Thursday, March 29, 2007

Commuter Economics

While it doesn't really have anything to do with history, reading more silly comments in the Sacramento Bee's online edition led me to do a little math regarding the costs of commuting.

A comment I hear a lot is, "Why should I spend $100,000 more for a house downtown than one in the suburbs?" I'll consider lifestyle considerations an intangible but a given--as my last rant indicates, people who think that there is no nightlife, culture, etcetera in downtown Sacramento are simply wrong. But I just want to talk economics.

Let's take the example of two people: Susie Suburb and Mona Midtown. Both earn fairly median salaries of $50,000 a year, and drive cars that get 25 miles per gallon, and both work downtown.

Susie Suburb lives in Elk Grove, about 15 miles from her job downtown. Commuting takes about 45 minutes each way, which means 90 minutes a day or 7.5 hours a week. 50 weeks a year (assuming 2 weeks vacation) means about 375 hours per years spent commuting. Her time is worth about $25 an hour, based on salary, and so those hours represent a cost of about $9375. She also uses 300 gallons of gas a year to commute, at $3 a gallon means another $900.

Mona Midtown lives in Newton Booth, the chunk of midtown farthest from downtown, about 2 miles from her job. Her weekly commute time is about 10 minutes, which means 1 hour 40 minutes a week or 83-1/3 hours a year, costing $2083. Gas, for a trip of two miles each way, adds up to 40 gallons, or $120.

This means a difference, merely in time and gasoline, of about $8000. Assuming a 30-year mortgage, Mona would have gotten back that $100,000 in twelve years. This figure does not include parking, child care (Susie would need to pay for an additional 190 hours of child care), extra wear & tear on cars, fast-food breakfasts (Mona has an extra half-hour to fix breakfast at home) and overall stress levels. It also fails to take into account that Mona could spend $2 a day to take light rail or bus downtown, spending $500 on transit, instead of driving, and saving $1500 (plus not having to worry about parking.)

So, even ignoring that a suburbanite will be extra burnt out from the added stress of driving to and from work in rush-hour traffic, has to go to bed earlier to wake up earlier and beat the rush, and has to spend more time driving to cultural amenities after work (assuming they have the time and energy to do so,) the downtownie gets back the difference in home expenses within a decade--and they'd have more equity and a bigger home-interest tax deduction to boot.

So yeah, it really is worth it. Unless the suburbs are really your bag, in which case I'd recommend staying there and getting in some quality time on the Xbox.


Sacramento, CA Forums said...

Thank you for doing the math and putting in a way that everyone can understand... I've often wondered about this, but I live in the suburbs and my commute is 3.5mi, can take 10min and allows me to go home at lunch. That extra relaxation of not living or working downtown and being able to kick back on my comfy couch and play w/ my pets in the middle of the day is worth every penny :)

wburg said...

It's all a matter of how far into the suburbs one lives, and of course where one works. If you live and work in the suburbs, you're just as well off as someone who lives and works downtown (and makes the same commute) in terms of time/money spent on a commute.

If the suburbs are your bag, that's cool, and all the better that you have a short drive. It's the ones who feel they have to live in one city and work in another who get the short end of the stick. I happen to like living and working downtown (of course, "living downtown" in Sacramento means living among stately oaks, 100 year old homes, and walkable neighborhoods) but I realize it's not to everyone's tastes.

I normally don't go home at lunch, but I live about the same distance from work as you (well, maybe 2 miles) and have done so if I had to drive somewhere during the workday and could justify stopping for lunch on my way out or back.

The classic example I gave is more aimed at someone living in a farther-out suburb, like Granite Bay, Roseville/Rocklin, or Elk Grove, and commuting downtown--or, even worse, serious exurb commuters who spend an hour or more commuting in each direction.