Cost of Living

You wouldn't believe what people here live on. Or maybe some of you would. Moving to Hong Kong from the US brought into relief the macro differences between social and economic systems. The salaries we earn as expats with professional skills seemed in line with us expectations before we arrived but after walking the streets for a while, it is clear that we operate at a level above our self-conception.

You see the average worker here works a 50-hour week for $9k (all figures in HK dollars) a month. Just for reference sake the HKD-USD exchange rate is about 7.75 right now. Salaries here have a gap unseen in the US because it is based upon which market your job is tied to. Investment bankers' salaries have to compete with New York and London but construction workers' salaries only compete with Guangdong province. The resulting gap would rend the social fabric in most Western nations, but in Hong Kong the government and its citizens have taken certain measures to offset this.

Things here are cheap. Our friend who makes $9k/month can get government housing for about $1100/month, which is essentially a modest apartment which the tenant is expected to furnish and/or remodel to their liking. Even if you exceed the income limits you only need pay 300% rent and get the same apartment. This is possible because in the 1970's the government along with private developers 'built' new cities out of outlying villages - including the both cities the author has lived in. Now granted government housing here is as it is everywhere, substandard; but if it only costs you 13% of your salary you can afford to sock some away for a down payment on a nicer place.

Housing isn't the only cheap thing around here. Manufactured goods are cheap because all those products that say 'Made in China' were likely made a province or two away. Even imported items are relatively cheap because Hong Kong is one of the four busiest ports in the world, which allows scale to lower the costs for importers. The result of all this is that labor is cheap here too, mostly because the things workers need to buy don't cost that much.

The other thing that helps is the way families are structured here. In an idealized portrayal of the US, children live with their parents until their early 20's and then strike out on their own. In Hong Kong, children will live with their parents until marriage and if they are the eldest in the family, they may just stay put and wait to inherit the house. If young adults do not choose this option another common approach is to move in with friends, but either way the cost of housing is always defrayed by family or friends.

What this translates into is that the average person in Hong Kong probably has a nicer handbag or TV than we do, but when we tell them where we live they think we pay too much in rent. While its true that expats command higher salaries for importing their skill sets, they typically import their spending habits and lifestyle expectations as well. full disclosure: most expats I have met do not and would not follow the pattern described above but according to one estimate, 50-60% of locals live out their lives this way.

This reminds me once again of the heritage Foundation’s annual survey, which has ranked Hong Kong as the freest economy in the world 14 years running. The government in Hong Kong has helped to keep the cost of living cheap, allowing companies to profit and people to enjoy their lives - so long as living in a 450' apartment in a crowded, noisy city is your idea of enjoyment.