Step 1: Formulating the Problem
I hate moving. I refuse to do it more than once in five years. However, I will relocate for good reason. Now I’ve been in one spot for six years. I am not tied down to an employer and, sadly but importantly, my cat only has a few months to live. In a nutshell, I am completely liberated to move anywhere I want. So … wow, where do I go from here?
I came to Los Angeles two decades ago for law school, and I’ve been here ever since. Most people’s response is, “OMG; LA?! it’s so expensive there!” Now, that’s only half the story, but it’s the half that everyone thinks of (probably because most people are not self-employed but think in terms of fixed salaries). LA is also known as an exceptionally large market with strong earning opportunities. I’d be likely to earn less anywhere else. But so far this is all conjecture. Some locations must be more profitable than others, and I might as well identify the best. It’s not a decision I’d base on word-of-mouth. So now I am on a quest, a data-mining-and-analysis-quest, for the most profitable location to live. I will only undertake a long-distance move if it would clearly offer a more profitable lifestyle than I could find locally.
Note that my operative criterion is “profitable”. The business mandate is to maximize profit: revenues minus expenses. For a person, this translates to:
PERSONAL PROFIT = TAKE HOME PAY – RENT
Modeling notes: This assumes that non-rent expenses would be pretty much constant, i.e. it would cost roughly the same to eat, make car payments, or visit the doctor no matter where I lived, and that rent would dwarf any other single expense anyway. Local or state taxes could have an appreciable impact on take-home pay.
For many people, relocation is all about jobs. That’s not my circumstance. I am pretty much a confirmed entrepreneur. I’m going to turn 50 next year never having held a long-term / full-time job. I think it’s safe to say that sending out resumes will be a waste of time. I’ve been self-employed for years as a small-business lawyer and a higher-ed tutor. (I’m the only known tutorney, thank you very much). Therefore, my livelihood depends on access to clients with disposable income. If rent were no concern, my ideal location would be an urban neighborhood densely packed with rich people. The nice thing about derived income is that it doesn’t matter what the local industry is. I wouldn’t have to know coding to live in San Jose, banking to live in Manhattan, or lobbying to live in DC. I’d simply offer my services to those who do. The more they earn, the more I earn — though not necessarily as much as them.
As a secondary concern, California has such high income tax that I’m starting to notice it as an avoidable drag on take-home pay.
Of course, rent is a concern. That’s why, in LA, I live as close as I can to dense, rich neighborhoods like Santa Monica and Beverly Hills without actually living in them myself. The cost of doing business takes a great bite out of my take-home pay, too; I have to pay rent for my office as well as my apartment. If income were no concern, my ideal location would be a trailer park in Mississippi. But of course, local clients would be few and far between.
That raises the interesting question of online work. I do have a couple of law-office clients now who would continue working with me remotely wherever I went. That’s not enough to keep me afloat, though, and I would have a lot of trouble finding new clients strictly online.
The goal: A lucky balance
So I need to find a location where income is randomly high and rent is randomly low. I can’t think of a place that would score well on both for obvious reasons. This will clearly require some data mining. Only after I scout out some of the luckiest locations will I know if there is a slam-dunk winner. I don’t even know whether inter-city or intra-city variation is higher yet.
The sheer numbers will be only a starting point. I’d still have to figure out the logistics of getting to know the local markets and demographics, finding new business, commuting from home to work, etc. Starting business over is very difficult. I know LA pretty well, and, if nothing else, I am established here. A major relocation would involve a leap of faith. It’s also important to consider the supply side of my industries, i.e. the density of test-prep centers or attorneys nearby. I am only licensed to practice law in California, so moving to a different state would also involve the extra step of taking another bar exam.
Here are some obvious candidates for my first round of comparisons:
- Locations known for high income (Malibu, NYC)
- Locations known for low rent (Palmdale, Detroit)
- Locations toted as having a favorable “index of living” or “local purchasing power”
- Locations as specific as possible.
- Numerous neighborhoods within the LA metropolitan area and numerous locations elsewhere.
- And of course, I’ll also see how my family’s locales stack up. I have a brother, sister, and parents in three completely disparate communities in different states.
For each location, key variables will include median income per capita and median rent. Those figures are available for almost every city, county, and metropolitan area in the US at www.DeptOfNumbers.com , which uses data from the US Census Bureau’s American Community Survey (which apparently updates annually). I might also be able to find a breakdown of income and / or rent by US Census tract; income is mapped out very nicely at https://project.wnyc.org/median-income-nation/#5/38.630/-95.890 .
This will obviously be an ongoing series. Next time, I will post my initial findings. Let me know if you have any information about affordable locales or thoughts about my modeling.