(NEXSTAR) – Are you considering moving to a new city for work? Don’t forget to find out the cost of living before accepting your new salary.
A new study from financial site Bankrate finds that after adjusting for cost of living, the average worker’s purchasing power increased in only a few metropolitan areas (compared to other cities).
For example, the San Francisco metropolitan area had the highest median household income in 2023 ($127,792), according to the U.S. Census Bureau. But the costs of housing, food and other necessities are just as high, falling 15.4% below the average worker’s purchasing power, the highest of any major metropolitan area.
Here are the top five major cities where the cost of living accounts for the largest percentage of workers’ wages, according to Bankrate.
Metropolitan area Average annual wage before cost of living adjustment Annual average wage after adjustment for cost of living Change in purchasing power after adjusting for cost of living San Francisco-Oakland-Fremont, California Metropolitan Area $97,460 $82,453 – 15.4% Los Angeles-Long Beach-Anaheim California Metropolitan Area$73,400$63,550-13.4%Seattle – Tacoma – Bellevue, WA metropolitan area $86,520$76,566-11.5%New York-Newark-Jersey City, NY-NJ metropolitan area$82,050$72,933-11.1%Miami-Fort Lauderdale-West Palm Beach, FL metropolitan area$63,380$56,691- 10.6% (Credit: Bankrate)
Since cities with higher average wages tend to have higher costs of living, and vice versa, is there a balance that can effectively drive wages higher?
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After adjusting average wages for cost of living, Bankrate found that only San Antonio, St. Louis, Charlotte, and Detroit can boast increased purchasing power compared to other large cities.
Metropolitan area Average annual wage before cost of living adjustment Average annual wage after cost of living adjustment Change in purchasing power after adjusting for cost of living San Antonio – New Braunfels, Texas Metropolitan area $57,700 $61,580 6.7% St. Louis, Missouri - Illinois Metropolitan Area $61,910$64,2893.8%Charlotte – Concord – Gastonia, North Carolina – South Carolina Metropolitan Area $64,440$66,4333.1% Detroit-Warren-Dearborn, Michigan Metropolitan Area $64,360$65,6732.0% Houston-Pasadena-Texas The Woodlands Metro Area $63,510 $63,383-0.2% (Credit: Bank Rate)
Yusuf Benalal, 30, told The Wall Street Journal of his decision to move from Miami to Charlotte: “I don’t want to be broke in a sexy city. I want to thrive in a mediocre city.”
A 2024 study by payroll firm ADP supports Benaral’s decision to avoid cities like Los Angeles, New York and Chicago in favor of smaller cities with active employment, affordability and solid salaries. It seems so.
ADP researchers looked at 55 U.S. metros and found that the average wage for a four-year college graduate, adjusted for cost of living, was highest in Raleigh, North Carolina. Austin, Texas. Baltimore; Atlanta; and Charlotte, North Carolina.
The biggest leaps in purchasing power come from keeping your salary and moving to a less expensive city, but that’s not always possible, especially when changing companies.
So what should your decision-making process include?
Career coach Melissa Fleury recommends using a cost-of-living calculator tailored to your prospective city to see how your base salary and bonuses will compare to other big cities. Fleury warned that there could be hidden costs, such as transportation, child care and living expenses.
“You need to make sure you like the area, and then you’ll probably want to stay there,” Lynn Berger, a New York City-based career counselor and coach, told Bankrate. . “If possible, try living there for a while without financial constraints or responsibilities before buying a house or apartment.”
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