In the United States, an average person will move 11 times in their lifetime. And while there are many reasons for moving – starting a family, finding a better home, or pursuing a new job – rising costs of living in our major cities are driving more people to consider how to make their dollars stretch further. Have you ever wondered how much you would make if you kept the same job and moved somewhere else?
To help readers answer this question, analysts at Trove compared discretionary income (the amount someone keeps after taxes and necessary expenses such as food and shelter) across major US cities and created The Cheddar Counter. The Cheddar Counter is much more than your typical cost of living calculator – it accounts for differences in salary across geographies, the impact of taxes, as well as cost of living. Think of it as the ‘big cheese’ of salary calculators.
Did you know that lawyers in Houston, TX have $46k of extra cheese in their pockets each year than lawyers in Salt Lake City, UT? Or that psychiatrists in Tucson, AZ keep the most cheddar of any city in the country? Read on to see our findings, and description of the
To rank cities and states for discretionary income (i.e., cheddar) by individual job or across all jobs, we created the Cheddar Score. High scores mean that the job earns higher discretionary income in that city or state relative to other cities or states. To start, we ranked states for discretionary income (Cheddar Score) across all occupations. Here are the Top 10 States for Cheddar Score:
- Texas (1)
- Washington (2)
- Michigan (3)
- Ohio (4)
- Minnesota (5)
- North Dakota (6)
- New Jersey (7)
- Indiana (8)
- Wyoming (9)
- Montana (10)
Here are the Bottom 10 States:
- Vermont (41)
- Rhode Island (42)
- Massachusetts (43)
- Maryland (44)
- Connecticut (45)
- New Hampshire (46)
- Maine (47)
- California (48)
- New York (49)
- Hawaii (50)
Digging a little deeper, we also looked at which jobs have the highest and lowest Cheddar Score in each state. Here’s what we found:
<p><a href=” https://www.mytrove.com/blog/2017/08/10/introducing-the-cheddar-counter/”><img src=”http://cdn.mytrove.com/infographics/cheddar-counter-infographic_half1.png” title=”Introducing the Cheddar Counter” alt=”Introducing the Cheddar Counter”></a></p>
After discovering that Florida is great for lifeguards but less so for tax collectors, we asked some questions about some popular jobs. Do directors in Los Angeles really get more cheese? Do software engineers in San Francisco make more cheddar than in any other city? See below for the cheesy results:
<p><a href=” https://www.mytrove.com/blog/2017/08/10/introducing-the-cheddar-counter/”><img src=”http://cdn.mytrove.com/infographics/cheddar-counter-infographic_half2.png” title=”Introducing the Cheddar Counter” alt=”Introducing the Cheddar Counter”></a></p>
Curious to learn more? Check out The Cheddar Counter to see where your city, state, or profession falls.
The Cheddar Counter assumes a single person sharing a two-bedroom apartment with a roommate. In the future, we’d like to expand The Cheddar Counter to cover more scenarios.
Salaries are based on the May 2016 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates from the Bureau of Labor Statistics (BLS), U.S. Department of Labor. Unless otherwise specified, the salary is the “Mean Annual Wage” column of the data set. The Cheddar Counter shows the Metropolitan Area from which that data is generated.
The Cheddar Counter assumes a Single Filer with no dependents for computing both federal and state income taxes.
Federal Income Taxes are based on the rates from The Tax Foundation. For computing the deduction, the greater of the standard deduction or the estimated state income tax is used.
Social Security Taxes are based on the employee’s contribution of 7.5% with a ceiling of $127,200.
State Income Taxes are based on the rates from latest available state tax brackets from The Tax Foundation.The Cheddar Counter assumes the standard deduction.
Medicare Taxes are based on 1.45% of income. The Cheddar Counter does not take into account Additional Medicare taxes for high-income earners.
Basic expenses are based on data from The Council For Community and Economic Research . The Cheddar Counter uses the Q1 Cost of Living Index (COLI) and the 2017 County Level Index to compute basic expenses for every county in the United States. The primary index provides relative pricing across 265 cities for 6 categories: groceries, housing, utilities, transportation, healthcare, and other goods and services. This is based on survey data from over 300 independent researchers. The data is based on relative expenditures for “professional and executive households”. Given this limitation of the data set, The Cheddar Counter may provide less accurate estimates for lower income occupations. Also, there is an inherent limitation in that these weights are based on an average household and the weights will not be accurate for every household.
To produce an absolute estimate of basic expenses from the COLI dataset, we seed it based on an estimated cost of housing in San Francisco for our target persona. We chose $2,000 for the cost of two people sharing a two-bedroom apartment in San Francisco. Although there is an inherent limitation in choosing a fixed number to seed the data, the relative rankings of cities are not greatly affected by small adjustments to this number. A future version of The Cheddar Counter might let you enter your own seed.
MSAs and Counties and States, Oh My!
The County serves as the primary primitive for calculating salaries and expenses. We chose counties because they are the smallest geographical unit region where salary and expense data can be estimated uniformly across the entire country.
For the salary component, the BLS salary data is reported at the granularity of Metropolitan Statistical Areas (MSAs). According to the BLS,
“MSAs consist of one or more counties (or towns and cities in New England) and contain a core area with a substantial population that has a high degree of economic and social integration with the surrounding areas.” The Cheddar Counter assumes that wages are fairly uniform within an MSA. For example, San Mateo County and Alameda County are part of the “San Francisco-Oakland-Hayward, CA” MSA. The Cheddar Counter assumes that wages in these counties are the same.
On the other hand, The Cheddar Counter does not assume that expenses are the same within an MSA. We all know that an apartment in Manhattan, NY is far more expensive than an apartment in Queens, NY. Therefore, we compute expenses at the county level (there are on the order of ~3000 of these in the United States) using the COLI 2017 County Level Index. Unfortunately, since the county level index does not break out categories, we synthesize relative weights of the 6 categories based on the nearest cities in the COLI Q1 Cost of Living Index. The assumption here is that although expenses may be higher in Brooklyn than in Queens, the relative weighting of the components is similar. This does not affect the total reported cost of basic expenses, but it may result in errors in how that is allocated to housing, groceries, utilities, etc.,
For each occupation, we aggregate the County level results to Metropolitan Areas, Cities, and States. See the table at Methodology for details.
Discretionary Income (AKA “The Cheddar”)
We define discretionary income as the amount of income leftover after subtracting Estimated Taxes and Basic Expenses. We believe this is the best metric for comparing occupations across metropolitan areas, cities, and states as this money can be used for savings or for expenditures that tend to vary less by residency.
We rank based on Discretionary Income. One can think of a location with a lower discretionary income for the same occupation as fundamentally paying less. This might be because the area is more desirable for reasons that have nothing to do with occupation or because of other inefficiencies in the labor market. For example, The Cheddar Counter reports that Honolulu consistently ranks in the bottom based on discretionary income. One might interpret this to mean that people are willing to give up a lot of discretionary income to live in Hawaii or that it’s relatively difficult for people in Hawaii to move to other states.
Our rankings are based on sorting the Discretionary Income across cities and states by occupation. We then provide a score based on the percentile of where a location appears in the ranking.