Cost of Living: How Far Does Your Salary Go in Different Cities?
A $100,000 salary in San Francisco has the same purchasing power as $55,000 in Kansas City. Location is everything.
The cost of living index measures how expensive a city is relative to the national average (100). San Francisco: 180 (80% more expensive than average). New York: 190. Boston: 150. Denver: 115. Austin: 110. Dallas: 100. Kansas City: 85. Mississippi: 84. Your real income is your nominal salary divided by the cost of living index times 100.
Where the Difference Comes From
Housing accounts for 60-70% of the cost difference between cities. Median rent for a 1-bedroom in San Francisco: $3,200. Kansas City: $950. That single expense difference is $2,250/month or $27,000/year after tax — requiring roughly $40,000 in pre-tax income just to match the housing difference. Groceries, transportation, and healthcare vary by 10-25% between cities. Housing varies by 200-300%.
The Remote Work Arbitrage
If you earn a San Francisco salary ($150,000) while living in a city with a 90 cost of living index, your purchasing power is equivalent to $167,000 in San Francisco. You effectively get a $17,000 raise by moving. Some companies adjust pay for location, but many do not — especially for high-demand tech and finance roles.