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How can local wages (in a currency other than USD) be "pitiful", but food cost "the same" for the USD? These are incongruent. Locals wouldn't be able to subsist

How can local wages (in a currency other than USD) be "pitiful", but food cost "the same" for the USD? These are incongruent. Locals wouldn't be able to subsist on those food prices. The USD has greater purchasing power, that's just a fact.

internet_user 6y ago
lower standard of living. people settle for less.
- cambalache 6y ago
  Yes, if your options are, A) Earning 2.5 USD/h . B) Starving. Guess which one you will take.
NovemberWhiskey 6y ago
Anyone who's ever done an international relocation understands this. It works like this. Your company asks you, a SF-based tech executive, to relocate to India for a three-year assignment. Notional cost of living in India is absurdly low. But your company will actually estimate that you'll need ~$50-100,000 more per year from a COL perspective. This is because your existing lifestyle is now composed of what are all luxury goods in India. A Toyota Camry is an expensive, luxury car in India with massively high rates of taxation. Even if you don't currently own a car, you will need to, because public transportation is some combination of unreliable, unsafe or unavailable. Vehicle maintenance will be much more expensive and frequent due to poor roads and the frequency of fender-benders. Your company will tell you that they recommend in the strongest possible terms that you hire a driver from the local area, because of the track record of outcomes when an expat gets into a traffic accident. Alcohol is incredibly expensive, particularly imported brands. Good luck if you like to eat steak. Restaurants that serve international cuisine are relatively rare, and those of good quality are actually expensive even by international standards. If you want to buy an item of technology that's near the leading edge, it's either not available, or only available via import with massive surcharges and taxes. Very little of the housing stock will meet your expectations, and you will probably end up in one of a very-few 'expat friendly' areas. You will be buying bottled water because the domestic water is not safe to drink. If you want to be confident of 24 hour power, you will either end up needing a place with its own generator, or to be in the one of the super-elite compounds that provides its own generation capacity where you're literally paying major world city prices. Visiting your family is now international travel involving stop-overs in Doha or London. Facilitation payments/bribes are now a budget item. The point is: cost of living differs depending on expectation. If you go to Mexico to live like a local, it will be very cheap. If you go to Mexico to live like an American, it will not be. EDIT: in fact, the real surprise to me was that the COL data from the big relo vendors like Cartus is nothing like symmetrical. If you look at say London/Tokyo as a city pair - there's a fairly large COL increase for moves in either direction.
- ronyfadel 6y ago
  Data point: me. I used to live in Paris, in a one bedroom apartment, eating out most of the time, using public transport, and going on vacation about 3 times per year. I used to spend about $3500 per month. In Mexico City, I was living with the same quality of life if not better (apartment in the heart of downtown, Uber'ing everywhere, eating out all the time), spending about $1500 per month (less than half).
- ghaff 6y ago
  Well, a lot of this isn't about CoL. Having to relocate internationally for a stint imposes all sorts of costs, especially for families. Plus, it's very possible that someone owns a house already which they can maybe rent out but there are still costs involved.
  - NovemberWhiskey 6y ago
    Sure, plus possibly even some element of tax normalization etc. But these are all cost-of-living items predicated on the assumption "I want to keep on living as I did and not be worse off for it". If that also means international schools for kids so they can stay on the same qualification track, then that's also a necessity, no? Assistance with costs of home rental are often a separate line item in a good relocation package, and things like shipment of furniture and personal effects, temporary rentals during the initial phase of the move, the services of a local vendor to deal with administrivia are also separate from the cash COL adjustment part.
    - ghaff 6y ago
      International schools. Probably a driver in a lot of low CoL areas. Maybe a cook. etc. And as you say, a lot may be handled outside of a "CoL adjustment." It just points out there's a huge gap between live like a local and live like a Westerner, especially a Westerner who is being relocated temporarily to a location that may not be especially desirable.
cambalache 6y ago
Have you lived in a 3rd world country, especially earning a local salary? 99.99% sure you havent.
username90 6y ago
> Locals wouldn't be able to subsist on those food prices. You can live on 2-3$ a day with American food prices and eat well. You can live on 50 cents a day with American food prices if you eat badly. Most third world wages covers this. For people living on less than that they will be forced to eat food of so low standard that it would be illegal to sell in USA.
- cambalache 6y ago
  For poor people in third world countries(well everywhere actually) food represents a bigger % of your budget. So OK, they are not starving, they can eat OK, but even buying a new pair of jeans is an investment.

internet_user 6y ago

lower standard of living. people settle for less.

cambalache 6y ago
Yes, if your options are, A) Earning 2.5 USD/h . B) Starving. Guess which one you will take.

