The Cities Where Your Salary Will Stretch The Furthest 2016

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When Americans consider a move to another part of the country, they sometimes are forced to make a tough choice: should they go to a city with the best job opportunities, or a less economically vital area that offers a better standard of living, particularly more affordable housing? However,  there are still plenty of metropolitan areas in the U.S. where you can get the best of both worlds.

Center for Opportunity Urbanism senior fellow Wendell Cox has developed a set of rankings that identify metropolitan areas where salaries are relatively high relative to costs, and you get more for your paycheck. Our list is geographically and demographically diverse, both in terms of the top 20 and the places closest to the bottom.

The COU Standard of Living Index takes the 2015 mean pay per job in the 106 metropolitan statistical areas with more than 500,000 population and adjusts it by cost of living. Metro areas that have a large proportion of high-wage jobs tend to do best, such as San Jose, Calif., and Houston. The biggest differences in terms of cost of living generally have to do with housing; costs for goods varied by 23 percent and for services by 35 percent in 2014 across the metropolitan data, but for rents the differential between the most and least expensive metro areas is 194 percent and, for housing purchased in 2014, a remarkable 775 percent. The composite cost of living index underlying the COU Standard of Living Index is developed from a blend of annual rent as well as home ownership costs for prospective home buyers.

I have divided the top and bottom rankings into four basic groups: expensive but worth it; moderately priced but still high income; expensive but so costly as to  be economically barely worth it; and, finally, areas that are cheap, but not for the right reasons.

Expensive, But Worth It

There are several high-cost areas that do very well in this ranking, largely because they offer high incomes to match. The metro area with the highest annual wage when adjusted for cost of living is San Jose, the center of Silicon Valley. The cost of living there is 63 percent higher than the national average, the highest in the nation, but with the highest nominal pay per job at $112,300 ($27,000 above the next best), the metro area still ends up with the highest adjusted paycheck of $68,850.

Four other high-cost areas also make our top 10. Two are in Connecticut: No. 4 Bridgeport-Stamford, where the cost of living is 45 percent above the national average, and No. 5 Hartford, where costs are 15 percent above the national average. But higher wages — $85,400 for Bridgeport and $62,600 for Hartford — give residents the buying power to absorb those costs, and places these metros areas high on the list.The other two are No. 6 Boston and 10th-ranked Seattle.

One common thread that helps these metro areas overcome high costs is a high concentration of jobs in better paying fields such as technology and business and professional services.

Opportunity Cities: Less Expensive And Economically Vital

The other five top cities in our Standard of Living index fit a very different mold. These are what may be seen “opportunity cities,” where there are relatively high wages and somewhat low costs. If the successful blue cities can be seen as something of “gated communities” for well-educated, largely white and Asian residents, these cities offer a higher standard for a broader and often more diverse population.

The epitome of opportunity cities, Houston, takes second place. Like San Jose, Houston has a strong concentration of engineering talent and STEM jobs, many of them related to the energy industry. The average annual paycheck in America’s Energy Capital is $65,000, well above the national average, and with a cost of living barely 5 percent above the usual, it’s only eroded slightly to an adjusted worth of $62,300.

The other cities in our top 10 tend to feature high growth in STEM employment but moderate to low costs. They include No. 3 Durham, N.C., located in the tech-rich Research Triangle area, No. 7 Atlanta and No. 8 Detroit. In all these areas the cost of living is around the national average, but salaries are higher. You may be surprised by Detroit, but this ranking looks at the total metro area, which is in much better shape than the core city. With good-paying jobs, many connected to the revived auto industry, the Detroit metro area is in far better shape than is commonly suggested.

Of course, the Motor City may lack the glamour and stratospheric wages of Silicon Valley, but its far lower costs offer a surprising high standard of living. Nor is it the only Rust Belt city that ranks highly. Consider No. 13 Cincinnati, No. 15 Pittsburgh, No. 16 Cleveland and No. 19 St. Louis. In the future it may make sense for more individuals and companies to take a second look at these areas.

Expensive, And Not Producing Enough Good Jobs To Make Up For It

Not all expensive cities are worth the cost, particularly if you are considering a move. Take 89thplace San Diego and 97th place Los Angeles, two California cities with idyllic climates and dynamic histories, but that now have become too expensive to offer a high standard of living for anyone not making far more than the local average salary.

The tragedy for these Southern California metro areas is that, while they have seen a rapid escalation in housing prices and rents, they have not been able to take a meaningful part in the tech boom that has driven up wages in San Jose and the Bay Area. San Diego’s mean wage of $58,000 might seem more than respectable, but with a cost of living 36 percent above the national average, it reduces the real pay in this attractive coastal city to a more modest $42,700.

Most critical, however, is the clear downshift in the standard of living in my adopted home region, greater Los Angeles. Once L.A. was full of high-wage jobs, many of them tied to aerospace and manufacturing, as well as high-end business services. Those industries have been eroding for well over a decade, replaced, in large part, by lower-wage positions in hospitality, retail and health. Now it is one of the poorest big cities in America, yet one with extraordinarily high costs, particularly for housing. The cost of living in LA is 46 percent above the national average, driving real wage from a respectable nominal average $59,000 to a dismal adjusted $40,400.

