Cost of Living
Region's affordability ranks high nationally, providing a competitive advantage for business and higher standard of living for residents.
It’s almost always good to place in a Top 10 list, but it’s even better when it’s a Top 10 that spans the nation. When it comes to affordable living, Kansas is ninth in the U.S., followed closely by Missouri at No. 12. Straddling the state line, Kansas City in many ways takes in the best of both affordable areas.
Based on the cost of living index for the first quarter of 2012 by the Missouri Economic Research and Information Center, the Midwest and the South share the honor of being the least-expensive regions in the country. Narrowing that focus, the 2012 first quarter cost of living for Metropolitan Kansas City area was 98.7 with Topeka, Kansas registering even lower at 92.3, compared to a national average of 100.
With key factors of housing, utilities, transportation, health care and miscellaneous goods, life in the Midwest gives reason for optimism to both residents and businesses. Making these cost-of-living listings even more impressive is the fact that 20 states were above the 100 mark. States such as California, Connecticut and New York were even up into the 130s. In plain English, Midwest metro areas such as Kansas City are among the most affordable places to live.
Low Cost of Living Provides Daily Benefits
This affordability is beginning to bring growth, despite the lingering stagnation in the national economy. According to the Bureau of Labor Statistics, existing home sales in the Midwest are up 14.4 percent above April 2011, with the median price at $141,400 up 7.4 percent from a year ago. Meanwhile, the median price in the West was $221,700, making the housing significantly more affordable here. In the MERIC index, Missouri was slightly lower at 80.9 for housing, compared to Kansas’s 85.71. Overall, the affordability of the housing is one of the area’s real strengths. Even though salaries tend to be lower here as well, the net advantage in affordability is impressive.
The two states were impressive in other ways, ranking within a point of each other in the areas of transportation, health care and miscellaneous expenses. Utilities, however, were much higher in Missouri. One reason could be the relative cost of natural gas. While electricity was slightly lower in Missouri than Kansas, the most recent [2011] data from the U.S. Energy Information Administration shows natural gas at $12.08 per 1,000 cubic feet for Missouri and only $9.96 for Kansas. Regardless, it’s still better than the prices in Arizona at $15.05 or even Massachusetts at $13.87. There might be more sunny days in Florida, but natural gas there was $18.23.
Those prices, however, have fallen dramatically since the last official reports, plunging below cost of production in the spring of 2012, at $2 per mcf.
And driving to view houses in these affordable areas is becoming cheaper as well, after a run-up in prices from 2009 to early 2012. Heading into the 2012 summer vacation season, gas ran about $3.45 a gallon in the greater Kansas City area. Topeka was $3.25 and Sedalia even lower at $3.12. At that same point, someone driving in California was shelling out, on average, more than $4 a gallon, while back east, New York state motorists were ponying up $3.65. Health-care costs, though high everywhere, look comparatively good here, as well. Missouri ranked 95.73 and Kansas was slightly lower this time at 94.84 on the index that averages 100. By comparison, health care ran as high as 119.1 in Rhode Island, 117.01 in Connecticut, and, as could be expected, higher in California at 107.5 and New York at 107.42. Scaling down, metropolitan Kansas City was still low at 95.1. Travel a short distance north, and St. Joseph came in at 92.
As could be expected by the overall positive cost of living, the miscellaneous goods component was better than most, with Kansas and Missouri ranking lower than 30 other states. Kansas was 97.95 and Missouri at 96.40 in this category. The news is even better, considering that 23 metro areas were over the 100 mark, with some well into the upper 120s.
A relatively minor regional drawback is transportation, due to the size of the metropolitan region and the lack of public transit. That is not enough, however, to offset the affordability of the region in almost all of the other areas compared to the nation as a whole.
Basis for Region's Strong Economy
Policom Corp., an economic research firm, recently rated KC as eighth-“strongest” in the nation. Based on data from 1991 to 2010, the research included 366 metropolitan and 576 micropolitan areas. The strong Kansas City area ranking was due to the region’s consistent growth. The two most dramatic categories were job and worker earnings as No. 1 and wages as the second.
The region’s low cost of living is a factor in the allure of the area to new businesses, and subsequently, a growing business community helps the regional economy. However, energy costs, lower business taxes and using tax dollars to attract and keep businesses are also components of the region’s economic growth.
Twelve of the 21 economic-incentive deals exceeding $100 million taking place over the past two years took place in the Midwest. Moody’s Analytics placed Midwest business costs at 96 percent of the U.S. average in 2010, based on a combination of labor, energy, taxes and real estate cost. It would appear that the area is doing well in the numbers game and benefitting from it.
This is just more good news for a region that is a bargain by any measurement. 
