Tag Archives: COLI

Lexington and Leadership Cities: A Comparison

At Commerce Lexington, we are no stranger to people asking how Lexington compares to other cities. Cities can be compared on many different attributes, from their size to demographics, economics to culture. These questions probably won’t go away any time soon, but we do have some tools at our disposal to help get some answers.

Because every city is different, some criteria had to be established on which cities would be included. Rather than use a definite criteria, such as population, we chose the cities that are picked yearly for Commerce Lexington’s Leadership Visit. Each of the cities contain some attributes that Lexington aspires to have and most of them also contain some common thread with Lexington, such as being a college town. Going back 20 years, there were 19 different cities at our disposal (CLX visited Austin twice). Of the group, only one, Greenville, SC couldn’t be included. The technical boundary of Greenville city is actually pretty small, only about 55,000 people live there, 5,000 people short of the threshold the US Census Bureau uses for being included in yearly updates. That left 18 Leadership Visit cities plus Lexington, so we included Pittsburgh, the site of next year’s Leadership Visit to make an even group of 20.

The next hurdle was picking out the criteria to rate each city on. we settled on three commonly available measures that could be found from a single source: the US Government. Often, city governments, chambers of commerce, and economic development organizations use numbers in marketing materials. More often than not, the way these numbers are assembled varies greatly from place to place. For instance, some organizations only report the jobs they had a hand in attracting (such as Commerce Lexington), while others report the entirety of jobs created in a certain area (such as Opportunity Austin). Neither of these approaches is any more correct than another, but it makes it extremely difficult to compare apples to apples. By using a single source, we can be assured that the differences between the cities will not simply be differences in reporting methods.

The three measures we chose to use are: population growth, employment growth, and median household income growth. These are three high-level measures that should give some good indication as to the differences between the cities. Note that we calculated the Compound Annual Growth Rate (CAGR) for each city over a consistent time period. Calculating the total growth over a time period (e.g., 10% overall from 2000 to 2007) really only tells you about that specific time period. Whereas calculating the CAGR will give us a sense of what is happening on a yearly basis for each of the cities.

Without further ado, the results of our research:

Lexington and Leadership Cities: A Comparison

Lexington and Leadership Cities: Data Table

*Note that no adjustments were made to income figures to account for cost of living differences in different cities. As of now, there are no reliable sources that calculate these differences for the entire population of the size cities included in this research. The closest, ACCRA, measures the cost of living in most of our target cities, however, their index is specifically designed to measure a certain segment of the population. Their target is the top 20% of young professional earners. Attempting to adjust a measure of an entire population (i.e., median household income) with an index derived from much smaller and non-representative subset (i.e. ACCRA) doesn’t pass statistical muster.

Cost of Living, 2008 Q4

The 2008 Q4 Cost of Living Index (COLI) numbers were in my inbox when I got to work this morning.

The highlights:

Lexington has inched up ever so slightly compared to the rest of the nation, with its total index score at 95.0, compared with 94.9 in Q3. To those unfamiliar with the COLI, it ranks cities against each other using an index of 100 as the average. So Lexington, at 95.0, is below the national average in terms of the cost of living.

All of the KY cities that participated in Q4 were below the national average.

Of the five cities that participate (Lexington, Louisville, Covington, Bowling Green and Paducah), only Bowling Green improved on their score (had a lower score) compared to Q3.

Cost of Living Index

One of the responsibilities of Commerce Lexington is participation in C2ER’s quarterly Cost of Living Index (COLI). We recently finished Q1 2009, which also happened to be my first experience with COLI as Research Director. It is quite a lot of work as 62 items have to be priced, most at multiple locations.

What I’ve Learned:

1. It truly does pay to shop around. Not only do prices for a variety of items vary from store to store, they also vary for the same store based on their location in Lexington. Next time you are trying to save a bit of money, do yourself a favor and call around ahead of time. This applies to everything from hamburgers to healthcare.

2. Apparently the title of