Cost of living on Vineyard is higher by 57 percent

By Janet Hefler - April 12, 2007

It may not come as news to Vineyarders that the cost of living on the Island is higher here than elsewhere. But, a study released last week by the Martha's Vineyard Commission (MVC) puts a number on it, estimating that consumer goods and services run about 57 percent higher on the Island than the national average.

The categories included in the study, known as "component indices," included groceries, housing, utilities, transportation, health care, and miscellaneous goods and services, such as entertainment, fast food, and clothing.

Based on a national average of 100, Vineyard's cost of living index (COLI) was estimated to be 157, or 57 percent above the average of participating urban areas during the survey period.

Housing stands out as the Vineyard's highest component index, at 96 percent above the national average and 13 percent higher than Boston.

The MVC study is based on the methodology of the American Chamber of Commerce Researchers Association (ACCRA), recently renamed the Council for Community and Economic Research (C2ER). Although C2ER does not carry out cost of living studies in areas with population as small as the Vineyard's, the organization offered the MVC the methodology at no cost.

"We aren't officially monitored or sanctioned by ACCRA, and it's up to us to do the compilation, and we can then compare it with their numbers," said MVC executive director Mark London.

The Island Plan, the MVC's regional long-term planning effort, provided the impetus for getting the study done, Mr. London said. "The Island Plan livelihood/commerce group is one of the five groups actively working now," he explained. "One of the issues we want to look at is the relationship between what people earn and what it costs to live here."

Mr. London said he would like to figure out a way to compare costs of living to income levels to determine the Island's "affordability gap."

"If we could look at the overall affordability gap in terms of incomes, I think we would also find it quite distressful, because our declared incomes are not as low as they have been in the past," Mr. London said. "We're close to the mainstream, on the lower to middle end of income, and the costs are so high. If the income was very high to go with the costs, it would be one thing. But the fact that our incomes aren't makes it even more difficult for the year-round population."

The C2ER composite index measures relative differences among middle and upper-income urban areas in the cost of consumer goods and services. Since the company sells the survey results, Mr. London said its methodology emphasizes upper- and middle-income urban areas because those are the likely target markets.

"They put together a 'basket' of a number of grocery items they think middle and upper income people will probably want to buy, "Mr. London explained. "They include Corn Flakes, and anybody can buy Corn Flakes - it's just their emphasis. It still applies to other income levels."

Martha's MVC economic development planner Christine Flynn coordinated the Vineyard's COLI study with Mr. London last summer. Senior planner Bill Veno and staff member Brian Leblanc helped with the data collection.

The pricing period for the MVC study, July 12-14, 2006, corresponded to the same time C2ER carried out similar studies in many urban areas across the country. The C2ER COLI measures differences in prices among urban areas at a single point in time.

The MVC study compared Martha's Vineyard's composite index to Boston's, which came in about 12 percent lower than the Vineyard's and at about 40 percent higher than the national average.

"We had to pick one spot for comparison, and figured a lot of people go back and forth to Boston, so we thought it would be interesting," Mr. London said.

The C2ER web site, www.costofliving.org lists only four urban areas sampled in Massachusetts, including Boston, Fitchburg-Leominster, Framingham-Natick, and Pittsfield. After the Times contacted C2ER for information about study results in other Massachusetts cities, Erol Yildirim, the company's cost of living index project manager, provided data for Framingham-Natick and Pittsfield by e-mail.

Mr. London said he discussed with C2ER the possibility of expanding their survey locations to include resort areas with seasonal populations that would compare more closely to the Vineyard.

Although Vineyard housing showed the highest component index, almost twice the national average and 13 percent higher than Boston's, the types of Island housing used for comparison did not meet the C2ER's specified criteria.

Transportation topped the Vineyard indices compared to Boston's, at 22 percent higher. However, the C2ER study took into account only two items, the cost for getting a tire balanced, and the cost of one gallon of unleaded regular gasoline.

While the Vineyard's grocery index came in at 12 percent higher than Boston's, Mr. London said the figure might challenge the belief among many people that it is so much more expensive on the Island, they should do all their shopping on the mainland.

"If it's 12 percent more, and you have an Island card and you get 10 percent off, is it really worth taking the ferry and driving and using gas and all that stuff?" Mr. London asked. "Maybe it doesn't cost so much more and we're better off buying on the Island. The cost differential may not be very much, and when you take in all the costs, maybe it is actually cheaper to buy certain things on the Island."

The MVC's 2006 study used the C2ER's list of 62 consumer goods and services within the six component indices. The chart includes a sampling of items from the survey, which can be viewed in its entirety on the MVC's web site at www.mvcommission.org by typing "cost of living" in the search box. City COLI comparisons nationwide are available at C2ER's web site www.coli.org, for a fee.

The C2ER methodology recommends collecting three samples for each item in non-metropolitan areas with a county population of 50,000 and a city population of 35,000, but accepts smaller samples from rural areas such as the Vineyard.

For most items, the MVC staff used three to five samples, calculating the average price per item based on the number of establishments surveyed. Some items were compared using the closest possible equivalent. In order to compare fast food hamburger prices, for example, since there are no McDonald's on the Island, hamburger prices in three Vineyard restaurants were averaged.

In some cases, the Vineyard has nothing available for comparison - no fast food fried chicken or bowling games, for example. As a result, the zero rating for these items brought the Vineyard's COLI down, by as much as 16 points in the miscellaneous goods and service and by 6 points for the composite index.

In an appendix to the study, the MVC staff pointed out several limitations in the C2ER's COLI methodology, and cautioned its results are only an approximation. The methodology uses a relatively small number of items and samples for each item.

The MVC also noted that some of the items used for comparison in the study may have little impact on Islanders' budgets. Although the price for a man's dress shirt is markedly higher on the Island, casual attire is acceptable in the majority of Vineyard workplaces.

Although the MVC study reflects a mix of consumer goods and services, it does not take into account childcare costs, health care, taxes or other monthly costs of living to support an individual or a family.

The MVC is considering updating the study annually. "As we said in our introduction, as we do the study more often, we will refine the numbers - we'll understand the methodology better and the formulas," Mr. London said. "Some of the problems are that we don't have direct comparables for certain things, which messes up the formula, and we'll try to figure out the best way to deal with those oddities.