The income measure that matters

I’d like to see us move into a new economic analysis model for economic development. The old days of comparing unemployment rates, average income level, etc. should be turfed in favour of new comparative measurements that matter.

In my opinion, for example, we should swap out unemployment/unemployment rate data with in-migration data. We should be far more deliberate about measuring a community’s ability to attract people (including immigrants) as that is the new labour force metric that matters most.

A second issue is how we measure income. High income areas brag about high average incomes and lower average income areas brag about a lower cost of living. What really matters these days, in the context of point one about in-migration, is the amount of money left over after you pay out all the stuff you would have to in both locations (the high and the low income areas).

Disposable income is gross income minus income tax on that income and discretionary income is income after subtracting taxes and normal expenses (such as rent or mortgage, food, car payments, and insurance) to maintain a certain standard of living. It is the amount of an individual’s income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of. These two income measurements are far more relevant (particularly the second).

When we look at that data, we see that New Brunswick cities don’t fair all that well when compared to larger urban areas. The average household in Moncton has 31% discretionary income than the average household in Toronto. So, if you are looking at money left over to spend on stuff we have discretion over (big screen TVs, travel, etc.), the average household is stil far better off in Toronto.

However, the good news is that when people move from a place like Toronto to a place like Moncton they are not ‘average’ (usually). Most people fall on a continuum and mostly people that are relocating from Toronto (etc.) to Moncton are not at the lower end of the income scale. So, if you are moving to Moncton for a job in computer programming, for example, you have another calculation to make. Namely, is the income variation offset by the lower cost of living (i.e. do I have more money in my pocket for discretionary stuff). And that looks better for Moncton.

Using ERI data, we can see that while the average programmer in Moncton earns $8,000 less than the average in Toronto, he/she has a far lower cost of living. What this tells us is that if you want the same lifestyle in Toronto as Moncton, you are better off at the Moncton salary level (in Moncton) than the Toronto salary level (in Toronto).

I’ll look at more of these metrics later on but they include things like the “disposible time” index (less commuting), crime rates, etc. Essentially, I think we need to get our comparative analysis of communities right down to where people live (doctors per 10,000 population, proximity to schools, spousal employment opportunities index, etc.).

Yes, you will say, that these are not metrics targeted at the business community, they are targeted at individuals. But as I have said many times before the new battleground is being waged on HR. What community can attract people. This is far more important these days than the old line comparative analysis (average rental rates, etc.).

The Atlantic Cancer Research Institute tells me they have no problem recruiting researchers from around the world to Moncton. That’s the new battleground, folks.

Maybe someone will even pay me to develop this set of indices for their community (hint, hint) and be early out of the gate.

This entry was posted in Uncategorized. Bookmark the permalink.

4 Responses to The income measure that matters

  1. mikel says:

    I think what you are pushing for is just more inclusive data. Unemployment rate is fairly useless, most people don’t even know what ‘seasonally adjusted’ means. But that’s media and government. Those guys can see tons of new low wage jobs and go out and brag because unemployment is so low, yet people are no better off than they were on welfare-and have even fewer opportunities to advance.

    However, the ‘new metrics’ is an issue that really needs to be hashed out. For cancer researchers, it reallly depends on WHO you mean. The Atlantic Cancer Research may have ‘no trouble’ getting CHINESE researchers. Unless they have a billion dollar stash somewhere then I doubt that’s the issue. My wife works for a leading research company, and they have a hard time just finding employees, because science is an international job market.

    These are people who can live ANYWHERE, and while Moncton may be nice and have perks, its not the mayo clinic and its not hawaii.

    The IMPORTANT part of that ‘metric’ is how much MONEY the Atlantic Cancer Research centre has. That’s because I have no doubt there are LOTS of New Brunswickers in science who had to leave to find work, and would return home no problem.

    That simply brings us back to your cause celebre-TONS of New Brunswickers would move back home or STAY home- IF there were good jobs. Science is a big market because the province historically did squat in science so virtually EVERYBODY had to leave for a career in science.

    It’s not rocket science, people WANT to live close to their family and community (usually). There’s a high price to pay when your family is nowhere near you.

    But excellent research and post, that is definitely the kind of information that should be out there. Hell, forget consulting, put research like that onto a CD and sell the damn thing. That’s what consulting companies do. Have a newsletter aimed at community self promotion with a few international links, and start selling them to individual councillors and municipal CEO’s and mayors- APEC charges $50 for a report that can be found at statscan and is essentially useless.

    Plus, hopefully the next generation of journalists will pay attention and learn how to do some research.

  2. mikel says:

    Oh yeah, just wanted to disagree with that one point-in migration isn’t the be all and end all. If people move around within NB then it doesn’t affect the province. Plus, as technology develops there simply aren’t as many people necessary. Out migration is definitely an issue, but in migration isn’t a measurement of economic development. Lots of people are ‘in migrating’ to Saint John because there are ‘new’ jobs there in temporary construction, but once those jobs are gone, so are those people. That’s not particularly reliable for ED.

  3. richard says:

    “My wife works for a leading research company, and they have a hard time just finding employees,..”

    This is a bit off-topic, but there are apples and oranges here. Global research organizations compete for the star researchers in any given discipline, so yes, money held by an organizations makes a difference in its ability to compete for them. (The ‘stars’ are often a poor investment, but that is another subject.)

    For most employees and employers in research organizations, supply rather than cost per se is the issue. There are not enough decently-trained researchers available in this region or the country as a whole. That’s because until recently there has been little investment and few jobs to attract students to science. Research organizations like ACR don’t necessarily need a lot of money, they need a pool of local researchers they can recruit from.

    There may be plenty of NBers who ‘want’ to return home, but the fact is, once you get settled elsewhere, inertia becomes a large drag on the willingness to return. From a demographic perspective, I’d rather see more non-NB immigrants than ex-pats anyway.

    Otherwise, David’s point makes sense to me; better to look all the data than just the traditional measures.

  4. mikel says:

    This isn’t ‘star’ researchers, this is ANY researchers, much as most of Richard’s comment shows. The lab here now is primarily chinese. Every time they post a position they get hundreds of chinese applicants-but no ‘stars’.

    This IS off topic, but there really isn’t much more to say about the statistics. In migration makes no difference who it is, it depends on the positions. The ACR last year added two new researchers, both were originally from New Brunswick and were doing research in the US. I sort of agree about inertia, but only so far-those two guys were DYING to come back. The US is severely cutting itself off from ‘mainstream’ scientific research, many fields won’t even schedule conferences in the US because of visa and passport problems.

    Researchers though primarily provide their own funding, which makes it more of a challenge, the ACR does need SOME money though. Just for fun I’ll check with them and see if they have any ‘openings’. That’s a good way to tell whether they have ENOUGH money. If they aren’t adding people, then they don’t need that ‘local talent’, these aren’t the $9 jobs we’re talking about elsewhere-if people are willing to move from china to work, then local talent isn’t that necessary-again, just the jobs need to be there.

Comments are closed.