If you read Monday’s post called The Grand Canyon and Uluru Compared, you will know that I spent the first couple of weeks of this month in the US on holiday.
It wasn’t cheap for us; the Aussie dollar against the US dollar is at a bit of a low. We were only getting about 68 cents US for a whole one of our Australian dollars.
So we didn’t find things very cheap in America and we all know that the US is a cheap country, don’t we? Or is it?
Here’s a picture of a trash can…
Yes, I’m Talking Rubbish again, but only briefly this time.
First though, I want to explain that for this post I’m not going to use the measly 68 cents we got for each of our Aussie dollars, because that does represent a six year low. I’ve just looked at a ten-year graph, the lowest was 60 cents and the highest was $1.10.
Even looking at the graph, 85 cents looks to be the average, and as it is the average of those two sums, that’s what we’re going to use. We are going to convert at the average rate of 85 cents which is representative of the last 10 years, rather than the low of today.
Back to rubbish.
I took that picture of the above rubbish bin in Target in the USA. We have Target here in Australia as well. When my wife and daughter said they wanted to visit Target in the USA I thought to myself “We’ve travelled over 11,500 kilometres to go to a Target!”
Apparently, my two girls wanted to know if Target USA was any different from Target Australia.
It wasn’t. Apart from the prices. Here is the bin for sale in Target Australia. We know it’s the Australian one because it is not called a trash can anymore, it’s a pedal bin…
So the US Trash Can costs $69.99 USD, that’s equivalent to $82.37 AUD when adjusted using the 10 year average mentioned above. Whereas here in Australia, the Pedal Bin costs $59 AUD.
Unfortunately for me, when I looked at the photographs closely, the US bin is 45 L, the Australian bin is 30 L. So in the US you pay 40% more for a 50% larger bin.
But you don’t have a choice in either country, Australia doesn’t sell the 45 L bin and the US doesn’t sell the 30 L bin, the bottom line is in the US you’re still going to pay 40% more for your bin, but you are being forced to ‘max it’ by going large; at least in McDonald’s they ask you first.
I’ve not finished yet though. Then there is sales tax. Yes we have sales tax in Australia as well, we call it GST, but it is included in the price you see on the sticker.
In the US, it’s added at the till. We travelled around a bit, sales tax varies, but most commonly it was around 8%. I’m sure there would be sales tax on that Trash Bin.
If it is 8% tax in this case, now this bin costs the equivalent of $88.95 AUD. 50% bigger, but 50% more.
Now let’s go to McDonald’s.
Macdonald’s ice creams
This is the price of a softserve ice cream cone in McDonald’s USA…
“Crikey and strewth” said my daughter when she saw that, she knows How to Talk Australians now, “in Australia the ice creams are only 30 cents“.
Yes, she was wrong, they are actually 50 cents, but she was unlucky. Up until 14 October last year they were actually just 30 cents here in Australia. They are now 50 cents, but the US ice creams, with the rate adjustment are the equivalent of 81 cents Australian.
So, in the US, McDonald’s softserve ice creams are 62% more expensive, or maybe again they are bigger? I don’t know if there is sales tax on McDonald’s ice creams, but if there is, that makes them about 70% dearer.
Fujifilm Instax Mini 8 Instant Film Camera (Pink)
The next thing to catch my daughter’s eye was a Polaroid camera which she saw in a shop in San Francisco; it was $99 US. Of course, add the sales tax, adjust for the 10 year exchange rate, and that becomes $125.84 in Australian money.
Here, in Australia, they cost $100. That’s just two random shops though, so I just checked online.
- Amazon USA – $65.00 plus sales tax plus currency adjustment equals the equivalent of $82.62 AUD
- I found the same camera, quite easily, here in Australia for $73.50
So, already Australia are edging it in these random items, but it gets much worse for the US when you go out to eat in a restaurant or just have a drink.
Eating and drinking out in the US
Because the US is BIG BIG BIG on tipping, here in Australia, it’s just not part of our culture. Try tipping anyone here in Australia, whether that be in a restaurant, a bar, your hairdresser, the milkman (just kidding, they don’t exist here anymore either), even taxi drivers, and they will look at you as if you have a flower growing out the top of your head.
On the other hand, tipping in the USA, I think it’s fair to say, isn’t even a voluntary thing, it’s pretty much mandatory.
