Key takeaways
- Bankrate’s analysis finds that cost of living impacts the average worker’s wages most in the San Francisco metro area, where high living costs effectively cut their buying power by more than 15 percent.
- Other places where workers lose the most ground on their wages are Los Angeles (13.4 percent), Seattle (11.5 percent), New York (11.1 percent) and Miami (10.6 percent).
- San Antonio, St. Louis, Charlotte, and Detroit were the only large metros in which the average worker’s buying power grew after adjusting for the cost of living.
People who live in expensive cities say it all the time: “If I lived somewhere cheaper but earned the same amount, I would be much better off financially.”
For many white-collar workers, that was a reality when remote work became the norm during the COVID-19 pandemic. Workers with big salaries who could work remotely flocked to more affordable parts of the country and bought homes.
But with job relocation, there’s a lot to consider – especially how that new paycheck stacks up against your new city’s cost of living.
A new analysis by Bankrate finds that cost of living takes the biggest bite out of the average worker’s wages in San Francisco, where high living costs effectively cut their buying power by more than 15 percent. In other words, someone making $100,000 in San Francisco has the same buying power as someone else making roughly $79,000 in San Antonio or $85,000 in Atlanta. Other places where workers lose the most ground on the buying power of their wages are Los Angeles (13.4 percent), Seattle (11.5 percent), New York (11.1 percent) and Miami (10.6 percent).
On the other hand, workers in some metro areas actually see their buying power increase after their wages are adjusted for the cost of living. San Antonio, St. Louis, Charlotte and Detroit were the only four metros where paychecks stretch a little further, when compared with other metros, after adjusting for the cost of living.
Given that the same goods and services can often cost more or less in different parts of the country, it’s not always true that someone with higher wages makes more money.
— Sarah Foster, Bankrate economic analyst
How far your paycheck goes in the 25 largest metros
Bankrate’s new cost-of-living analysis illustrates the need to consider costs in a potential new location before committing to a job offer. We looked at regional data from the Bureau of Economic Analysis to determine how far average annual wages go in the 25 largest U.S. metros.
Moving from a high-cost area to a lower-cost city – or vice versa – may not always result in the expected increase in purchasing power. While workers in expensive cities tend to get paid higher wages on average, their pay effectively declines when adjusted for the area’s cost of living. Similarly, workers in cheaper areas may make less, on average, but their pay effectively increases because they can buy more with their dollars.
The following table and charts show where the average worker loses the most ground to the cost of living and where wages go the furthest before and after the cost of living is taken into account among the 25 largest U.S. metros.
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MSA Annual mean wages, before adjusted for cost of living Annual mean wages, after adjusted for cost of living How much less or more wages go once adjusted for cost of living San Francisco-Oakland-Fremont, CA Metro Area $97,460 $82,453 -15.4% Los Angeles-Long Beach-Anaheim, CA Metro Area $73,400 $63,550 -13.4% Seattle-Tacoma-Bellevue, WA Metro Area $86,520 $76,566 -11.5% New York-Newark-Jersey City, NY-NJ Metro Area $82,050 $72,933 -11.1% Miami-Fort Lauderdale-West Palm Beach, FL Metro Area $63,380 $56,691 -10.6% Boston-Cambridge-Newton, MA-NH Metro Area $84,490 $75,708 -10.4% San Diego-Chula Vista-Carlsbad, CA Metro Area $76,010 $68,170 -10.3% Washington-Arlington-Alexandria, DC-VA-MD-WV Metro Area $88,370 $81,372 -7.9% Riverside-San Bernardino-Ontario, CA Metro Area $61,930 $57,396 -7.3% Denver-Aurora-Centennial, CO Metro Area $75,910 $71,953 -5.2% Phoenix-Mesa-Chandler, AZ Metro Area $64,890 $61,507 -5.2% Minneapolis-St. Paul-Bloomington, MN-WI Metro Area $70,290 $67,263 -4.3% Portland-Vancouver-Hillsboro, OR-WA Metro Area $72,350 $69,836 -3.5% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro Area $67,880 $65,585 -3.4% Tampa-St. Petersburg-Clearwater, FL Metro Area $62,000 $59,961 -3.3% Dallas-Fort Worth-Arlington, TX Metro Area $65,860 $63,756 -3.2% Baltimore-Columbia-Towson, MD Metro Area $72,470 $70,565 -2.6% Chicago-Naperville-Elgin, IL-IN Metro Area $69,490 $67,729 -2.5% Orlando-Kissimmee-Sanford, FL Metro Area $57,960 $57,329 -1.1% Atlanta-Sandy Springs-Roswell, GA Metro Area $66,910 $66,313 -0.9% Houston-Pasadena-The Woodlands, TX Metro Area $63,510 $63,383 -0.2% Detroit-Warren-Dearborn, MI Metro Area $64,360 $65,673 2.0% Charlotte-Concord-Gastonia, NC-SC Metro Area $64,440 $66,433 3.1% St. Louis, MO-IL Metro Area $61,910 $64,289 3.8% San Antonio-New Braunfels, TX Metro Area $57,700 $61,580 6.7%
Before adjusting for the cost of living, the San Francisco, Boston, Seattle and DC metro areas have the highest mean wages. But when mean wages are adjusted for the cost of living to show their real value in those metros, the gap between more expensive and more affordable metro areas shrinks.
