EXPAT FOCUS – I am an avid reader of Quora.com. Every day I usually spend my first 15 minutes reading the entries found in my email digest. If you aren’t on Quora, you should be. High recommended.
But to my point. Today, in the ‘Visiting and Travel in Costa Rica’ section, the question “Why are wages in Costa Rica low if it is an expensive country to live in?” was posted.
Nick Halverson, who lives in Costa Rica, posted this answer:
It is definitely a difficult and complicated situation, however, I would disagree with a couple of the assumptions you made in your question.
If you are comparing clothing, food, and housing to middle-class USA living, then yes, it would be impossible to live like that on $2/hour. This brings up a common discussion I often have with my clients. If you want to live the exact same lifestyle that you currently have with the only change being your address (from USA to Costa Rica), then it will be an expensive move. However, if you choose to live like a Costa Rican, then it can be quite affordable (with a couple of exceptions that I’ll address later in my response).
Here are some incorrect assumptions I believe you’ve made:
- Clothing is affordable. I spend quite a bit of time in San Isidro del General (Perez Zeledon) and there are dozens of small clothing stores throughout town. Their prices are quite reasonable.
- The brands will be different than what you see in the USA/Canada, but how important is it to wear Levi’s jeans, if someone can afford to buy a different brand for $8? I would argue, it’s not important at all.In your question, you are comparing the lowest-paid workers in a country to an average middle-class worker. If you are going to use the $2/hour figure then you need to compare that to the lowest-paid wage earner in western countries (~$7/hour). What you would be probably overlooking in this comparison, however, is the benefits received by the $2/hour worker in Costa Rica. All full-time workers are entitled to medical benefits which have to be paid by the employer. I have a couple of workers that earn approximately $2/hour, however, I also pay the government approximately $2.50/hour in medical insurance (for them and their immediate family) plus, they are earning a severance if I decide to fire them without cause. Therefore, many $2/hour workers are in fact receiving benefits worth about $4.50/hr and have full medical and dental benefits. The $7/hour worker in Western countries rarely has medical benefits.Unfortunately, many ex-pats hire local Costa Ricans without paying this legally enforceable healthcare tax.
- Food is affordable in Costa Rica. If you are comparing a Western diet full of fats and carbohydrates, then yes, food is a lot more expensive in Costa Rica than the USA/Canada.Costa Rica doesn’t manufacture many things so importing Doritos, Coca Cola and other high-fat/high-sugar foods IS expensive.However, as we all know, those foods are nutritiously weak. If one chooses to eat like a Costa Rican, then your diet would consist of food generally grown in your front yard (fruits, vegetables, chickens, beans) and a large bag of rice at the store. Rice is very inexpensive. Outside of my house we have planted over 10 types of fruits/vegetables (mamones chinos, papaya, mango, yucca, limon, guanabana, etc) and depending on the season, I eat healthy food from my front yard.
- There are definitely items that are a lot more expensive in Costa Rica than other Western countries. My rule of thumb is: “If you have to plug it into the wall for electricity, it is at least 50% more expensive in Costa Rica than the USA.” Back to my earlier point of having little-to-no manufacturing of electronics in their country, Costa Rica has to import everything.
- Vehicles are more expensive. Just like electronics, vehicles are generally 50% more expensive in Costa Rica than the USA.
- I believe part of the reason why those items are more expensive is that Costa Rica does a poor job at collecting taxes. Therefore, if a country taxes items that generally wealthy people can afford, the country has found a way to more easily collect and track taxes.
- Regarding housing. I have been to 100’s of homes in Costa Rica. Many are much smaller than homes in the USA where the average home is 2,400 square feet. During the past decade of traveling and living in Costa Rica, I’ve learned the square footage of a home means absolutely nothing in terms of happiness, marital happiness, etc. The Western world is full of large homes filled with a couple of children and 50% divorce rates. The people of Costa Rica generally work very hard for their money, and I believe, have a better sense of family and happiness.
One of the biggest challenges currently facing Costa Rica, I believe, is the increasing separation of the “haves” and the “have-nots”. This is especially apparent in the suburbs of San Jose.
Additionally, as proven through countless research papers, as income increases, so does the amount of fat/carbs in ones diet. As the average income has increased in Costa Rica, so has obesity rates and diabetes rates.
With all of this said, it IS very difficult to survive on $2/hour (and $7/hour in Western countries). My hope is that as the country continues to develop that higher paying jobs become more available. However, a country needs a large manufacturing sector to get that started, and that is where Costa Rica has some challenges.
What is or has been your experience of living (or visiting) Costa Rica? Use the comments section below or post to our official Facebook page.