The Cost of Living: Australia and the US Compared

I would imagine most of us from both Australia and the UK have, on occasions, glanced enviously over to the USA because, well, everything is so cheap there, isn’t it?

Houses are cheaper, petrol is cheaper, electricity is cheaper and so are electrical goods and many other regular household items.

Here in Australia, unlike the UK and the USA, we do not have an Amazon website.

Every time I have needed to buy (needed? No, wanted more like) some kind of little electrical gadget, it has always appeared to be much cheaper over at Amazon in the USA then I can get it for here.

But what if we talk in yakka’s? The yakka, remember, is basically how much the average person can earn in one hour and therefore how long you need to work for to buy stuff. The amount varies for each country and you can read more about the yakka here.

Average annual incomes in America.

Trying to establish the average annual income for a full-time working adult in the USA is not easy. First, I found what should be reasonably accurate figures for median household income from the US government census website. They say its $52,029. (2009)

But as that refers to household income, clearly it implies more than one wage earner in some cases.

Looking around the same source, it appears that the mean income for both sexes (all races) aged 18 to 64 years was $40,845. (2009)

And I found a press release which said that personal income was down in 2010, and although it didn’t give the national average, it did quote the averages for the highest and lowest paid states. They were Connecticut at $54,397 and Mississippi at $30,103. You can read the full article here.

So, we’ll go with $40,845 then. That does appear to be a reasonably accurate figure.

The American Yakka

Therefore the American yakka is worth $40,845 divided by 52 and then divided again by 40. So….

One USA Yakka = $19.63.

So let’s now buy another Apple iPad with Wi-Fi + 3G 64GB. You will recall from last weeks introduction to the yakka, that we could buy it for $1049 in Australia and £714.00 in the UK.

Over at Amazon in America you can buy an Apple iPad with Wi-Fi + 3G 64GB for $898 USD. So let us now convert everything into US dollars.

• Obviously, in America, your iPad will cost $898 USD.
• In Australia the same iPad will cost $1027 USD (current conversion rate is one AUD equals 0.9794 USD).
• In the UK, the iPad will cost $1122 USD (current conversion rate is 1GBP equals 1.5718 USD).

So the iPad is cheapest in America with it costing 14% more to buy in Australia and almost 25% more to buy in the UK. But what if we price it up using yakka’s? How many hours would you have to work to buy your iPad? Let me tell you…..

• 47.41 UK yakka’s.
• 45.7 US yakka’s.
• 31.98 Aussie yakka’s.

So, instead of the iPad being 14% more expensive in Australia, it is now almost 43% dearer in the USA. That is a massive swing. I know this is just one item, but on current average salaries between Australia and the USA, it appears Americans have to work more than 50% longer than Australians to buy their stuff. So even if stuff in the USA is 15, 20 or even 25% cheaper than in Australia, that stuff is still not really cheaper at all.

Even when I started to write this post, I never expected it to turn out like this. I’m really quite shocked! The US, for Americans, is really quite expensive.

No more envious glances to Amazon in the USA for me from now on.