Thursday, May 06, 1999
Tristate dollar goes a long way
Survey: Buying power 8th-best
BY JOHN J. BYCZKOWSKI
The Cincinnati Enquirer
Cincinnatians might not be rich, but they're able to feel richer than residents of most other cities, a new study says.
The study by economists at Old Dominion University in Virginia found that the average buying power in Cincinnati was eighth-best in the nation. The average Cincinnatian earned $25,359 in 1996, but when that income is adjusted for local cost-of-living factors, it has purchasing power equal to $28,052.
“It's one way of looking at how well off people are,” said economist Gilbert R. Yochum, who wrote the study with colleague Vinod B. Agarwal. Cincinnati ranked just 65th nationally in per-capita income before the adjustment, according to the U.S. Department of Commerce.
Such data can aid business expansion. A region's purchasing power “is the single most important issue retailers and other service providers must deal with,” said Chris Ohlinger, chief executive of Service Industry Research Systems Inc. in Highland Heights, a retail market research firm.
“Having an advantage in purchasing power that's disproportionate to your size should cause the promoters of Cincinnati and (retail) developers to be shouting this fact loud and strong,” he said. Along with demographics and level of competition, purchasing power is “probably among the top three things that retailers look at in determining the desirability of a particular market.”
The Old Dominion ranking took U.S. Department of Commerce metropolitan income data and corrected for local inflation factors — the cost of housing, utilities, food, transportation and the like — using American Chamber of Commerce Research Association price indexes for cities nationwide. The result is what the researchers call “real” per-capita income for those cities.
While Cincinnati rose in income rankings based on these adjustments, other cities fell. New York City ranks 11th nationally on raw per-capita income but falls to No. 210 in the Old Dominion ranking, presumably due to high cost-of-living factors.
West Palm Beach-Boca Raton, Fla., ranks second in raw per-capita income and first in real per-capita income. Mr. Yochum said at this point, he can't fully explain factors affecting individual cities, but suspects that a city like this has a low cost of living, and the residents — many of them retirees — earn larger-than-average shares of their incomes from dividends and interest.
The study's second part, due out in several weeks, will describe the differences among cities in cost of living, Mr. Yochum said.
Cincinnati's standing in this ranking “is not surprising in a way, because we've always known our cost of living was moderate,” said Joe Kramer, vice president of economic development for the Greater Cincinnati Chamber of Commerce.
He said a region's cost of living plays into many business expansion decisions. “It's a major issue for individuals, and it's also a major issue in terms of recruiting,” Mr. Kramer said.
United Parcel Service decided to move its headquarters from Connecticut, he said, when the company found too many people turning down transfers to headquarters because the cost of housing there was too high. UPS eventually moved to Atlanta.
Conversely, International Paper was looking to move employees here from Mobile, Ala.
“There was a view that they were coming to "expensive' Cincinnati,” Mr. Kramer said. Economic development officials were able to demonstrate that Cincinnati wasn't as expensive as they thought, and the employees moved.
Cincinnati Bell gets ready for strike
Bell gets OK to operate in 55 counties
Tristate dollar goes a long way
Report: Region basks in glow of robust economy
P&G's Prell brand looking for a buyer
TRISTATE BUSINESS SUMMARY
INDUSTRY NOTES: REAL ESTATE
COMMERCIAL REAL ESTATE TRANSFERS
PEOPLE ON THE MOVE
TRISTATE MARKET SPOTLIGHT
