The Value Of $100 In Each State

I go to Trader Joe’s or Aldi about every two weeks, and usually spend about $100.  But as the Tax Foundation’s recent report of the value of $100 in each state shows, I’m not getting as many groceries as millions of Americans in other states. 

Color me annoyed, but I live near Washington D.C. and I guess this should come as no surprise to me. 

The data come from the Bureau of Economic Analysis and have been published for three years now.  The value for each state is in comparison to the national average. 

The Value Of $100 In Each State

 

As you know I love maps, and I really love maps that others make for me.  And they were kind enough to use my color scheme.  Wonderful folks. 🙂 

But it’s important to remember that in general, states and areas with higher prices also usually have higher salaries.  The Tax Foundation article says:

It’s generally the case that states with higher nominal incomes also have higher price levels. This is because in places with higher incomes, the prices of finite resources like land get bid up. (This is especially true in cities.) What is also true is that places with high costs of living pay higher salaries for the same jobs. This is what labor economists call a compensating differential; the higher pay is offered in order to make up for the low purchasing power.

I did a post a little while back analyzing the expenses for the big three (housing, transportation, and food) in each state.  It looks like my analysis was spot on as my final map looks strikingly similar to the Tax Foundation map above as far as how expensive each state is in relative terms.

 

The Value Of $100 In Each State

 

The least expensive states in my analysis of the big three are West Virginia, Arkansas, and Mississippi. 

The Tax Foundation’s report shows that $100 is worth the most in Mississippi, Alabama, and Arkansas.  And West Virginia is 4th.

Regarding the issue of higher salaries in higher costs states, I’ve got you covered.  I did a post highlighting a great tool that shows the expected salary for a whole host of college majors and professions in different parts of America. 

It would be nice if states that have a higher cost of living also had commensurate salaries, and more often than not they probably do. 

But the Tax Foundation article shows an example between North Dakota and Massachusetts.  They have similar median nominal incomes, but $100 is worth much more in North Dakota.

The Value Of $100 In Each State

 

Granted, as in all cases of data aggregated by state, the numbers can be skewed by special regions within the state. 

For instance in the example above the Massachusetts data is no doubt being skewed by the fact that Boston is a pretty expensive city. 

Massachusetts has a total of 6.8 million people, and 67% of them live in the greater Boston metropolitan area.  So if you’re one of the 2.2 million people in Massachusetts who do not live in the Boston area, your results may vary. 

If you want to see the full list of all 50 states and how much $100 is worth in each one it’s at the bottom of the Tax Foundation article. 

I will no doubt be using this data for other analysis that I may or may not be cooking up!

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Dave @ Accidental FIRE

I reached financial independence and semi-retired in my mid-40's through hard work, smart living, and investing. This blog chronicles my journey and explores many aspects of personal finance including the psychological and behavioral factors that drive our habits.

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25 Responses

  1. Cubert says:

    Another fine analysis, AF! I’m happy to see that Minnesota is doing a little bit better than Colorado. I need the solace since we’re probably not moving to CO anytime soon.

    It’ll be curious to see if there’s a large scale gentrification in the Deep South over the coming decades. Seems ripe for it.

  2. Xrayvsn says:

    It makes me smile that I happened to luck into a state that is pretty high on the list for how far a dollar goes and because I also to well in the compensation scale I attribute this as one of the main reasons I have rapidly increased my wealth. Geoarbitrage is a great deciding factor between two jobs if all other things are equal.

    I knew living in Hawaii would be expensive but it is impressive to see by how much so on your map. It definitely has a significant sunshine tax.

  3. The irony of California being #48 is that so much of the food comes from here. Somehow, I guess if you put it in a truck and drive it to Mississippi, it gets cheaper. Go figure!

  4. thedragonsonfire says:

    This chart should be used by anyone thinking of Geo-arbitrage. I feel that the cost of living in our city is pretty good, but I am surprised that our state is more in the middle of the pack instead of a closer to the top. Would be interesting if there was an analysis like this by city as well. Thanks for sharing!

    • Accidental FIRE says:

      City data gets complicated because some sources use “city proper” and others use “greater metro region” which includes sububs etc. So it’s hard to find consistency

  5. Luckily I live in Ohio! This is a really cool chart to see. Thanks for taking the time to put this all together.

    Bert

  6. RoperatCandC says:

    Interesting that my home state of WV has a 25% difference with some neighboring states. That’s on par with USD exchange rates with EURO, GBP, and Canada.

  7. GenX FIRE says:

    You said “But it’s important to remember that in general, states and areas with higher prices also usually have higher salaries. ” I think you need to add to that the fact that within states there can be great variation. I lived in Manhattan, a small town just inside the commuting range to NYC, and a small city in upstate NY for college. The price of everything varied greatly. Amazingly, even between Manhattan and Brooklyn, I noticed significant differences between the prices of say milk and ice cream. It blew my mind the “Manhattan Markup”.

    • Accidental FIRE says:

      You’re absolutely right,local variation can be tremendous and I try to get county-level data when I can but for many things it’s not easily available. Love the term “Manhatten markup”

  8. I’m surprised that the differences are not much larger than they appear.
    I would suppose that the cost of milk, bread of sugar won’t differ much across the states – they have similar distribution channels and costs.
    The difference in other goods – like entertainment, restaurants, hotels and babysitting/childcare will be much more.

    • GenX FIRE says:

      Believe it or not, from personal experience I can say that milk and ice cream, Lactaid and Hagen Das, are different between Manhattan and Brooklyn in NYC, and also compared to the suburbs in New York, Connecticut, and even other states. I think prices are as much tied to rent and transportation as to the cost of production.

    • Accidental FIRE says:

      Great point, I think service-oriented stuff varies more

  9. Joe says:

    Neat data. I think it’s a bit off for Oregon too. Portland metro is the big factor here. It’s more expensive than the rest of the state. It seems pretty similar to MA and Boston. Oregon is much bigger and I’m not sure how that change things.

    • Accidental FIRE says:

      Portland has really exploded in the past 10 years and has a very ‘trendy’ angle to it. But it’s a great city!

  10. you ever spent much time in mississippi? i wasn’t thrilled with it, even for the 15% spending boost.

    • Accidental FIRE says:

      No – I’ve been to 45 of the 50 states and Mississippi is one that I still need. I’ll get there!

  11. Cee Elless says:

    Keep the numbers coming! These are excellent data to help inform future location planning and budgeting. Thanks!

    This is probably a suuuper silly question, but why is there no state where the relative value of $100 equals $100?

    • Accidental FIRE says:

      Ha! Great point… The national average is 100 and I guessed they used the raw value of the dollar as a base. Maybe we need an average state to step up!

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