(Bloomberg) -- Will you be further ahead financially by relocating to another state for more pay? That depends, not only on the differences in income but also the cost of living specific to U.S. regions.
By that measure, the Midwest is attractive. And while incomes, adjusted for the national inflation rate, tend to be less in the South, the story is much different when regional pricing is taken into account. For instance, Alabama and Arkansas rank 39th and 37th in average personal income, respectively. However, after figuring in the states’ lower costs of living, both move up 20 spots in terms of worker pay and other income.
Alabama goes from being almost $6,000 poorer on average than New York, on a per-capita basis, to having income that is almost $7,000 higher after accounting for differences in the cost of living between the two states.
New York’s real per capita personal income is $46,416, 17th among all 50 states. After adjusting for state-specific prices, it falls to $40,152, or 28 spots to 45th in the nation. New Jersey is even worse -- No. 8 before the adjustment but No. 37 after. What’s more, these figures aren’t adjusted for taxes, making high-tax states even less appealing.
Bloomberg compared 2016 household incomes from the Census Bureau with so-called regional price parity, which is used to measure the differences in price levels across areas for a given year. It’s expressed as a percentage of the overall national price level calculation by the Bureau of Economic Analysis. Bloomberg compared the two measures to obtain price-parity household income by state. Inflation ranges from 86 percent of the national norm in Mississippi to 18 percent more than average in Hawaii.
©2018 Bloomberg L.P.