Matt has taken my offhanded complaint about DC beer prices and placed it within the context of social justice, noting that DC’s high wages account for its high beer prices (our average drink prices are comparable to New York’s; our median annual wage, at $57.1k, is somewhat higher than New York’s, at $52.8k; both are significantly above the national median of $42.3k). His basic project is all to the good: thus is the charge of any thoughtful person concerned with the common weal and/or our ability to drink away worries about the state it’s in.
However! I object to his specific analysis of the situation for two reasons.
The first concerns the relevance of the wage figures Matt cites — I think the average DC beer-buyer is poorer than those numbers imply. Matt’s reliance on pan-workforce statistics is understandable, but still insufficient for the task at hand. One needs to look at the bar-going slice of the population in order to characterize the market for happy hour beer. Sadly, the BLS does not consider this a focus of their work. However! Both New York and DC are on the high end of the marriage age spectrum, so let’s assume that bar-going rates are roughly similar for both populations. I contend that DC’s drinking class is likely to be impoverished relative to New York’s, for two reasons. First, DC’s young professionals are likely to have a substantially larger average debt burden than those of New York, given that we have twice the incidence of graduate degrees and, one imagines, student loans (UPDATE: proof!). Second: while I don’t have stats to back it up, the incidence of unpaid internships in this city must be abnormally high, even when compared to New York’s wage-depressed economy of starry-eyed small-town dreamers.
The second objection is based on evidence that the supply of alcohol in DC is artificially constrained, producing higher prices than would otherwise be found. I’m pretty sure that Matt’s aware of this effect, because I think I stole the idea from him. Namely: the terrible regulatory situation faced by DC bars. A search for retailers licensed to sell alcohol for on-premises consumption in New York, NY yields 14,718 records. An extremely generous summing of DC’s licensed alcohol sellers — I included everyone but grocery stores, liquor stores and caterers — shows 1,039 licensees. Normalizing this to population is challenging: liquor licenses aren’t administered at the MSA level, and it should be obvious that a larger proportion of DC’s happy hour attendees are from the suburbs than is the case for New York. But Wikipedia puts the workday population of DC at around a million, so let’s run with that number. If we do, we can see that DC has 1.039 milli-watering holes per capita (mWHPC), versus a robust 1.760 mWHPC for New York City (using per capita rates across the entire population — not just the bar-going segment — because of our our assumption that the demographics (if not the economics) of bar attendance are similar in both cities). Even using the formal population of DC (591,833) leaves New York in the lead, with a DC score of 1.756. And this is to say nothing of New York’s later last call, which provides the city’s residents with 8.3% more drinking hours per bar (marginal though they may be). Normalizing the mWHPC score to DC’s last call, New York emerges with a commanding 1.91 mWHPCw(2AM) — nearly twice as much as DC!*
The significance of this disparity is bolstered by looking at alcohol consumption stats. These are actually pretty hard to track down on an MSA level, and obviously state figures won’t do when making comparisons to DC. This admittedly-dated survey is about the best I could find, and shows a rate of alcohol use over a 30-day window that’s five percentage points higher for DC than New York. All else being equal, one would assume that the per-capita quantity of bars would be higher in harder-drinking cities. Yet in this case we see exactly the opposite.
This all suggests to me that wages aren’t the whole story — at least when that story is told in comparison to New York — and that regulatory forces play a significant role in distorting the DC market for alcohol by keeping supply artificially low relative to demand.
* As I went to sleep last night I realized that, unless something has changed since I last stayed out late and DC bars are now open for 24 of the day’s 26 hours, my math is wrong. The real percentage increase caused by a later last call should probably be substantially higher, even though a contrary effect should be introduced by applying something like a discount rate to the extra hours themselves. So I can’t really propose a firm number, though using no discount and assuming drinking begins at 5pm would give you an adjustment weight of 1.22; it therefore seems safe to say that New York’s weighted score should be no more than 2.15.