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Pay May Be Lower in Smaller Cities, But it Can Stretch Further

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New analysis highlights salary advantages in small and mid-sized metro areas.

After factoring in living costs, the metro areas around the United States with the highest salaries tend to be smaller and mid-sized cities, with fewer than one million residents, according to a new analysis from the research arm of a job search website.

There’s a caveat, though, when it comes to many high paying jobs in the technology and finance sectors. Research from the Indeed Hiring Lab finds that these positions pay the most in bigger metro areas even after accounting for the higher living costs in those places.

The analysis also notes that larger cities generally provide other job market advantages, like lower unemployment and faster job growth. They also typically offer a wider range of jobs than smaller cities.

The highest salaries, before adjusting for living costs, are in pricey cities like San Francisco and San Jose, California, the analysis says.

But when living costs are taken into consideration, the research shows that the places where salaries go the furthest are metro areas covering places like Brownsville, Texas; Fort Smith, Arkansas; Huntington, West Virginia; Porterville, California; and Toledo, Ohio.

In Toledo, for example, a salary of $70,000 is equivalent to $79,800 after adjusting for living costs, the analysis says. 

Some larger-sized metro areas that offer similar advantages include Birmingham, Alabama; Memphis, Tennessee; Cincinnati; Louisville, Kentucky; and Indianapolis.

“The ten metros with the highest adjusted salaries are all small and mid-size metros. These aren’t just odd exceptions—it’s a general pattern,” Jed Kolko, chief economist at the Indeed Hiring Lab, wrote.

“For nearly every metro, there are a few other places that offer a similar mix of jobs, but have higher adjusted salaries,” he added.

Salaries adjusted for living costs are lowest, according to the research, in metro areas that cover Honolulu; Myrtle Beach, South Carolina; Miami and Fort Lauderdale, Florida; Bridgeport and Stamford, Connecticut; New York City; and Oxnard and Ventura, California.

Even after accounting for the cost of living, tech sector salaries are highest in bigger cities, with places like Boston, Washington, D.C. and Columbus, Ohio, topping the list.

“Larger cities might not be the best deal for most job seekers, but they’re still where employers want to hire,” Kolko noted. “But for most jobs, employers are willing to pay more to hire in big cities, even though most jobs offer workers a better deal in smaller ones.”

The analysis looked at all 185 U.S. metro areas with at least 250,000 residents, and involved calculating average salaries for Indeed job postings between April 2018 and April of this year. It also relied on local cost of living data from the U.S. Bureau of Economic Analysis.

More information about the findings can be found here.

Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.

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