Bigger, more expensive cities generally pay workers more because of the types of companies and occupations found in those cities, as well as a stronger competition for highly skilled workers, but that doesn’t necessarily mean that workers’ wages always go further in those cities. After the adjustment, the San Francisco, Boston, Seattle and DC metro areas remain among the highest-paying areas, but wages in the San Diego and Los Angeles areas, for example, drop significantly.
The average worker makes $73,400 a year in Los Angeles, ranking No. 8 for average annual wages in the metro areas Bankrate examined in its analysis. But when adjusting for the area’s high cost of living, those wages are worth about $63,550, losing 13.4 percent of its initial value.
Adjusting for cost of living reveals that average annual wages in Los Angeles are worth less than wages in the majority of metros where workers appear to make much less — moving down from 8th to 18th place in the post-adjustment. It also reveals that real annual average wages in San Diego are less than the real annual mean wages in Denver, Portland and Baltimore.
Among the 25 most populated metros, workers can make the biggest leaps in their purchasing power by moving from the highest-cost metro (San Francisco) to the lowest-cost metro (San Antonio). For example, average annual wages in San Francisco are $97,460, which is equivalent to the same purchasing power as roughly $77,000 in San Antonio. That means someone moving from San Francisco to San Antonio could take a 21 percent pay cut in their new city without noticing much of a difference, according to Bankrate’s calculations.
But Foster says even that can have its drawbacks. Workers who relocate from more expensive cities to cheaper locales aren’t always able to bring those bigger paychecks with them.
“Whether that’s a realistic salary in an area [San Antonio] where the average worker makes about $58,000 is another question,” she says. According to Foster, the compensation package you’re offered for a job relocation will ultimately depend on your industry, skills and experience — and the demand for the type of work in the area where you’re thinking of moving to.
Younger workers are more willing to relocate than older workers
With remote work on the decline, many workers — especially young workers — now appear to be open to relocating. According to Bankrate’s Employment Security Survey, 39 percent of Gen Z workers and 28 percent of millennial workers said they would likely relocate for a job between August 2024 and August 2025. Comparatively, only 13 percent of Gen Xers and 6 percent of baby boomers in the workforce would likely relocate for a job during that same period.
Melissa Fleury, career coach and founder of the Branded Career, says that’s because younger workers tend to have fewer familial and financial ties, such as mortgages or school-aged children, “allowing for greater flexibility.” Fleury says younger workers also see relocation as an opportunity to advance their careers, experience new environments and expand their professional networks.
“Younger generations often prioritize work-life balance and personal growth, viewing relocation as a stepping stone to achieving those goals,” she says.
Where are young Americans moving to?
Young Americans have been flocking to metro areas along the Sun Belt, and for good reason. They’re able to stretch their dollars much further while still enjoying the employment opportunities, the cultural hot spots and other trappings of the big city.
Bankrate’s cost-of-living analysis found that many of the metros where workers’ wages rise, once adjusted for cost of living, also experienced an uptick in people ages 25 to 44 between 2022 and 2023. According to the latest Census Bureau data, these five large metro areas grew the fastest between 2022 and 2023 for people ages 25 to 44:
- San Antonio-New Braunfels, TX Metro Area: 2.9%
- Tampa-St. Petersburg-Clearwater, FL Metro Area: 2.4%
- Houston-Pasadena-The Woodlands, TX Metro Area: 2.3%
- Dallas-Fort Worth-Arlington, TX Metro Area: 2.3%
- Orlando-Kissimmee-Sanford, FL Metro Area: 2.3%
By relocating to more affordable metros with growing job markets, young people can make their paychecks go further. Here’s an example: If you’re making $70,000 per year in Chicago and decide to relocate to San Antonio for a new job for the same salary, your salary will be worth roughly 9 percent more in your new city. To maintain the same standard of living you had in Chicago on a $70,000 salary, you could take a job that pays around $64,000 in San Antonio. That’s because Chicago has a higher cost of living, and therefore, your salary goes further in San Antonio, even if you’re technically making the same or less on average.
“Ensure the new salary supports a comfortable lifestyle in the new location, factoring in housing, transportation and taxes,” Fleury says.
Should you relocate for a job opportunity? Advice from three career experts
Whether you’re considering relocating for a job, or you’ve already been offered a job in a different city, here are career experts’ top tips on what to consider before making the decision.
To determine if a compensation package is sufficient, it’s important to evaluate it comprehensively. Start by analyzing the base salary and bonuses, adjusting them using cost-of-living calculators specific to the new city to ensure they align with local expenses. Next, review the benefits offered… and account for hidden costs such as differences in transportation, childcare and lifestyle expenses, which can significantly impact your overall financial well-being in the new location.
— Melissa Fleury, career coach and founder of the Branded Career
Research what industries are prevalent in the city that you’re considering moving to and the health of the company. You don’t want to limit yourself, and it’s ideal if there’s more than one industry that’s prevalent.
— Raquel Cid, career coach and founder of Coached by Cid
You’ve got to make sure you like the area, and you’d be willing to perhaps stay there because one never knows if the job’s going to work out. If possible, before buying a home or a condominium, live there a little bit without any financial ties or responsibilities.
— Lynn Berger, a New York City-based career counselor and coach
Read the full article here