Tag: Cost of living

Cost-of-Living Index by City – January 2025

Posted on | by ERI

ERI Economic Research Institute’s Cost-of-Living Index ranks the cost of living for heavily populated U.S. cities using the total cost of essential market basket items for each city indexed against the U.S. average. Rankings are determined by the prices of essential goods and services, including housing, consumables, transportation, health services, and tax obligations, by location.  

The list below is ordered from the highest to lowest cost of living for 20 major U.S. cities as of January 2025. The percentages were calculated using ERI’s Relocation Assessor and are based on the national average for a two-person household with a combined yearly income of $100,000 renting a 900 square foot apartment with one car. 

  1. New York-Manhattan, New York
    The cost of living in Manhattan, New York, is 61.2% higher than the national average. 
  2. San Francisco, California
    The cost of living in San Francisco, California, is 43.8% higher than the national average. 
  3. Los Angeles, California
    The cost of living in Los Angeles, California, is 30.8% higher than the national average. 
  4. Queens, New York
    The cost of living in Queens, New York, is 29.8% higher than the national average. 
  5. San Diego, California
    The cost of living in San Diego, California, is 29.6% higher than the national average.
  6. Boston, Massachusetts
    The cost of living in Boston, Massachusetts, is 29.5% higher than the national average.
  7. San Jose, California 
    The cost of living in San Jose, California, is 29.2% higher than the national average. 
  8. Washington, District of Columbia
    The cost of living in Washington, District of Columbia, is 24.2% higher than the national average.
  9. Seattle, Washington
    The cost of living in Seattle, Washington, is 19.3% higher than the national average.
  10. Chicago, Illinois
    The cost of living in Chicago, Illinois, is 17% higher than the national average. 
  11. Denver, Colorado
    The cost of living in Denver, Colorado, is 12.1% higher than the national average.
  12. Portland, Oregon
    The cost of living in Portland, Oregon, is 11.1% higher than the national average.
  13. Philadelphia, Pennsylvania
    The cost of living in Philadelphia, Pennsylvania, is 9.5% higher than the national average.
  14. Atlanta, Georgia
    The cost of living in Atlanta, Georgia, is 9.1% higher than the national average.
  15. Baltimore, Maryland
    The cost of living in Baltimore, Maryland, is 7.8% higher than the national average.
  16. Charlotte, North Carolina
    The cost of living in Charlotte, North Carolina, is 4.4% higher than the national average.
  17. Dallas, Texas
    The cost of living in Dallas, Texas, is 3.1% higher than the national average.
  18. Phoenix, Arizona
    The cost of living in Phoenix, Arizona, is 2.8% higher than the national average.
  19. Austin, Texas
    The cost of living in Austin, Texas, is 2.4% higher than the national average. 
  20. Minneapolis, Minnesota
    The cost of living in Minneapolis, Minnesota, is 1.4% higher than the national average.

 

See how ERI's Cost-of-Living Index ranks 20 major U.S. city from the most to least expensive places to live based on the national average.

Cost-of-living differentials are essential to compensation planning and are used to evaluate business or employee relocation, expansion, and remote work. Our Assessor Platform can help you stay on top of cost-of-living changes among cities and analyze cost-of-living differentials based on earnings level, home size, home ownership or rental, family size, number of autos, and automobile value.  

Cost-of-Living Comparisons: Relocating to Austin, Texas

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As the capital of Texas and one of the fastest-growing cities in the United States, Austin has become a popular destination for professionals seeking career opportunities, affordable living, and a high quality of life. With its rapid economic growth and booming tech industry, Austin has become a magnet for professionals in all sectors. Cities like San Francisco, New York, and Boston are known for their high cost of living, and many professionals are seeking more affordable, yet thriving, alternatives. Austin offers that balance and the city’s quality of life is a major draw.  

What Does It Cost to Relocate to Austin, Texas? 

In our latest cost-of-living comparison using data from our Relocation Assessor, we examine a family of four relocating to Austin, Texas, from three other major U.S. locations. These analyses are meant as one-to-one comparisons based on replicating a typical lifestyle with an annual salary of $150,000 in each area. We assume that this family owns a 1,200 square foot home with 2 automobiles valued at $80,000. Calculations do not include moving costs. In addition to the total cost-of-living comparison, we have provided differentials for each of the major expenditure pattern components: consumables, transportation, health services, and housing. 

 

Cost of Living Comparison Austin Texas

Moving to Austin from California 

Replicating a typical lifestyle in San Francisco, California, earning an annual salary of $150,000 only requires you to make $66,993 in Austin, Texas. This makes Austin about 55% less expensive than San Francisco, with housing in Austin costing 67% less. Moving to Austin from California means more affordable transportation, housing, food, and health costs. 

