Cost of Living


No Shocker | Along with housing, utility costs that are sharply lower here give businesses in the Kansas City region a competitive advantage over outside firms.

It is a symbol of civic and business pride we call The Kansas City Value Proposition.

And it works like this: Because the costs for nearly everything here—including the cost of doing business—are lower than in many other cities, local companies have a built-in advantage when competing with other firms nationally to provide legal, accounting or other professional services, especially outside this market.

But it runs deeper than that, benefitting organizations that operate strictly in this geographic area. How? Because they can hold out powerful lures, such as considerably lower home prices when making their pitch to attract talent from out of the area.

More than a few times, we’ve heard transplants to Kansas City say they came here at salaries below their coastal incomes, yet never enjoyed such a high standard of living. You run into that thing quite often when someone is comparing an $800 mortgage payment here to four, five, even six times that level in New York or San Francisco.

The really good news for Kansas City in the past year is that our value proposition has only grown stronger. A year ago, among 35 major metro areas in the U.S., Kansas City ranked 26th its composite ACCRA cost of living index, as measured by the economic analysts at C2ER. Remember here, a lower score is a good thing. Among those same cities this year, the composite-score dropped from 93.1 to 91.0, putting us at No. 33 and making us the third-most affordable region in the nation.

The composite index incorporates scoring for six spending categories: grocery items, housing, utilities, transportation, health care and the catch-all miscellaneous goods and services. Scores below the national average of 100 means it’s cheaper to live in a given community. But keep in mind, the downward movement for Kansas City isn’t necessarily the result of falling prices; more likely, costs in other cities have increased enough to produce our improved affordability ranking relative to those other cities.

Still, it’s comforting to know that we’re below the national averages in each of those categories. Here is a breakdown on changes from year to year:

  • Grocery items. These held steady for the region at 99.9, within a hair of national averages.
  • Housing. A big-time win for this region, lower housing costs help drive down our composite score, coming in at 81.3 in 2017, a half-point drop from 2016.
  • Utilities. Another big score driver for KC; last year, we came in with 82.3, down a healthy 1.4 points on the 100-point scale.
  • Transportation. Again, a drop of more than a full point, from 95.1
    in 2016 to 93.8 last year.
  • Health care. The lone area that saw an uptick year over year, moving from 97.0 to 98.7.
  • Miscellaneous goods and services. This category was the biggest factor in the region’s scoring movement, plunging from an above-average 101.0 to 95.9 last year.

Overall, it marked the first time in at least a decade that this region came in below the national average in every scoring metric for this national survey.

So where does that position us relative to other large metro areas?

Perhaps it’s unfair to compare ourselves to a New York or a San Francisco, but those are still good starting points. The more recent composite index for New York came in at 235.9, meaning it was about 2.36 times more expensive to live there than in Kansas City. For San Francisco, costs of living nearly doubled KC’s at 192.3.

In each case, housing was the culprit. While most of the other five categories came in at a manageable 16-45 percent higher than the national average, housing was nearly five times (!) as expensive in New York, where the score was 485.4, and more than 3 imes more costly in San Francisco, with its score of 357.9.

The case for buying a home in the Kansas City area is only strengthened by that 81.3 rating last year; if you use that as a benchmark, New York housing is roughly six times the cost we enjoy here, and San Francisco’s is more than four times our cost.

Both of those cities, coincidentally, also came in No. 1-2 in grocery costs.

With our other strong point, the costs for utilities, we came in at just over half what they pay to keep the lights on and the furnaces working in Boston, which led the nation with a score of 138.8. Kansas City, by comparison, was No. 4 in utility affordability with its score of 82.3.

We also tied for fourth-most affordable in transportation costs. Our reading of 93.8 was considerably below the 134.5
that the good folks pay in San Francisco, the priciest community in that category. (Perhaps they want to rethink that $7 one-way fare for cable car tickets out that way.)

While our health-care cost inched up closer to the national average last year, we’re still middle-of the pack in that regard, and well below the most expensive city on the list, Boston, where they shell out nearly one-third more for care than the nation as a whole.

And in the final category, miscellaneous goods and services, our sharp drop there relative to other cities put as at No. 1 in terms of affordability. The priciest city for that? No surprise there: New York again, with a monster score of 149.3, higher even than their nation-leading grocery-bill scoring.