Alaska, Massachusetts Among Most Cost-Effective

Median salaries in Silicon Valley are higher than in any other part of the country – but the area's considerably high cost of living means a dollar there can go a lot further elsewhere.

In a bid to figure out where salaries and costs of living combine to create the most cost-effective living situation in the country, The Hamilton Project at the Brookings Institution earlier this month released the results of a wage- and geography-focused study titled "Where Work Pays: How Does Where You Live Matter for Your Earnings?"

"A lower cost of living – including cheaper housing, food, education, transportation, and other goods and services – allows the same dollar of wages to stretch farther," the project researchers said in their report. "A worker in a metro area with a relatively low cost of living (e.g., Dallas) might think twice before accepting a slightly better-paying position in a metro area with a higher cost of living (e.g., San Francisco)."

The researchers highlighted California's tech-heavy Silicon Valley region as the portion of the country in which median earnings for workers between the ages of 25 and 64 are highest across a host of occupations. At $65,000 annually, the median yearly salaries of those living in the San-Jose-Sunnyvale-Santa Clara metro area beat out those in California-Lexington Park, Maryland, ($60,758) and folks in and around Washington, D.C. ($60,631), rounding out the top three.

At the other end of the spectrum, Sebring, Florida, was found to have the lowest annual median earnings at $26,000 – well shy of the $41,216 national average, based on data gleaned from the Census Bureau's five-year American Community Survey running from 2012 through 2016.

But once cost of living and tax burdens were factored in – including state and federal tax obligations – Silicon Valley and cities elsewhere in the Golden State look slightly less attractive. The California-Lexington Park, Maryland, metro claimed the top spot nationally in terms of actual take-home pay, followed by Bloomington, Illinois, and Midland, Texas.

The study comes with certain limitations – namely, that it focuses primarily on state and federal tax burdens and excludes city and local taxes that further eat into workers' take-home pay. But it does offer a relatively straightforward comparison of purchasing power between states and cities across the country.

At the state level, Connecticut, Massachusetts and New Jersey were found to be tied for the highest unadjusted median annual incomes – not including Washington, D.C. When cost of living and taxes were factored in, however, Alaska, Massachusetts and Connecticut claimed the top three spots, according to the report.

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Top 5 Most Cost-Effective States

·        1.  Alaska

·        2.  Massachusetts

·        3.  Connecticut

·        4. North Dakota

·        5. New Jersey