The Real Value of $100 in Metropolitan Areas

Tax Foundation recently published a map showing how far $100 would take you in different states. For example, in states with low costs of living, like Arkansas, $100 had the same sort of purchasing power that $115 would have in an average state.

A lot of requests were sent in – particularly from upstate New Yorkers – for a map of purchasing power that separates out cities from non-metropolitan areas. Fortunately, that data is available from the BEA’s interactive tables, and Tax Foundation has created an interactive map of purchasing power down to the city level.

Full data for this map available on GitHub.

The orangest colors on the map, signifying the place where your $100 buys you the least, are in these five cities. One of them may surprise you.

  1. Honolulu ($81.37)
  2. New York-Newark-Jersey City ($81.83)
  3. San Jose-Sunnyvale-Santa Clara ($81.97)
  4. Bridgeport-Stamford-Norwalk ($82.31)
  5. San Francisco-Oakland-Hayward ($82.44)

Yes, Honolulu is the most expensive place to live! Honolulu is, in fact, quite densely populated; there isn’t much territory to work with between the mountains and the Pacific. It also relies heavily on expensive imports. People pay a heavy premium in order to enjoy its lovely weather.

With MSA-level data, we can see price differences are even larger than the ones on our previous map. Tax Foundation is interested in this issue because it has important implications for state tax policy, federal tax policy, and interstate migration. A lot of policies are based on income, like progressive taxes and means-tested federal benefits. A federal benefit in Mississippi could be so large as to overwhelm the returns to work, while that same benefit in New York City could be insufficient to help people get by. Tax Foundation wrote in a recent report that income data alone is insufficient to tell us how well someone is doing.

It’s important to see that price differences do persist across states, even in non-metropolitan areas. $100 still doesn’t go nearly as far in rural California ($101.94) as it does in rural Texas ($113.64). It doesn’t even go as far as it does in San Antonio. ($106.50.) This suggests that policy – not just geography and urbanization – may play a role in these price differences.

Original article published by on TaxFoundation.org.