California cities rank at the bottom of places in the country where a $100,000 salary stretches the furthest, according to a recent report from ConsumerAffairs.
When ConsumerAffairs assessed how far a $100,000 salary can stretch in the 100 largest cities in America, Dayna Edens, media relations manager at ConsumerAffairs, said what stood out about the data was “how many California cities cluster near the bottom of the rankings.”
“Many of (the cities) share the same regional economy and price levels, which means residents are facing a double squeeze: higher taxes combined with some of the highest everyday costs in the country,” Edens said in an emailed statement.
ConsumerAffairs’ methodology for ranking cities
To determine where a $100,000 salary goes the furthest, ConsumerAffairs said it looked at the 100 largest U.S. cities.
For each city, the journal said it started with $100,000 annual salary.
To estimate take-home pay for each city, ConsumerAffairs subtracted federal income tax, along with applicable state and local taxes, from the base. Then, the journal also deducted payroll taxes for Social Security and Medicare.
“Take-home pay varies dramatically by location, in part due to the wide variance in state and local tax rates across the U.S.,” ConsumerAffairs said. “But taxes are only part of the equation; housing and everyday costs can erode take-home pay just as quickly.”
To account for differences in local prices levels, ConsumerAffairs said it “adjusted each city’s post-tax income using regional price parity (RPP).”
The totaled figure represents “the value of everything a $100,000 salary can buy” adjusted for average prices, according to ConsumerAffairs.
ConsumerAffairs said it then ranked the cities from highest to lowest based on RPP adjusted take-home pay.
What does a $100,000 salary look like in some California cities?
Here are the 15 California cities on ConsumerAffairs’ list, along with their rankings and RPP adjusted take-home pay:
(Some cities tie in the rankings due to shared tax rates or metro areas, according to ConsumerAffairs.)
“When basics like housing, utilities and groceries run well above the national average, even a six-figure salary loses purchasing power quickly,” Edens said. “In several California cities, that means a $100,000 income ends up being worth closer to about $60,000 to $65,000.”
Where does $100,000 get the furthest nationally?
A $100,000 salary stretches the furthest in Laredo, Texas, where there are no state or local income taxes, and the cost of living is low, according to ConsumerAffairs.
For an annual salary of $100,000, the city has $89,864 in purchasing power, the journal said.
In general, “Texas dominates the top of the rankings,” ConsumerAffairs said.
“Several cities benefit from affordable-living costs and the lack of state income tax,” ConsumerAffairs said.
What is the average salary in California?
In December, the average weekly wage in California was about $1,400, which equates to about $72,800 annually, according to USAFacts. The average was about 2.9% lower than the year prior.
“When accounting for the cost of living, California’s average weekly wage of $1,383 has the purchasing power of $1,249,” USAFacts says.
The state’s average weekly wage is higher than the national average, ranking 3rd among states, according to USAFacts.
“When accounting for regional cost of living differences, California ranks 13th among states,” USAFacts says.
This article originally appeared on Palm Springs Desert Sun: $100K salary doesn’t get far in these California cities, report says
Reporting by Daniella Segura, Palm Springs Desert Sun / Palm Springs Desert Sun
USA TODAY Network via Reuters Connect
