What Is the Real Value of $100 in Metropolitan Areas?

by Erica York, Michael Hartt, Tax Foundation, September 26, 2023

• Honolulu -- $87.15
• Maui County -- $89.25
• Rest of State -- $92.46

Purchasing Power

If you’ve traveled to New York or San Francisco recently, you’ve likely noticed the price of your Starbucks order change from terminal to terminal. The difference is due to price level variation throughout the United States.

The Bureau of Economic Analysis (BEA) recently released data detailing the disparities in spending power across metropolitan and nonmetropolitan areas of each state for calendar year 2021. Using the data, we can compare how much $100 buys across the country.

The differences can be large and they have significant implications for the relative impact of economic and tax policies across the United States. $100 tends to buy the least in large cities in the Northeast, California, and the Pacific Northwest. On the other hand, $100 goes the furthest in rural areas in the Southeast and Midwest. Prices can vary significantly within states too—$100 in California tends to buy $89.45 worth of goods on average, but in the Los Angeles area, $100 can purchase about $87.86 worth of goods and services, while rural Californians can purchase $99.15 worth. 

The Relative Value of $100

What is the Real Value of $100 in Your Metro Area? >>> LAUNCH FULL INTERACTIVE MAP ACCESS SHAREABLE MAP

Table 1 shows the 15 most expensive metropolitan areas in the United States, where the real value of $100 is the lowest. The San Francisco Bay Area was the most expensive metropolitan region in 2021, where $100 would buy goods and services only worth $83.45 compared to the national average.

Put another way, residents of the San Francisco-Oakland-Hayward area had, at least in terms of purchasing power, about a 17 percent lower standard of living than their nominal incomes alone may suggest, as illustrated by the price-adjusted per capita income relative to nominal income in the nearby table.

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15 Most Expensive Metropolitan Areas, 2021

The difference between the most and least expensive areas tends to correspond to differences in housing costs. Generally, states with higher nominal incomes also have higher price levels as they tend to see the prices of finite resources like land rise. When residents seek to occupy a limited amount of available land, it pushes up the cost of housing. Areas with higher costs of living also tend to pay higher salaries for identical jobs, which can offset at least some of the lower average purchasing power.

Some metropolitan areas, however, are more affordable. Table 2 shows the 15 least expensive metropolitan areas in the United States. They tend to be in the southeastern U.S. and are smaller than their more expensive counterparts. While nominal incomes in such areas appear lower at first glance, when adjusted for how much further a dollar can go, price-adjusted incomes are relatively higher.

15 Least Expensive Metropolitan Areas, 2021

The two metropolitan areas with the greatest disparity in price levels are the San Francisco-Oakland-Hayward, California region and Anniston-Oxford, Alabama. The real value of $100 in San Francisco is $83.45, compared to $119.28 in Anniston-Oxford. In other words, the purchasing power in the Anniston-Oxford area is 43 percent greater than in the San Francisco-Oakland-Hayward area. 

Many policies, such as minimum wage levels, tax brackets, and means-tested public benefit income thresholds, are denominated in nominal dollars, even though a dollar in one region may go much further than a dollar in another. Lawmakers should keep that reality in mind as they make changes to tax and economic policies.

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