Family of Four? Grocery Costs Differ Dramatically Between and Within Each State

America may not be well organized for the 21st Century.

Like most countries, America is organized around geography, with states divided either by arbitrary plots or landmarks like rivers, hills and 18th Century farmland. Trouble is, the ties that bind residents of the same state matter less and less in the face of a growing urban/rural divide.

For all their famous antipathy the residents of Fayette and Morenci have more in common with each other than their fellows in Columbus and Ann Arbor (respectively). It's a phenomenon that has received a lot of attention in politics, where "blue state/red state" disguises the fact that every state is rural red and blue-by-density. It is perhaps even more relevant when it comes to costs of living, an issue that everyone has to consider every single day.

A trip to the grocery store is a different experience in Missouri than Massachusetts, but that's a little like saying one state votes Republican and one Democrat. The forest has obscured the trees. What's actually happening is that people in Manhattan and St. Louis pay far more at the grocery store than their suburban and rural counterparts. New York costs more because the prices in New York City put a thumb on the scale.

First, the big picture.

State by state the cost of groceries varies widely. The average U.S. household spends about $330 per month on food and non-alcoholic drinks.

According to data from the Missouri Economic Research and Information Center, interstate costs generally fluctuate by about 15 points below the national baseline to 88 points above it. Mississippi has the cheapest groceries per household in the country, costing about 85.1% of the national average. California and Hawaii are the most expensive, at 141% and 188.3% of the national average,  respectively.

The problem, from a policy standpoint, is that this information is interesting but ultimately unhelpful.

"The way I like to look at this is not by state but by metro areas, because in any given state, the cost of living can vary a lot between a big metropolis and the rural areas," said Drew DeSilver, with the Pew Research Center.

"You look at a place like California and the Bay Area has, I think, almost the highest overall price level of any place in the entire country aside from Honolulu. Santa Cruz and San Jose are 22% or 20% above the national average, but if you look at a place like El Centro, Calif., the average price level is 10% below the national average. So it makes it hard for state policy experts to come up with some sort of minimum wage policy or some other policy that applies just as well to places that have such diverse situations."

Understanding the cost of food matters, both for consumers looking to find a home and the policymakers who want to make it a little easier to live there. Along with housing, it's the chief cost that has eroded Americans' spending power year after year.

When it comes to housing, this means spiraling costs for city dwellers, forcing even well-employed residents into increasingly compromised living conditions that would have been almost unimaginable a generation ago. For food the story gets more complicated, but even in a depressed city like Flint, Michigan, residents might still pay 30% more for a gallon of milk than someone would in a small town.

And while most urban residents have considerably more disposable income than rural consumers do, these costs of living often outpace their ability to earn additional income. It has created the pernicious trap where people who live outside the cities can't get jobs, while those in the city can't earn enough to keep up.

"You think about expensive places to live, they're all big cities. You're talking the Bay Area, the New York area, Washington D.C.," said DeSilver. "In terms of the cost of living, they have more in common with each other than they would have with more rural or suburban areas in their own states."

"To me that's a key distinction that gets lost in the state by state discussion."

During the 2016 election, when Democrats were more openly discussing a national minimum wage of $15, this issue came up. As I wrote at the time:

Costs of living vary enormously nationwide, and the urban-focused Fight for $15 movement probably wouldn't make much sense in Michigan's Upper Peninsula, where $15 an hour has a lot more purchasing power… and costs a lot more for businesses to pay. A far better solution is local regulation by state, or for municipalities to pick up the ball.

The truth is, like everything else, the price of food is going up relative to wages. Sadly the only things that seem to be getting less expensive are what the USDA categorizes "fats and oils," "sugars and sweets," and "nonalcoholic beverages." In other words, all the stuff that makes us fat.

Addressing this will take real policy solutions. It will take an effort to reduce income inequality and share wage growth in tandem with economic growth once again, but it will also require understanding which populations are actually in the most pain. It will require a nuanced picture of how prices rise and fall across towns and cities and how real purchasing power keeps up.

And that is a problem that America continues to struggle with. Politically, the country's spender of last resort, is built to think in terms of nation geography, but the truth is far more granular than that.

The policy solutions of the 21st Century will need Congress to write legislation for Chicago, Bismarck and Rexburg, Idaho (population: 17,250). State level data just isn't cutting it anymore.

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