Today in "why, again, do we need inflation?" news, a brand new study by SmartAsset reveals that in several U.S. cities, earning as much as $300,000 per year only feels like $100,000 due to increases in cost of living.
The study "adjusted $100,000 for the local cost of living in 76 of the largest cities in the U.S. using data from the Council for Community and Economic Research" using an index that took into account the price of housing, groceries, utilities, transportation, and other necessary purchases for Q3 2022.
The study found that three major U.S. cities required take home pay of over $300,000 to be able to spend like you earn $100,000 per year. Among them, of course, is San Francisco: "Residents of Honolulu, New York City and San Francisco who earn this amount are taxed roughly 40.5% or higher and have a cost of living more than 82% above the national average."
The study also found that it is easiest to "make it" in Texas - which could explain the massive defection currently taking place, wherein California residents are hauling their belongings to, and putting up roots in, the lonestar state.
"Salaries in El Paso, Corpus Christi, Lubbock, Houston, San Antonio, Fort Worth and Arlington can be as low as $119,300 while feeling like a true $100,000. Texans at this income level hold onto an average of 5.7 percentage points more of their annual salaries compared to states that charge income taxes, while the cost of living across Texas is generally lower than the national average," the study reads.
Meanwhile, for the privilege of living in California, you require the highest gross income of any state. SmartAsset writes: "San Francisco, Oakland, Los Angeles, Long Beach and San Diego all require exceptionally high salaries to feel like $100,000. Those in the Bay Area, for example, require at least $147,000 in salary for middle-class comfort. These Golden State cities command particularly high tax rates and cost of living premiums."
And believe it or not, despite Miami's high cost of living, the study found that due to its low taxes it is more affordable to live in than places like Chicago and Baltimore:
In general, states with no state income taxes have an edge when it comes to overall purchasing power. States that don’t take a cut of residents’ income taxes include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Are politicians, including Chicago's newly elected Mayor, paying attention?
You can read the entire study here.