Here’s how it works:
- 10% = a bad tip, a very bad tip
- 15% = a below-average tip, but acceptable
- 18% = this is what is expected, the average tip
- 20% = this is what you give when you feel you have had a better than average service
Tipping 25% or more is not uncommon, especially if you want to get preferential treatment in a busy bar or restaurant. I spoke to one waitress who told me that some people tip her 50%.
Tipping in the USA is, as I’ve said, very big.
A quick drink
We were in a very average cafe/bar in San Francisco and we took advantage of happy hour where drinks were $4 a go. I had a beer, it wasn’t very big, at best it was 16 ounces in US terms, that’s 473 mL.
Cheap at four dollars? Well, we have to add sales tax, we have to add 18% tip, it’s expected, and then we have to convert it to Australian dollars.
Happy hour beer = $6
The fun occurred when I went to get a second; happy hour had finished, the same beer was now $8.75. Now admittedly, that’s not the usual price a beer will be in the US, San Francisco is apparently one of the most expensive cities, if not the most expensive city in all of the US.
Now $8.75 with all the add-ons is $13.10 AUD.
Sydney is our most expensive city, probably, but nobody would pay that much for a beer in an average cafe in that city, or even one overlooking Bondi Beach.
Expect to pay $7 here, maybe maximum $9, no tax added, no tip expected.
Eating out is the same problem. The price you see on the menu might look pretty good, but then once you’ve added the sales tax and given the expected 18% tip, you’ve added 27% to the bill.
Then, when you’re adjusting for Australian currency, even using the 10 year rate, the total percentage add-on becomes exactly 50%.
Once you add on that 50%, I can assure you that eating out in the US from my limited experience, even using the 10 year average figures, is certainly no cheaper than eating out in Australia.
For us though, with the exchange rate so low, our add-on was actually around 87%, so for us, eating out wasn’t cheap. Drinking out wasn’t cheap.
The USA wasn’t cheap.
What was cheap in the US?
Petrol, or gas as it’s called in US, that must be cheaper, mustn’t it?
In San Francisco, we paid $4.12 per US gallon. In LA it was $3.59 and it was a bargain $2.47 in Arizona. The difference is, incidentally, all down to state taxes.
Let’s call the average price of a US gallon of petrol $3.39, the average of the above three figures.
One US gallon equals 3.79 litres, so that’s 89 cents US per litre. I’m going to use the current conversion rate on this one, because petrol prices are very much linked to the current exchange rate.
So 89 cents US is equivalent to $1.31 AUD.
EXACTLY the same price we are currently paying here, in fact, today I can buy petrol for $1.20. So, turns out now that I’ve done the maths, that petrol is no cheaper in the US, unless, maybe, you are in Arizona.
Even I am surprised at that one.
The US produce some wonderful ales, I enjoyed many a fine IPA during my stay. Most sixpacks (similar sized bottles to our sixpacks) cost around $9 USD, so about $11.50 AUD with tax and conversion at the 10 year rate.
Here, most sixpacks are about $18 or so. But here, you can get a 24 pack much cheaper, $40-$50. But most of these US beers were very strong, 6% to 8% or more, you can’t buy those for $50 here in 24 packs, it’s more like $80.
Beer in the US is much cheaper and the range and quality is unmatched.
Shorts though, that was an eye-opener. You can buy a 1.75 litre bottle of vodka or gin for something like $12-$16, including tax. No tip required, it’s a supermarket.
That works out at a stunningly low Australian equivalent of $9.40 a litre.
Here, in Australia, a litre of the same will cost roughly $42.00.
Maybe I should be applying for my green card then?
Disclaimer blah blah
I only spent a couple weeks in the US, I know nothing really. This is a lighthearted cost comparison, all I’m saying is that I expected things to cost a lot less.
Strikes me though that when you take into account Australia’s undoubtedly higher average wage, then maybe the idea that the US is really cheap is just a myth.
But of course, life isn’t all about trash cans, Polaroid cameras, eating out, drinking and McDonald’s ice creams. We also have to take into consideration little essentials like food, housing, keeping warm in the winter, education and health services.
So I’d love to hear from residents of the US, let me know what you think, is the costs of living in your country cheap? Have I made any major mistakes here?
Please do have your say in the comments below, comments are open to everyone no matter where you live.