Last Thursday, the host of the nationally syndicated NPR show Wait, Wait, Don't Tell Me interviewed Ann Arbor native and University of Michigan lecturer John U. Bacon during a live taping in Hill Auditorium. In an exchange that didn't make it on the air, host Peter Sagal asked Bacon if he thought U-M football coach Jim Harbaugh's $5 million salary plus $2 million bonus was excessive. In a nuanced answer, Bacon argued the market value of Harbaugh's presence likely exceeded that amount, while also pointedly comparing the multimillion dollar annual rate to his own as a university lecturer.
"I could make more walking across the street," he said in the interview. When Sagal laughed and asked which employer across what street would pay him more, Bacon jovially said, "Oh, any street will do."
Point taken. And though he was joking, the dichotomy isn't limited to the part-time lecturer and football coach. According to the Washtenaw County Office of Community and Economic Development's
Housing Affordability and Economic Equity Analysis released earlier this year, households in the 90th percentile for income in the Ann Arbor Metro Area have experienced wage growth by 18.8 percent since 1979, the income of those in the 10th percentile have shrunk 14.4% percent. Is it any wonder that a
2012 PEW research report listed Ann Arbor area as the eighth-most economically segregated city in the country.
Simply put: It's getting harder to live on a moderate salary in Ann Arbor, and what is considered "moderate" is changing as well, thanks to the rising cost of living.
Ann Arbor's green glass ceiling
As Ann Arbor's largest employer with more than
29,000 employees between the hospital and university, U-M is a pretty good place to start examining the Ann Arbor income gap.
While certainly many doctors and tenured faculty may have few complaints about pay, support staff is a different story. According to
U-M's Annual Salary Disclosure Report the average pay for a receptionist is about $32,000. Senior secretaries average $44,000, and custodians make between $31,000 and $32,000. All told, more than 6,900 U-M employees in Ann Arbor make between $30,000 and $40,000. They include medical assistants, lab techs, clerks, research fellows and administrative assistants. And because most U-M salaries are tied to wage schedules that top out at a certain level, many of these employees lose the ability to earn anything beyond a cost of living increase no matter how much experience they accrue.
Not that wage schedules are uncommon, particularly in public institutions. At Ann Arbor Public Schools, another one of the city's largest employers, teacher salaries are similarly tied to a wage schedule based on education and experience. First year teachers without a masters degree are
hired in at $38,354, and teachers with an MA at step nine of ten income steps earn $70,861.
These numbers may seem like okay income thresholds, no matter how many people are stuck below them for the entirety of their careers. But in Ann Arbor, where the
median household income is $76,666 (versus Washtenaw County, where it's $59,104), the cost of living is rising to a level that makes $30,000 to $40,000 a tough income on which to get by. And given the size and influence of the university on the employment market, it has to be asked: how much are these below-the-median salaries being repeated in the community-at-large?
According to the Washtenaw County housing study, 87 percent of renters earning between $20,000-$34,999 and 45 percent of those earning between $35,000-$49,999 live in quantifiably unaffordable housing, meaning they pay more than 30 percent of their household income in rent.
Living in town on $40K
What's that like? Ask "Jane," a U-M graduate and interior designer working and living in Ann Arbor on a salary of about $44,000, who wished to remain anonymous. At 38, the single woman living in a near-downtown apartment with no pets or children says her paycheck covers the basics, but not much more.
"I don't suffer, but I'm definitely on a pretty good sized budget," she says. "I don't treat myself very much."
Jane pays $845 in monthly rent for her two-bedroom apartment—a rarity, considering that
Rent Jungle lists the average rent for a one bedroom apartment in Ann Arbor as $925. To provide some perspective, the new downtown
Ann Arbor City Apartments range between $2,140 and $3,010 for two-bedroom units. Still, in order to afford her home, Jane doesn't buy nice clothes or get her hair done professionally. Her two big splurges travel and healthy food.
"I look for bargains wherever I can find them. That's because, week-to-week, though I try really hard to save money," she says, "no matter how much I think is extra in my checking account, it always goes back down to that bottom line."
She is able to put a small amount into an IRA and has accumulated about $5,000 so far, which is approximately the same amount she has in credit card debt.
"If I'm going to paying this much to live," says Jane, "I've pretty much decided I might move."
She's now looking at a community across the country with a similar cost of living, but where there is more money to be made. At the same time, though money is always tight, Jane says there's a reason she's lived in Ann Arbor for 12 years.
"I'm willing to make the sacrifice for a fantastic community," she says. "I feel very safe here and I'm very fond of the access I have to good food and nature and a community that is forward thinking."
Buying a home on UM Salary
While Jane's rent has her looking to possibly move elsewhere, "Sarah," a U-M employee and graduate, doesn't want to go anywhere.
"My job is cool," says the 43-year-old IT worker who chose to remain anonymous. "I like the people I work with, and it's hard to land one of these jobs."
Sarah likes her job enough that's she's decided to make a commitment to the area by buying a house with her $44,000 salary. She began her house search in the Packard Rd./Eisenhower Pkwy area, but wasn't able to find many small, single family homes in her price range. And even those with affordable asking prices had tax bills that put them over the affordability edge. Though she was hoping to be able to walk to a grocery store and be close to her campus job, she ended up buying a house in Pittsfield Twp., six miles away from work, an area she categorizes as "the boonies." And still, her father helped her with the down payment—which she says would have been impossible to afford on her salary and student loan payments—and economizes to make it affordable on a month-to-month basis.
"I don't pay for cable," she says. "I have Virgin for my phone service, and the cheapest smartphone service you can get. I didn't have internet for a while."
She also doesn't buy much or have any costly hobbies. To be clear, Sarah says that because she's lived in other cities that are more expensive, she's not all the bowled over by the cost of living here. And if it weren't for her student loans from her U-M degree, she says, Ann Arbor life would be a whole lot more affordable.
"It was the University of Michigan that I paid all of that money to in the first place," she says. "There is certain irony to the fact that I paid close to $70,000 for a degree that I'm not actually using, and I'm working in IT paying back that money now."
That said, if she had kids or had a less thrifty lifestyle, it would be impossible for her to get by.
"I do think I'm underpaid for what I do," she says. "Looking around at my job description in other markets, I think people get paid more."
There's no denying the benefits of living in Ann Arbor. Though Jane is considering moving elsewhere, both she and Sarah are clear about how much they enjoy living here—which is why they have chosen to stretch their paychecks and live frugally to make it work. This would clearly not be possible if either had children or dependents to support.
"I, in some ways, understand why rent is the way it is in Ann Arbor," says Jane, "but the reality is that it is really difficult, and potentially impractical [to live here on this income]."
While it could be considered a solid, middle-class income in many other Michigan cities, it's clear that living on $35,000 to $45,000 is tough in Ann Arbor. And though many employers pay these rates—the
Washtenaw County housing study cites the positions of assistant principal at Huron Valley Catholic, Cost Plus World Market supervisor and assistant trainer at Eastern Michigan University as others that don't pay enough to live affordably in Ann Arbor—it's worthwhile to highlight just how many jobs provided by the city's largest employer fit into this not-quite-affordable range.
From IT employees to custodians to clerks, a significant number of U-M jobs just aren't enough to cover the cost of living in Ann Arbor. For a university that receives some of the
largest charitable donations in the nation and pays its football coach in the millions, that's notable indeed.
Natalie Burg is a senior writer at Concentrate and IMG project editor.
All photos by Doug Coombe.
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