One example is the cost of consumer goods, healthcare, and renting or buying a home, which vary widely from one city or region to another. To highlight this variation, the Tax Foundation in Washington, D.C., used recent data from the U.S. Bureau of Economic Analysis to create the cool interactive map below, which shows locations with the highest cost of living (bright orange) and the lowest (bright turquoise).
Running a cursor over the map displays metropolitan and rural areas and their comparative living costs, measured in terms of what $100 will purchase. In the Manhattan-New Jersey area, for example, $100 buys the equivalent of about $82 worth of goods, healthcare and housing, while it will buy $119 worth of the same stuff in central Kansas.
Source: The Tax Foundation.
The least expensive city is Danville, Illinois, where $100 buys $126 in consumer goods, followed by Jefferson City, Missouri; Jackson, Tenn.; Jonesboro, Arkansas; and Rome, Georgia. The most expensive metropolitan areas are the usual suspects, in this order: Honolulu, Manhattan, Silicon Valley, the Bridgeport-Stamford, Connecticut, area outside Manhattan, and Santa Cruz, California, which is south of Silicon Valley. [A second map compares states.]
Alternatively, the foundation puts cost of living in the context of workers’ incomes. For example, a Kentucky resident who makes $40,000 a year after taxes and wants to move to Washington, D.C., would have to earn 33 percent more – or $53,000 – to retain her same standard of living; the comparative cost of living difference between Washington and rural Kentucky is 33 cents. This map dramatizes why retirees from high-cost states have migrated in the opposite direction, to places like Florida and Arizona where their pensions and savings go farther.
Pay scales for workers in expensive cities tend to be higher than they are in less expensive cities, but the interactions between compensation and costs are complex. For example, economists say workers in San Francisco and New York earn more because that’s where they’re more productive or prefer to live. Because they earn more, they also bid up apartment rentals and house prices.
Steep rents and house prices are a large component of the cost of living in the bright orange areas of the map along the coasts. But Lyman Stone, a Tax Foundation economist, said housing costs are an indicator that smaller items will cost more too. For example, Whole Foods stores tend to cluster in cities or suburbs catering to people who can afford to indulge their expensive tastes for food – and houses.
“You don’t have a lot of places where housing is expensive and other things are cheap,” said Stone.
Content Provided by:
The Trustees of Boston College and the Center for Retirement Research