[BUSINESS] Best Places to Max Usage of Income
- If keeping more of your paycheck is important to you, some places are
much better than others.
By Jeanne Sahadi, CNNMoney.com senior writer
Listing of Best Jobs:
WHAT $100K REALLY LOOKS LIKE
16 cities where 6FigureJobs.com and TheLadders.com have had the
greatest number of six-figure job listings, and the gross salary
required to replicate $100,000 after adjusting for cost-of-living.
New York $205,426
San Francisco $179,034
Los Angeles $156,106
San Diego $149,384
Washington, D.C. $141,894
NEW YORK (CNNMoney.com) -- Making $100,000 or more is nothing to
Only 5 percent of earners in 2004 reported making that much,
according to Census data.
While entering six-figure territory can be a marker of a certain
level of success, it's not always a marker of a lot of buying power.
In some cities, a $100,000 salary sounds a lot better than it is
because the cost of living is high, taxes are high and, as Murphy's
Law would have it, even the rate of inflation runs higher than in
other parts of the country.
New York is the clearest example. Its cost of living is double the
national average, according to data from ACCRA. Put another way, in
New York, $200,000 is the new $100,000 paycheck
But that $200,000 doesn't really mean you can afford the same
lifestyle that $100,000 could buy in lower-cost cities like Cleveland
Consider inflation. Over the past 12 months through May, overall
inflation in New York metropolitan area was 4.8 percent. In
Cleveland, the rate was 3 percent. Drilling down, you also see big
differences. The cost of having a roof over your head went up 5.6
percent in New York, while in Cleveland it rose just 0.8 percent.
Next, consider taxes. State and local taxes make a big difference in
how much you net, but so, too, does the federal income tax. Earning a
nominally higher salary ($200,000 versus $100,000) puts you in a
higher tax bracket. J. Scott Moody, chief economist at the Maine
Heritage Policy Center working on behalf of the Tax Foundation, notes
that a single person making $205,000 in New York would have an
effective tax rate of 25.4 percent, paying just over $52,000 in
federal income tax, leaving him with $153,000.
If you adjust for cost of living differences, that $205,000 salary
would be worth $102,000 in Cleveland or Denver. The effective federal
tax rate on that amount would be just 20.4 percent, so you would pay
$20,868, with $81,480 left over.
"Even though the two incomes are equivalent in terms of purchasing
power, the New Yorker has an effective rate that is 5 percentage
points (or 25 percent) higher than the person living in Denver. As a
result, the New Yorker suffers a lower level of after-tax purchasing
power," Moody said.
Of course, the greatest number of six-figure jobs tend to be in the
most pricey and populous cities, but there are also plenty of
opportunities in more affordable ones.
We asked job listing sites 6FigureJobs.com and The Ladders.com to
provide us with a snapshot of where they have had the greatest number
of listings for six-figure jobs in the past two months.
Predictably, New York, San Francisco, Los Angeles and Washington,
D.C. were in the top 10. But there were also a relatively high number
of such jobs in Chicago, Atlanta, Seattle, Cleveland, Denver,
Philadelphia, Milwaukee, Houston, Dallas, Minneapolis and Charlotte,
Besides being less costly, there is another big advantage these
cities offer if you're in the running to make six figures. To attract
talent, companies often will offer the same big salaries that you
could earn in New York or San Francisco.
"Whenever top talent is scarce (which is always), salaries offered to
those super-producers ignore any geographic pattern that would
suggest a lower number," said Jim Brennan, a senior associate at the
Economic Research Institute, which specializes in competitive salary
surveys. "So if you want to get a key executive, you have to pay