What is the New York Dollar
A New York Dollar is a phrase for the reduced buying potential of a U.S. dollar (USD) in the city of New York. To calculate a New York Dollar, people subtract the additional cost of living in New York City, then add the increased income residents tend to command as a result of living there. The remaining amount is a rough estimate of what a dollar is worth in this expensive city.
BREAKING DOWN New York Dollar
The phrase New York Dollar helps to illustrate how living in New York City, the city that never sleeps, is much more expensive than most other places in America. Here, a dollar earned and spent does not go as far as it would in other cities across the nation. A New York Dollar is the spending power of money, once accounting for the higher cost of living from the usually increased pay scale.
According to Nerd Wallet, New York City is the most expensive city of any in its database of 232 cities. While, on average, the pay in the city is higher than what is available elsewhere, the daily expense of living in the city is also higher and will take a significant portion of that increase in salary.
Transportation cost includes paying for public transits such as the subway and buses, as well as a taxi because, in a city of this size, few people drive their cars. Renting a parking space can cost nearly $1,000 month. Also, the city charges a 10.375% tax plus additional surtaxes on parking, garages, and motor vehicle storage.
The average rent in the city is over $3,000 per month since there is a limited amount of empty land to build on. Also, zoning limits the location of residential properties. Property taxes for rental properties are among the highest in the nation and are higher than Miami, Seattle, Washington D.C., or Boston.
Even groceries will cost more in New York City than they do in most other parts of the country. Transporting semi-trailers full of food is hard within the city, so the load must be broken into smaller units to get it to the stores. Smaller loads mean more trips, more fuel costs, and more labor costs.
Sales taxes for the State of New York are 4%, but the city adds a 4.5% city rate for purchases above $110, and there is also a district surcharge of 0.375-percent. These additional taxes mean if you eat out, pay utilities, buy clothing or furniture, get a haircut, or fulfill any other basis you will pay 8.875% in sales and use tax.
Productive Workers Earning Their New York Dollars
Forbes surveyed the salaries reported on Glassdoor to determine the median base annual wage in New York City. They found the average base pay for a worker in the U.S. in 2017 is $51,324, whereas in New York City it is $60,606
Economists believe that differences in salary cost between an expensive city like New York and much of the rest of the country results, primarily, from differences in worker productivity. Because New York is the headquarters for so many large and prominent businesses, a worker can be more productive in New York than pretty much anywhere else.
This increased productivity allows employers to raise worker pay. Increases in salary attract further economic activity, creating a virtual cycle of economic development. This economic vibrancy does not affect all prices the same. Certain goods can be imported more cheaply into New York through their international ports and will be less expensive than they are in other parts of the nation. Other purchases, like real estate, or services like those of a lawyer or tutor will be significantly higher. The rising cost of real estate in cities like New York is a particular problem for the U.S. economy today, with many economists arguing that it is hurting growth.
New York Dollar Around the World
New York is very expensive, relative to the rest of America, but many cities across the world are even more expensive. According to the World Wide Cost of Living Index, in 2018, New York was only the 13th most expensive city in the world. The cities of Singapore, Paris, Zurich, Hong Kong, and Oslo ranked as the five top, most expensive cities in the world.