumer purchasing power across different parts of the U.S. So, how do we really know how much it costs to live in any given area? The Cost of Living Index, or more formally known as the Metro Area Regional Price Parity (RPP) provides some answers.

According to the source for this indicator, the Bureau of Economic Analysis (BEA), RPP's "measure the differences in price levels across states and metropolitan areas for a given year…cover[ing] all consumption goods and services, including rents."

Price levels are determined by using the estimated average consumer costs for goods and services calculated by the Consumer Price Index (CPI). Since there are only 38 CPI areas in the U.S., the CPI score of the Seattle-Tacoma-Bellevue MSA is used to create a weighted CPI score for Chelan & Douglas Counties. Next, the weighted score is merged with U.S. Census American Community Survey (ACS), housing costs specific to Chelan and Douglas Counties. Although a very brief explanation, the end result is an RPP score for the combined counties.

The RPP methodology is standard and is used to calculate an RPP score for nearly 90% of the U.S. That is, it covers all the metropolitan statistical districts in the U.S. The standard methodology allows for the direct comparison of all areas where RPP scores are calculated.

The RPP methodology is designed for urban and metro areas, helping to explain why 10% of the country, which are generally very rural and sparsely populated areas, do not have RPP scores calculated or them.

More specifically, the RPP captures consumer costs in three categories: Goods, durable and nondurable consumption goods; Services-Rents, rents paid by tenants and an imputed rental value for owner-occupied dwellings; and Services-Other, services consumption products.

100 always represents the national RPP average. This allows RPP scores across the U.S. to be expressed as a percentage of the national average. In 2016, the San Jose and San Francisco MSAs registered the highest scores, at 213 and 190, respectively. Conversely, Beckley, West Virginia put up the lowest cost of living, at 78.8. How to interpret the numbers? At 97.3, the highest RPP score in the series for the two counties (2008) was 97.3% of the MSA national average. Or, one could interpret the result as the cost of living in the two counties 2.7% below the national average.

With those introductions, let's take a look at the look at the specifics of Metro Area Regional Price Parity (Cost of Living Index) indicator on the Chelan-Douglas Trends website.

One quickly sees for Chelan & Douglas Counties combined, a lower cost of living prevails than for Benton & Franklin Counties combined and especially for King and Pierce Counties combined. Additionally, the value for Chelan & Douglas Counties combined has sat well below the national average and has done so throughout the series.

More precisely during 2016, the RPP score for Chelan & Douglas Counties was 95.2 (4.8% below the national MSA average). The BEA source shows a bit of variation in the components: Goods were nearly equal to the national metro average, at 99.4. Yet, Services-Rents, which includes actual rents the computed rent cost of home ownership, came in at 89.1. A surprising result? Perhaps. Census data point so rents, not home prices, as the likely source of this relative standing, as indicator 6.2.4 shows. Services-Other registered 94.

The 2016 finding of 95.2 compares to 97.1 in Benton & Franklin Counties and 110.5 in King & Pierce Counties. So, the area is slightly less expensive than the metro due south of the Greater Wenatchee area, and not surprisingly, considerably less expensive than the central Puget Sound area.

A further surprise might be that the RPP score for Chelan & Douglas Counties has decreased over the series while both benchmarks increased. Not included in the series but offered here to help with perspective, the RPP for all the metros in Washington State during 2016 was 105.5.

So, in the eyes of those who tally for the federal government, the two counties have enjoyed a relatively low cost of living - and one that has been slowly but steadily decreasing over the past nine years. This is food for economic development thought, for sure. But the trend also represents one more reason for choosing to live and work in Chelan and Douglas Counties.

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