Tuesday, July 1, 2008

Tulsa ranks high on Salary.com's "salary value" list - but I don't buy it

Tulsa ranked high on salary.com's list of cities for building personal wealth, coming in at number 12 out of 69 listed. The index is based on:

local salaries, cost of living, and unemployment relative to the national average. This year's list also factored in qualitative measures including diversity of industry, education level of the cities' population, proximity to post secondary institutions, percent of population below poverty level, and median travel time to work

Let's compare Tulsa to, say, Portland, Oregon, which was listed at number 33 in the list.

While it is true that the cost of real estate and rental housing in Portland is higher than Tulsa, there are at least four things about Portland that make me question the study's findings.

1) Necessity of car ownership.

In Tulsa, you absolutely have to own a car, because we have an extremely limited and ineffective public transportation system. Cars come with a lot of expenses - gas, insurance, maintenance, etc. My partner and I estimated recently that between gas, car insurance, and maintenance, we spend $500 to $600 per month just to own both of our cars.

Portland has a robust public transportation system, composing light rail, buses, and commuter trains. Car ownership is not at all necessary. By my calculations, that adds up to a huge savings. True, there is a cost associated with using public transportation, but it doesn't approach what one spends owning a car.

2) Sales tax.

Tulsa has a huge sales tax. Portland has none. Now, Portland does have a local income tax, which may make this calculation a wash, but I would still argue that replacing a regressive sales tax with a non-regressive income tax makes a difference as far as disposable income.

3) Real estate costs offset by higher salaries

Tulsa may have really cheap real estate and incredibly low rents on apartments, but salaries for certain jobs are also relatively low.

For example, a paralegal living in Tulsa can expect to make between $25,000 and $35,000, which is perfect when rent on an average 1 bedroom apartment is below $500.

A paralegal living in Portland can expect to start at $40,000, and go as high as $55,000 or $60,000. That increase in salary offsets the fact that a 1 bedroom apartment in Portland generally runs between $600 and $1,000 per month.

4) Proximity to post-secondary education

Tulsa should be way down the list on this one. Tulsa has zero fully functional public universities within its city limits. It has a (not fully accredited) community college that partners with a four year college (TCC / OSU-Tulsa), and a very limited OU campus. It also has two private universities (ORU and TU).

Portland has Portland State University, a fully functional public institution, with a full range of undergraduate and graduate programs. It also has the Oregon Health & Sciences University. In addition, it has a number of community colleges, along with several private colleges and universities.

Thus, I'm a little skeptical about the findings of this report, and I would argue that the factors I listed above would necessarily push Tulsa farther down the list in favor of cities with no sales tax, a robust public transit system, a salary structure that offsets a higher cost of living, and real access to post-secondary public education.