I recently completed the 2023 Chemical Engineering Salary Report and I’ve been thinking about the topic of cost-of-living for awhile. One thing that I think is under-appreciated in the job marketplace is how substantial the cost-of-living differences are between certain areas of the country. I wanted to take a minute and share some of the resources I use for calculating the difference between two locations and also show you a few real-world examples.
Resources:
There are a few websites that I like to use, mostly because they calculate the differences DIFFERENTLY.
BankRate: this website has a great, easy-to-use (and free) cost of living calculator that allows you to compare two different cities easily and quickly. One of the downsides is that is doesn’t get very specific. For example, I live in one of the outer Western suburbs of Chicago, but BankRate only gives me “Chicago”…and if you’re from around here, you know there is a big difference between Chicago and an outer suburb. Still, for a quick comparison that gives you more than just one data point, BankRate’s calculator is hard to beat.
City-Data.com: this is my personal favorite because in addition to being able to compare two cities (at a very granular level), you also get to see other differences between where you are now and where you’re going. Things like differences in demographics, weather, crime, etc. For cost-of-living, they put every location on a 100-scale, where 100 is an average (50th percentile) level of cost. The higher the number is over 100, the higher the general cost-of-living. The farther below 100, the lower the general cost-of-living.
There are a few others that are worth looking at: SmartAsset has one, NerdWallet has one, PayScale as well.
Sneaky Taxes:
There are eight states with no income tax: AK, FL, NV, SD, TN, TX, WA and WY. The five states with the highest state income taxes are: CA, HI, NJ, OR, and MN. However, that is not the full story. States with no income, or low income, taxes often find other ways to get you. For example – Tennessee, no state income tax, but they have a 9.55% sales tax (state and local sales tax combined). Similar story in Washington state, no income tax, but a 9.23% sales tax. Texas doesn’t have a state income tax, but has some of the highest property taxes in the country (1.6% of home value). Overall, taking income and sales tax into consideration, the top highest sales/income tax states are: NY, CT, NJ, IL, CA and WI (tied). When moving, it’s important to understand how these factors change between where you are now and where you are going. As an employer, it’s important to understand the differences that a prospective candidate may be looking at when they are considering relocation to take the role you have open.
Some Examples:
Some of the most extreme examples involve states where there is low income tax combined with low housing costs compared to high income tax/high housing costs.
Houston to San Francisco:
Base Salary Houston: $125,000
Equivalent in San Francisco
– BankRate: $242,680
– City-Data: $231,250
– PayScale: $253,770
Much of that difference is in housing cost alone, which BankRate does a good job of highlighting. I like think of this from the converse standpoint as well – if you are currently living in San Francisco (or LA, or San Diego for that matter), moving to somewhere like Houston will allow you to enjoy a much higher standard of living at a much lower cost.
Houston to Austin
Base Salary Houston: $125,000
Equivalent in Austin
– BankRate: $137,080
– City-Data: $127,500
– PayScale: $136,700
I compared these two because it shows how of a difference cost of housing alone can make in this equation. Houston and Austin both have no state income tax and local/state taxes are fairly similar. Austin housing is significantly most expensive on average.
Charlotte to Houston
Base Salary Charlotte: $125,000
Equivalent in Houston:
– BankRate: $117,600
– City-Data: $126,250
– PayScale: $119,470
Here’s one where the calculators don’t all agree. Granted, City-Data’s data isn’t as up to date as BR and PS. Charlotte and Houston are a good example of comparable cost-of-living, despite different economic factors.
Boston to Seattle
Base Salary Boston: $125,000
Equivalent in Seattle:
– BankRate: $125,000
– City-Data: $106,250
– PayScale: $125,400
Here’s an example of two cities that are generally very expensive, but when compared to one another, they are fairly similar.