NovemberWhiskey 6y ago

Anyone who's ever done an international relocation understands this. It works like this. Your company asks you, a SF-based tech executive, to relocate to India for a three-year assignment. Notional cost of living in India is absurdly low. But your company will actually estimate that you'll need ~$50-100,000 more per year from a COL perspective. This is because your existing lifestyle is now composed of what are all luxury goods in India. A Toyota Camry is an expensive, luxury car in India with massively high rates of taxation. Even if you don't currently own a car, you will need to, because public transportation is some combination of unreliable, unsafe or unavailable. Vehicle maintenance will be much more expensive and frequent due to poor roads and the frequency of fender-benders. Your company will tell you that they recommend in the strongest possible terms that you hire a driver from the local area, because of the track record of outcomes when an expat gets into a traffic accident. Alcohol is incredibly expensive, particularly imported brands. Good luck if you like to eat steak. Restaurants that serve international cuisine are relatively rare, and those of good quality are actually expensive even by international standards. If you want to buy an item of technology that's near the leading edge, it's either not available, or only available via import with massive surcharges and taxes. Very little of the housing stock will meet your expectations, and you will probably end up in one of a very-few 'expat friendly' areas. You will be buying bottled water because the domestic water is not safe to drink. If you want to be confident of 24 hour power, you will either end up needing a place with its own generator, or to be in the one of the super-elite compounds that provides its own generation capacity where you're literally paying major world city prices. Visiting your family is now international travel involving stop-overs in Doha or London. Facilitation payments/bribes are now a budget item. The point is: cost of living differs depending on expectation. If you go to Mexico to live like a local, it will be very cheap. If you go to Mexico to live like an American, it will not be. EDIT: in fact, the real surprise to me was that the COL data from the big relo vendors like Cartus is nothing like symmetrical. If you look at say London/Tokyo as a city pair - there's a fairly large COL increase for moves in either direction.

ronyfadel 6y ago
Data point: me. I used to live in Paris, in a one bedroom apartment, eating out most of the time, using public transport, and going on vacation about 3 times per year. I used to spend about $3500 per month. In Mexico City, I was living with the same quality of life if not better (apartment in the heart of downtown, Uber'ing everywhere, eating out all the time), spending about $1500 per month (less than half).
ghaff 6y ago
Well, a lot of this isn't about CoL. Having to relocate internationally for a stint imposes all sorts of costs, especially for families. Plus, it's very possible that someone owns a house already which they can maybe rent out but there are still costs involved.
- NovemberWhiskey 6y ago
  Sure, plus possibly even some element of tax normalization etc. But these are all cost-of-living items predicated on the assumption "I want to keep on living as I did and not be worse off for it". If that also means international schools for kids so they can stay on the same qualification track, then that's also a necessity, no? Assistance with costs of home rental are often a separate line item in a good relocation package, and things like shipment of furniture and personal effects, temporary rentals during the initial phase of the move, the services of a local vendor to deal with administrivia are also separate from the cash COL adjustment part.
  - ghaff 6y ago
    International schools. Probably a driver in a lot of low CoL areas. Maybe a cook. etc. And as you say, a lot may be handled outside of a "CoL adjustment." It just points out there's a huge gap between live like a local and live like a Westerner, especially a Westerner who is being relocated temporarily to a location that may not be especially desirable.

cambalache 6y ago

Have you lived in a 3rd world country, especially earning a local salary? 99.99% sure you havent.

username90 6y ago

> Locals wouldn't be able to subsist on those food prices. You can live on 2-3$ a day with American food prices and eat well. You can live on 50 cents a day with American food prices if you eat badly. Most third world wages covers this. For people living on less than that they will be forced to eat food of so low standard that it would be illegal to sell in USA.

cambalache 6y ago
For poor people in third world countries(well everywhere actually) food represents a bigger % of your budget. So OK, they are not starving, they can eat OK, but even buying a new pair of jeans is an investment.