New Jersey one of the worst in bang for the buck
How much does $100 buy in New Jersey? Not as much as you might think.
The answer may surprise you, but it only gets you $87.34, according to new data from the Tax Foundation, which ranks the Garden State the fourth worst in the nation when it comes to how much you can purchase with a dollar.
The Bureau of Economic Analysis took a basket of goods that a typical person would buy, including food, housing, liquor, clothing and other items and went state-by-state to see where $100 bought the most and where it bought the least. According to the research, a dollar buys the least in Washington D.C ($84.96), Hawaii ($86.06) and New York ($86.73). It buys the most in Mississippi ($115.21).
"Goods are most expensive when land is scarce and rent is high, which is the case in New Jersey" said Alan Cole, economist with the Tax Foundation. "Chances are if you are paying high rent, the store nearby is also paying high rent and it has to charge higher prices to make up for that. The Garden State is the most densely populated state in the nation and that results in those high land values and high rent."
The states with the lowest costs are near the Gulf of Mexico, where gasoline is cheaper and on the Mississippi River, where shipping makes it easier to obtain goods.
"You can also look at New Jersey as having a lot of zoning restrictions or regulations that provide value in terms of standardizing things or making sure businesses comply, but it also raises the price of goods as well," Cole said.
It is usually the case that states with higher incomes also have higher price levels. In places with higher incomes, the prices of resources, like land, are higher. At the same time, places with high costs of living also pay higher salaries for the same jobs.
"New Jersey tends to have high incomes and high price levels, so on the whole while it is probably doing well, it is likely not doing quite as well as a simple look at peoples' paychecks would suggest," Cole said.
For more information, visit http://taxfoundation.org/blog/real-value-100-each-state-0.