I have had this debate with a few people recently and I want other opinions. I was wondering why in some of these states that are cheaper to live, they still have poor people who live their. People say moving to a cheaper state to live is better because of the cost of living. I disagree and I don’t think it’s necessarily cheaper. If someone is poor and they can’t afford to live in a state that is cheap, then is it really a cheaper state to actually live in?
I understand that minimum wage is a lot lower in some of these states. I don’t understand why people think it’s necessarily cheaper to live in these states? I know of people that have moved away to live in a cheaper state but then end coming back to where they used to live because they weren’t making enough money at their job. I live in an expensive state and would never leave this place because the wages here are much higher. My husband would love to live in a cheaper state. I’m more realistic on the idea. I don’t want to leave my family and friends just to live a cheaper life. The job my husband has now would pay a lot lower in another state. It’s just not worth it! The condo my husband and I own is cheap. We may live in a expensive state but we still are able to almost pay off our condo.
Poor people exist in states with low cost of living because it is the standard of living—not the cost of living—that determines our economic well-being and standard of living is a function of the productive output of the community (state). The higher the productive output per capita, the higher the purchasing power and with it our individual standard of living. The cost of living is higher in wealthier states because higher purchasing power increase aggregate demand that in turn raise prices (and quality) of goods and services above that of the communities with lower productive output.
Conversely, lower standard of living is a result of lower productive output that leads to lower purchasing power and reduced aggregate demand forcing prices of goods and services down.
To understand the income in this context think of income as actually being a price of labour. In wealthier economies where prices are higher so is the price of labour, hence higher wagers for workers while in the poorer communities the opposite is true. Therefore the best way to elevate the standard of living and reduce poverty is not by government mandated price controls or minimum wage laws but by increasing the productive output.
Now for you additional comments that I just noticed and your specific situation. This is where the things get much more involved, not to say complicated because in addition to economic considerations there are other, perhaps more important aspects to consider. The first thing I would caution you is that financial stress is statistically the number one reason for divorce. If you husband is feeling financial pressure there’s more going on than meets the eye. Try to be understanding, it may be a bigger decision than you think. You have not provided details (children, do you also work, your financial circumstance and so on) and this is economic category that is not suited to answer specific family finance question but it sounds like financial planing advice might be what you need. Best to you both.