Bang for Your Buck? The Cities Where a Paycheck Goes the Furthest in 2017
When looking at jobs in different local markets, a dollar is not always a dollar—and sometimes it isn’t even a dollar. Paychecks go further where housing and other costs are lower. This is the dilemma job seekers face: The places with the highest salaries also have the highest cost of living.
Salaries are highest in San Jose and San Francisco, but that doesn’t take into account the cost of living. When you factor in how much more expensive it is to live in the Bay Area, the rankings flip entirely. It turns out that when salaries are adjusted for cost of living, they tend to be higher in smaller metros than in the largest ones. Adjusted salaries are highest in Birmingham, AL, Jackson, MS, and Fresno, CA—places where what you’re likely to earn buys the most. Big cities like Miami, New York and Los Angeles are among those where your salary won’t stretch far.
So should job seekers write off metros where salaries don’t keep up with the cost of living? Not necessarily. Some people want a huge city, despite the high costs. If that’s you, consider Detroit or Atlanta, and check out the list below. In fact, a low average adjusted salary just might be a signal that a city is special for reasons other than money. Plus, places that look like a worse deal today might offer greater job security tomorrow.
Living large in Birmingham, and just getting by in Honolulu
Big salaries and high prices go hand-in-hand. The five metros with the highest salaries—San Jose, San Francisco, Washington, DC, Fairfield County, CT, and New York—are among America’s most expensive places to live. That makes sense. If there were some magical place with fat paychecks and low prices, people would flock there—flooding the market with workers while bidding up the cost of housing—and the magic would fade.
But salaries and prices don’t all even out in the wash. To find where salaries go furthest, we calculated the average salary for all jobs with annual-salary information posted on Indeed between August 2016 and July 2017 in each of the 104 US metropolitan areas with at least 500,000 people, and then adjusted for each metro’s cost of living.
When we adjust for living costs, those big coastal metros with high average salaries no longer look like a good deal. Instead, as noted, the highest adjusted salaries are in Birmingham, AL, Jackson, MS, and Fresno, CA. Not a single big coastal metro ranks among the top 20, but plenty of smaller metros in the South and Midwest do. The only California metros among the top 20 are far from the Pacific—in the Central Valley metros of Fresno, Bakersfield, and Modesto, where housing is much cheaper than on the coast.
Where do salaries stretch the least? Poor Honolulu. Its salaries aren’t that high to begin with and, after adjusting for its high cost of living, it’s the most expensive metro in the country. Honolulu is expensive not just because of housing costs. Housing actually is more expensive in San Francisco and San Jose, but housing accounts for only one-third of the typical American’s total expenses. In Honolulu, physical goods cost more…