The Real Value of $100 in Metropolitan Areas
August 11, 2016
Last week, we published a map showing how far $100 would take you in different states. For example, in states with low costs of living, like Mississippi, $100 had the same sort of purchasing power that $115.34 would have in an average state.
But what about the differences in purchasing power within a single state? Do people in Houston have the same purchasing power as those in Dallas? And of course, how does upstate New York fare against New York City?
To answer these questions, we’re following up with a new map of purchasing power that separates cities from non-metropolitan areas. Fortunately, that data is available from the BEA’s interactive tables, and we have created an interactive map of purchasing power down to the city level. Below, with this interactive map, you can mouse over your city to find out how far $100 gets you.
The yellowest colors on the map, signifying the place where your $100 buys you the least, are in the largest cities in the northeast and California.
The ten most expensive cities in the United States, where $100 buys you the least, are as follows:
|Metropolitan Area||Real Value of $100|
|San Jose-Sunnyvale-Santa Clara, CA||$81.37|
|New York-Newark-Jersey City, NY-NJ-PA||$81.77|
|Santa Cruz-Watsonville, CA||$82.10|
|San Francisco-Oakland-Hayward, CA||$82.44|
|Santa Rosa, CA||$84.53|
|Los Angeles-Long Beach-Anaheim, CA||$85.47|
While cities are almost uniformly more expensive than rural areas due to the higher price of land, some cities – particularly those with relaxed zoning restrictions and a lot of flat land to build on – are cheaper than others. In particular, Cincinnati ($111.36), St. Louis ($110.50), and Atlanta ($104.60) manage to stand out as less expensive than average, despite having large populations and huge corporate headquarters for firms like Procter & Gamble, Anheuser-Busch, and Coca-Cola.
We are interested in this issue because it has important implications for economic policy; some areas are effectively richer or poorer than their nominal incomes suggest. A lot of policies are based on income, like progressive taxes and means-tested federal benefits. If real incomes vary from place to place due to purchasing power, this matters for those policies.
It’s important to note that price differences do persist across states, even in non-metropolitan areas. That $100 still doesn’t go nearly as far in rural California ($103.73) as it does in rural Texas ($113.25). It doesn’t even go as far as it does in San Antonio ($105.93). This suggests that policy – not just geography and urbanization – may also play a role in these price differences.