Left Behind

Most of the metro areas at the bottom half of our list are smaller, with barely a million people or less. Many of these are in high-cost regions, notably our last-place finisher, Honolulu. In the Hawaiian capital, the average paycheck is $48,800 but when you factor in our cost of living modifier, the real income falls to $33,900. That’s partly due to a lack of developable land that drives up property prices and also due to the high proportion of necessities that are imported, including food and oil.

This pattern is repeated by many areas in our bottom 10, including the California cites Stockton (94th), Fresno (98th), Riverside-San Bernardino (102nd) and Santa Rosa (105th). In all these cases, incomes tend to be  modest, but costs, particularly for housing, are higher than their economies would logically warrant. Much of the “credit” here may well belong to California’s restrictive land use and housing policies, and generally poor climate for manufacturing, agriculture and other blue-collar businesses.

What does this tell us? Metro areas that want  to improve in these rankings need to focus not just on developing their economies, but also policies that keep costs competitive with other regions.



Center for Opportunity Urbanism
Standard of Living Index: 2015
Rank (of 106) Metropolitan Area Annual Pay Per Job, Adjusted by COU CoL Index
1 San Jose, CA $68,855
2 Houston, TX $62,305
3 Durham, NC $59,526
4 Bridgeport-Stamford, CT $58,704
5 Hartford, CT $57,050
6 Boston, MA-NH $56,979
7 Atlanta, GA $56,647
8 Detroit,  MI $56,421
9 Dallas-Fort Worth, TX $55,529
10 Seattle, WA $55,123
11 Charlotte, NC-SC $55,122
12 Washington, DC-VA-MD-WV $54,525
13 Cincinnati, OH-KY-IN $54,265
14 Birmingham, AL $54,256
15 Pittsburgh, PA $54,168
16 Cleveland, OH $54,059
17 Minneapolis-St. Paul, MN-WI $53,668
18 Denver, CO $53,526
19 St. Louis,, MO-IL $53,519
20 Nashville, TN $53,144
21 Des Moines, IA $53,115
22 Kansas City, MO-KS $53,009
23 Austin, TX $53,002
24 Memphis, TN-MS-AR $52,911
25 Columbus, OH $52,319
26 Philadelphia, PA-NJ-DE-MD $51,912
27 Fayetteville (Bentonville), AR-M $51,876
28 San Francisco, CA $51,723
29 Baton Rouge, LA $51,492
30 Chicago, IL-IN-WI $51,425
31 Raleigh, NC $50,980
32 Tulsa, OK $50,798
33 Indianapolis. IN $50,781
34 Akron, OH $50,578
35 Harrisburg, PA $50,483
36 Louisville, KY-IN $50,390
37 Richmond, VA $50,053
38 Oklahoma City, OK $50,018
39 New York, NY-NJ-PA $49,760
40 New Orleans. LA $49,739
41 Albany, NY $49,578
42 Phoenix, AZ $49,403
43 Sacramento, CA $49,323
44 Portland, OR-WA $49,262
45 Dayton, OH $49,203
46 Winston-Salem, NC $49,079
47 Knoxville, TN $49,060
48 Milwaukee,WI $49,022
49 Baltimore, MD $48,771
50 Toledo, OH $48,705
51 Wichita, KS $48,608
52 Melbourne (Palm Bay), FL $48,230
53 Augusta, GA-SC $48,065
54 Omaha, NE-IA $47,956
55 San Antonio, TX $47,910
56 Little Rock, AR $47,900
57 Chattanooga, TN-GA $47,877
58 Jacksonville, FL $47,810
59 Madison, WI $47,510
60 Rochester, NY $47,486
61 Grand Rapids, MI $47,459
62 Salt Lake City, UT $47,368
63 Syracuse, NY $47,239
64 Greensboro, NC $47,013
65 Greenville, SC $46,762
66 Buffalo, NY $46,500
67 Columbia, SC $46,437
68 Tampa-St. Petersburg, FL $46,410
69 Allentown, PA-NJ $46,141
70 Springfield, MA $45,585
71 Providence, RI-MA $45,323
72 Worcester, MA-CT $45,236
73 Jackson, MS $45,196
74 Colorado Springs, CO $45,017
75 New Haven CT $44,848
76 Charleston, SC $44,613
77 Miami, FL $44,589
78 Orlando, FL $44,527
79 Virginia Beach-Norfolk, VA-NC $44,290
80 Las Vegas, NV $44,265
81 Spokane, WA $43,770
82 Albuquerque, NM $43,486
83 Tucson, AZ $43,484
84 Bakersfield, CA $43,464
85 Boise, ID $43,103
86 Scranton, PA $43,082
87 Lakeland, FL $42,907
88 Youngstown, OH-PA $42,766
89 San Diego, CA $42,716
90 Lancaster, PA $42,227
91 Modesto, CA $42,034
92 Portland, ME $41,902
93 Cape Coral-Fort Myers, FL $41,547
94 Stockton, CA $40,512
95 Provo, UT $40,473
96 Sarasota (North Port), FL $40,434
97 Los Angeles, CA $40,432
98 Fresno, CA $40,226
99 El Paso, TX $40,074
100 Oxnard, CA $40,049
101 Ogden, UT $39,966
102 Riverside-San Bernardino, CA $38,598
103 Daytona Beach (Deltona), FL $38,242
104 McAllen, TX $38,182
105 Santa Rosa, CA $35,370
106 Honolulu, HI $33,903

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo by w:Flickr user Bill Jacobus [CC-BY-2.0], via Wikimedia Commons