A new study compares and contrasts the material standard of living across America by both place and for different types of workers.

Combination of Cost-of-Living Index with Individual Income Data Offers Surprises

Many of us know that the most expensive area in the US is the commuting zone surrounding Silicon Valley in California.  Many of us, however, don’t know that the most affordable area in the US is the community zone surrounding Natchez, Mississippi.

If you were to put together such contrasting material standard of living data along with people’s incomes and consumption patterns, you might be able to piece together a surprising take on where people with different income and spending patterns might feel the most comfortable living. Economists Rebecca Diamond, with Stanford University, and Enrico Moretti, with UC Berkeley, have done just that.

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For the past four years, Diamond and Moretti have compiled and analyzed the day-to-day finances (bank account deposits/withdrawals and credit/debit card spending) of three million American households spread out all across the country.

This study is focused expressly on the size of people’s paychecks minus the cost of stuff people buy.  Forget the weather; forget the cultural scene; forget opportunities for kids, crime rates, school quality, walkability, hiking trails, surfing, etc.  Diamond and Moretti’s standard of living is solely focused on average income minus taxes and expenses…no intangibles, “cool” factors.

This study answers questions Moretti asked, such as…

  • “Where do you get the most bang for the buck?”
  • In the race between your salary and local prices, “are you better off in a place that offers a higher salary but everything costs more?”
  • “Or are you better off in a place that offers you lower salaries but everything is cheaper?”

Places with Highest & Lowest Standards of Living for College Graduates

Moretti said, “The big, overall takeaway for college graduates is that expensive cities like New York and San Francisco remain a pretty good deal…” regardless of their both being cities that are “obnoxiously” expensive.  College graduates typically have jobs that are so good their incomes can more than enough offset higher expenses.

Diamond and Moretti found that the standard of living for college graduates throughout the US varies much less than it does for other workers.  Educated workers are typically able to afford a similar lifestyle regardless of where they live.

Places with Highest Standard of Living for College Graduates

  • McAllen TX
  • Houston TX
  • Huntington WV
  • Beaumont TX
  • Charleston SC

Places with Lowest Standard of Living for College Graduates

  • Medford OR
  • Provo UT
  • Salem OR
  • Olympia WA
  • Asheville NC

Workers with High School Diplomas Only

Roughly 60% of adults in the US have not graduated from college and have “only” a high school diploma.

While workers with “only” a high school diploma typically are paid more in places that have a higher cost of living, their incomes are not as adjustable as those who are college-educated workers.  Without financial help from families or the government, workers with just high school diplomas are financially more vulnerable.

Moretti said, “Expensive cities offer a significantly lower standard of living compared to more affordable communities.”

Places with Highest Standard of Living for Workers with High School Diplomas 

  • Gallup NM
  • Summersville WV
  • Natchez MS
  • Graham TX
  • Marquette MI

Places with Lowest Standard of Living for Workers with High School Diplomas

  • Asheville NC
  • San Diego CA
  • Manhattan KS
  • Medford OR
  • Jacksonville NC

Workers Without a High School Diploma

Moretti said, “The differences in standard of living across places are very large for high school dropouts in particular.  A family, headed by a high school dropout, who moves from the most expensive city in the US to the most affordable one would gain +26% in terms of consumption.  There’s a significant improvement in what they can afford to buy.”

Places with Highest Standard of Living for Workers without High School Diplomas

  • Summersville WV
  • Paris TX
  • Gallup NM
  • Galesburg IL
  • Cadillac MI

Places with Lowest Standard of Living for Workers without High School Diplomas

  • San Diego CA
  • Cheyenne WY
  • Los Angeles CA
  • Miami FL
  • Asheville NC

Bottom Line

Real estate agents/brokers and their potential homebuyers may want to reshuffle their thinking about where to live based upon living standards and income levels.  Even Diamond and Moretti were unclear before doing this project about “which places offer the best deals for different kinds of workers.”

Now that Diamond and Moretti, after doing this work, and you, after reading this post, are more clear about which places offer the biggest bang for the buck for which people, may want to reshuffle your real estate guidance.

Thanks to National Public Radio’s Planet Mone

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