Moving to Austin from Massachusetts  

When moving to Austin from Boston, Massachusetts, you should be making at least $132,155 to maintain the same standard of living. Housing in Austin costs 27% less than housing in Massachusetts.  

Moving to Austin from New York 

Not surprisingly, New York is significantly more expensive than Austin, Texas. With housing prices 65% higher than in Austin, you will only need to earn $75,313 to maintain the same standard of living in Austin. 

How Expensive Is It to Live in Austin, Texas? 

 

Cost of Living Comparison National Average

Our Austin, Texas, cost-of-living comparisons show why professionals may be seeking relocation to Austin as it offers more affordability overall compared to the other major U.S. cities. Austin is also the least expensive of the cities analyzed when comparing the cost of living to the national average. Although the cost of moving to Austin depends on a lot of factors, understanding the cost of living between cities and how expensive they are compared to the national average can help you make informed decisions on relocation, salary planning, and budgeting. 

Why Use ERI? 

Cost-of-living differentials are essential to compensation planning and are used to evaluate business or employee relocation, expansion, or remote work. Our Assessor Platform can help you easily compare cost of living among cities and analyze cost-of-living differentials based on earnings level, home size, home ownership or rental, family size, number of autos, and automobile value. 

Examining Cost-of-Living Differentials at Different Earnings Levels

Posted on | by ERI

Relocation and HR Professionals using the Relocation Assessor frequently ask, “Why does the cost-of-living differential change when I increase or decrease the Annual Earnings? Shouldn’t it always be a fixed percentage?” To evaluate COL differential estimates, it is necessary to have an understanding of the underlying expenditures patterns. Since the mid-1980s, the Bureau of Labor Statistics using the annual Consumer Expenditure Survey has produced average expenditures for various family profiles (e.g., earnings level, age, and race).  Survey participants are asked to keep detailed diaries of all spending, and in-person interviews are conducted. The goal is to accurately capture both reoccurring purchases (such as grocery items) and larger expenditures over a period of time (such as a car, rental/mortgage payment, etc.).  Results from the survey demonstrate that, at lower earnings levels, it takes a larger percentage of Annual Earnings to cover the expenditures for Housing, Consumables, Transportation and Health Services for the professional/mid-management lifestyle estimated in the Relocation Assessor data.

Another (more mathematical) way to think about this is that more and more of the typical expenditures are being covered as Annual Earnings increase, so more is available for the Miscellaneous expenditure category. The Relocation Assessor assumes that the Miscellaneous expenditures are equal in both the Base and Destination locations. The “mathematical” explanation follows:  The Miscellaneous category becomes a higher percentage of Annual Earnings as it increases. The COL differential of Miscellaneous is always 0, so an increasing percentage of entire budget is not impacted by a COL differential.  Now consider the “intuitive” explanation:  Does it make sense to offer the same COL differential percentage to an employee making $50,000 as an employee making $500,000?

In the example below, we illustrate with a 900 square foot apartment rental at an Annual Earnings level of $75,000 for a family of two. The COL differential from Atlanta to San Francisco is a 51.7% COL increase. For the same parameters (900 square foot apartment rental and family size of 2), when the Annual Earnings increases to $125,000, the COL differential decreases from 51.7% to 34.3%. If the Annual Earnings is $200,000, then the differential falls to 26.5%.

Here is the generalized explanation:  Expenditure patterns differ based on earnings levels. At lower earnings levels, households typically spend a higher percentage on Housing and Consumables. Further, as income increases, the percentage of Income and Payroll Taxes increase due to the progressive tax structure in the US.

In practice, the HR or Relocation Professional gets this common question from the recipient of a Relocation Assessor report: “I found different data online about the cost of living in my new location. Why is what I found so much higher?” Ask to be provided with the results (the COL differentials) from the source being for several different income levels (perhaps $50,000 and $500,000 in addition to the individual’s salary). If the percentage difference for both (all) salary levels is the same, share the above explanation.

ERI Economic Research Institute compiles the most robust salary, cost-of-living, and executive compensation survey data available, with current market data for more than 1,000 industry sectors.

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New ERI White Paper

Posted on | by ERI

ERI Economic Research Institute’s recent white paper, “Cost-of-Living Data and Models: Credible? Defensible? Robust?” by Marillyn Tefft, ERI Relocation Assessor Product Manager, is available for download.

Tefft explores “What matters in a cost-of-living model?” using various examples, complete with actual Relocation Assessor reports.

“It is not uncommon for mobility professionals to struggle with justifying the cost-of-livingadjustments/payments offered to a transferee in a relocation package,” writes Tefft. “Each part of the modeling process should be based on sound economic theory and use widely-accepted estimating techniques.”