Friday, September 16, 2016

Trigaux's Gloomy Observation Made Not So Gloomy

Bob Trigaux accurately observed that in a list of the top 25 metros, Tampa Bay was dead last for median income - leading him to assert that "we are poor"

Sounds nice, except you can't make an apples to apples comparison of the markets included in this report.  I speculated that two factors work to Tampa Bay's income disadvantage - retirees and cost of living.  I did a quick stat analysis to confirm utilizing US Census data at the county level (except for St. Louis which is split - used municipal data there).  I combined Pinellas and Hillsborough Counties for the Tampa Bay measures.  

15.8% of Tampa Bay's population is 65+, compared to 11.4% for the other 24 metros. A one percentage point increase in your 65+ population reduces your median income by $1,132. Normalize Tampa Bay's population to the group average, and that's an extra $5k accounted for by our comparatively larger retired population - people with minimal incomes, but also likely with reserves/savings.

Furthermore, the average cost of living for the other 24 metros is 14% above the national index. Tampa Bay? 2% below it. A one percentage point increase in cost of living relative to the index increases median income by $530, as it takes more income to get people to live in more expensive places.  Normalized, that's an additional $8,500 hit Tampa Bay takes.   

What does this mean? If Tampa Bay's age and cost of living were controlled for, our median income would be $13.5k higher - putting it at $62.4k - or 15th out of the 25 metros.  Not in the top tier, but probably not "poor".  

Oh, and for those scoring at home, 65+ population and cost of living relative to the index accounted for 74% of the variance in the median incomes of these communities.