The Relative Value Of $100
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The Relative Value Of $100

The Relative Value Of $100

This Surprising Graphic Will Show You How Much Your Money's Actually Worth

Question: If you live in a popular state, particularly one along either of the coasts, do you feel as though you’re getting a good value in exchange for what you pay to live there?

If you answered “no,” your intuition isn’t wrong. Yesterday, nonprofit policy center The Tax Foundation
released a graphic that visualizes the relative purchasing power based on data first released by the Commerce Department’s Bureau of Economic Analysis in April. The gist? If you want to live somewhere hip, it’s going to cost you.

The data, a new form developed by the government called Regional Price Parities, serve as a simple cost of living metric. The Washington Post delved into the math back in April, but it’s pretty straightforward: The cost of goods and services in a given state are compared to the national average, and so an RPP is created. In the case of rent, Hawaii has an RPP of 159 — rents in Hawaii are 59% higher than the national average.

The Tax Foundation took things a step further with the graphic, which outlines the purchasing power of $100 in all 50 states plus the District of Columbia. Basically, if $100 nets you $100 worth of stuff in a mythical median state (Illinois is the closest, as it turns out), how much stuff would you get elsewhere if you handed someone the same C-note?

Some of the findings will be surprising, others not. Middle America is, on the whole, a pretty affordable place to live, with $100 there generally netting you $110-plus worth of stuff. On the flip side, Hawaii, California and New York are relatively expensive, with $100 netting you well short of its face value there versus the national average.

The most expensive place of all? Washington, DC, where $100 buys you just $86.40 in goods. I live here, and it’s not surprising. DC is a power town, and anyone who’s tried to live in the city proper (versus the nominally cheaper near-suburbs of Maryland and Virginia) knows that your money doesn’t go very far. Another way of looking at it is to say that DC residents are about 14% poorer than their income would suggest — basically, people who live here get paid Mid-Atlantic salaries but have to live with a NYC-esque cost of living.

DC is of course not a state but a city, hence its incredibly low value. That’s the thing with these data — by lumping the RPPs by state (rather than by municipality), it somewhat misleads anyone looking to make a move (or evaluate a salary offer) in another state. For instance, it’s unlikely that when someone says they’re “moving to New York,” they mean Buffalo. They probably mean Manhattan, where I assume $100 would buy you a book of stamps and a bag of Skittles.

The same goes for California. While San Francisco is probably the most expensive place to live in the country (and increasingly so, thanks to the influx of tech evangelists), most of California is just as hickville as the more obviously affordable southern states. In both cases, it’s the cities that likely pull values down, somewhat skewing the entire state’s results.

Still, a graphic like this is important to keep in mind — if you’re considering a move and offered what seems like a lower salary, do some research. A person making the national average of $53,000 in Hawaii would enjoy the same standard of living in Mississippi on just $39,000, for instance.

Of course, whether it’s appropriate to compare the standard of living of Hawaii with Mississippi — at any income — is a different question entirely.

Check out the graphic below (hit the image for a larger version).