Far from the big city, new economic life
Research by Rebecca Diamond, an economist at Stanford University, and Enrico Moretti, an economist at the University of California at Berkeley, explains the attraction. They determined how costs affect the standard of living in various parts of the country.
Workers without a four-year college degree earn little in the Cookeville commuter zone — their income puts them among the poorest 10% of households in hundreds of commuter zones across the country. However, after adjusting for the local cost of living, their purchasing power reaches the richest 10%.
They can live a more comfortable life than if they moved to a big city, like Nashville or Knoxville. According to the work of Ms. Diamond and Mr. Moretti, which is based on 2014 data, the family income of a typical worker who never finished high school in Cookeville is around $43,000. In New York, it’s $58,000; in San Francisco, $62,000.
Yet, taking into account the local cost of living, workers in San Francisco and New York could afford much less – about what someone with an income of $37,000 could buy in a city like Cleveland, which ranks in the middle of the national income distribution. Workers in Cookeville, on the other hand, live as if earning $46,000 in Cleveland.
Big cities are not good business, even for highly skilled workers. They earn much higher salaries in New York than in Cookeville – indeed, college graduates reap a bigger salary premium if they work in bigger cities than their less educated peers. But according to the researchers, any additional salaries are eaten up by higher costs.
It’s mostly housing. Last November, the typical Cookeville home cost $217,303, according to Zillow. That’s a quarter of the median price of a house in Los Angeles and a sixth of the price in San Francisco. The median rent in Jackson County is $548 per month.
Housing costs put a big dent in the case of urban America. “If you’re trying to raise people’s standard of living, you want to get them away from big cities, not into them,” said Jesse Rothstein, an economist at the University of California, Berkeley. He wrote a research paper with David Card, his colleague at Berkeley, and Moises Yi of the Census Bureau that pours more cold water on the supposed benefits of America’s megacities.