Cost of Living Estimation for City of Malden, Massachusetts

By Frank S. Li
M.P.P. student at Brandeis University
Research Associate at the Lurie Institute for Disability Policy
January 2, 2020

All measures of family economics fundamentally must communicate whether people are able to live and subsist. From an economic development standpoint, cost of living helps underscore resident financial needs, where those needs are concentrated, and therefore what services or structures would best be suited. This case study compares three tools used to estimate the cost of living at the county level, and generates an estimate specific to the City of Malden, Massachusetts.

Unlike some other places throughout the country, Malden is not dominated by a single type of household structure. Using the common family structure of two adults and one child, I compare typical expense profile estimates for Middlesex County from the MIT Living Wage Calculator, the Economic Policy Institute, and the University of Washington Self-Sufficiency Standard.

There are significant differences across these three estimates, with the Economic Policy Institute (EPI) having the highest estimate and the Washington study having the lowest. The areas of most dramatic and interesting difference are transportation, childcare, and the nebulous “other” category.

Author-Constructed Cost of Living
In addition to the three measures cited above, I used a mixture of sources to create the following estimate for a living wage in Malden, MA based on the same family structure.

Typical Monthly Expenses for a family of two adults and one child in Middlesex County, MA and Malden, MA, based on different standards

My estimate turned out to be the second highest. The major differences are that I produced higher housing and health care costs than any of the other estimates, but that was offset by comparatively low transportation and food costs. EPI also estimated higher child care and miscellaneous costs, combined with an almost doubled transportation cost, which accounts for its living wage estimate being significantly higher.

Detailed reasoning and methodology for each major domain follows.

Housing. I collected a sample of 50 two-bedroom apartments for rent in Malden using a Craigslist and Zillow (30% Craigslist, 70% Zillow), then took the 25th percentile of rent as the base monthly rent estimate. I excluded from the sample any apartment advertised as “luxury” or had a broker’s fee. This resulted in an estimate of $1900 per month for rent. I then used my own rough utility costs for a 3-room 1-bedroom apartment as the utility cost, and assumed that adding one room would add 30% to electric and gas costs. Averaged across the year this results in $130 for gas and electricity, plus $50 for internet. This is higher than the other three living wage estimates, likely because Middlesex County overall is a more diverse housing market than Malden.

Food. I used my own groceries budget as a guide, and multiplied it by two to arrive at an estimate of $450. Since I tend to consume more food than the average person, my cost is likely an overestimate. I assumed that this would approximately account for the consumption of a preschool-aged child. I assumed that the family might eat out twice per month at $50 each time, for a final estimate of $550.

Childcare. It was essentially impossible to find cost estimates for center-based child care in Malden without contacting individual centers for rates. I found an estimate showing average in-center costs for 2016 Massachusetts at $13,208 annually . Though this is an average across the state, and likely does not account for other conditions such as care from friends or extended family members, use of Head Start or other subsidized child care, or employer-provided child care, it is the best concrete number available. Inflated to 2018 dollars (1.0455 multiplier), this translates to $1,151 monthly.

Health care. I used the MassHealth connector to find the cheapest plan available that would cover the family as constructed. That plan, “Standard High Bronze: Tufts Health Direct Bronze 2750”, has a monthly premium of $619 per month before any credits or welfare based on income, with a total family deductible of $5,500. At the end of the day health is a non-negotiable, so for the purpose of a “living” wage concept I assumed that the household would need to pay at least the full deductible each year plus the monthly fee. This resulted in an estimate of $1,077 per month, which as expected is far higher than the other three estimates. I would be cautious in using this as a lower-bound estimate, but believe that from a policy perspective attempting to make decisions based on this upper-bound estimate is far less likely to leave behind those in need.

Transportation. I used an adjusted version of my own estimated transportation costs from living in Somerville, MA, which is also in Middlesex County, not far from Malden, and somewhat similarly situated in terms of its availability of public transportation. In the two years I owned a used car (2015 and 2016), I spent around $2500 per year for all vehicle-related costs, including all repairs, taxes, fees, insurance, gas, and parking. I inflated this value to $3000 per year to account for more regular driving. The car had an estimated value of around $1500 when purchased, which is amortized over two years. The car was old but reliable; for a living wage estimate this seems reasonable. The car-related values were then inflated from 2015 to 2018 dollars using the CPI calculator (1.0559 multiplier). I assumed that in a household of two working adults, for a living wage estimate, shared use of one car and public transportation would be appropriate. Similarly, to the Washington estimate, public transportation costs assume use of one unlimited ride pass at $84.50, inflated by 1.75 to account for when both adults need to use public transportation. I then added $25 to account for occasional use of a taxi, express bus, or commuter rail under uncommon circumstances, resulting in an estimate of $499 per month.