Cost of Living

Cost of living is a measure of the people's purchasing power in a specific location. It varies from city to city and from state to state, as each geographic area has its own economic factors of influence such as their proximity to affordable sources of energy, its ability to connect to sources of consumable products and its appeal for a workforce in various industries.

Because of its nature, the cost of living is constantly changes since the same wages in different parts of the country result in a different ability to acquire goods and services, with some areas being more expensive than others and some areas being less expensive than others. It is for this reason that a cost of living calculator is necessary when comparing two locations, as it will indicate the adjusted earnings that will be necessary to achieve a comparable standard of living.

There are 14 states where living costs are more expensive than the U.S. National average. These expenses in Washington D.C. are also higher due to its overall population density as compared to that of states. The state of New Jersey has the highest number in the nation by 12.26%. The state of Iowa has the lowest cost of living in the United States by 10.31%.

Cost of Living Comparison and Salary Calculator

Use this salary calculator to compare the living costs of two different cities in the USA.

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The cost of living is usually captured in what is known as the consumer price index or CPI. This number is an aggregate of the various expense categories for people to live their lives. As expected, these categories include housing, food, energy consumption, transportation, education, healthcare, clothing, recreation, communication and taxes. Each one of these categories make up a portion of the index and their percentage share is different from one area to another because the weather conditions, transportation infrastructure, dwelling types, diet, career choices, environmental influence and consumption patterns vary across the country.

The Bureau of Labor Statistics within the United States Department of Labor keeps track of the CPI at the national level and across major regions in the country. The changes in the index can be tracked in time because its inception point is fixed in time. If individuals have to pay more for the same goods and services a few years after the index original release, you see that the index has increased for that year in comparison. Similarly, its variations can be tracked from one geographical area to another. If the index reflects the national average cost of goods and services, the index will be lower in more affordable regions and will be higher in more expensive regions.

As it has already been stated, a salary comparison between two cities will result in the difference in earnings required to enjoy a similar lifestyle. This calculation is based on the different CPIs of each of the 2 cities in the comparison, and more specifically in this case, it is based on a statistical model that takes into account some of the major personal consumption areas such as healthcare, transportation, housing, education and food, along with supply and demand factors reflected on the salary ranges for a particular city, or state and the regional and national Consumer Price Index (CPI) information.