How Cost of Living Differences Affect Your Job Offer’s Worth

Just received a job offer in another city? Congratulations! But before you accept or call the movers, there’s one more thing you should do: check on the local cost of living.

Living costs can vary dramatically from one place to another, and what looks like a big pay bump could end up shrinking your purchasing power once local expenses like housing, taxes, and healthcare are factored in.

Here’s how to assess a job offer through the lens of cost of living—and why $50K in one city isn’t always equal to $50K in another.

What Goes Into the Cost of Living?

Cost of living is the total expense required to maintain your standard of living in a particular place. That includes:

Out of all these, housing tends to have the biggest impact.

The Biggest Factor: Housing Costs

Housing is the largest single budget item for most households. In 2023, it represented 32.9% of household spending, on average, according to the U.S. Bureau of Labor Statistics, far ahead of such costs as food (12.9%) and healthcare (8.0%).

To illustrate just how wide the gulf can be, the National Association of Realtors, which compiles home prices across the U.S. by county, recently reported that median prices ranged from a high of $1,565,090 in Marin County, California, to a low of $47,990 in Todd County, South Dakota.

The same applies to rentals. A comparison tool on the real estate website Zillow calculates the average rent in San Francisco at $3,500, compared with $2,249 in Denver, $2,175 in Newark, New Jersey, and $975 in Des Moines, Iowa (as of July 2025).

Taxes: Not All States Are Created Equal

Taxes can also vary widely from one city, county, or state to another. A job offer in Florida (no state income tax) may stretch further than one in California or New York, where tax burdens are high.

Comparing them can be tricky. For example, a state with a low or even no income tax might have high sales or property taxes, or vice versa.

The nonpartisan Tax Foundation’s website breaks down income, sales, property, business, and other taxes for each state and also rates the states in terms of their overall tax burden. For 2025, it ranked Wyoming, South Dakota, Alaska, Florida, and Montana as having the lowest overall tax burden and New York, New Jersey, the District of Columbia, California, and Connecticut as having the highest.

How to Compare the Cost of Living in Different Places

While the federal government compiles much of the data that goes into computing the cost of living, it doesn’t provide a tool for comparing one area to another. However, there are many such calculators online. Investopedia hasn’t independently evaluated them, so you might want to try several in case their results differ.

One calculator that could be useful to potential job changers appears on the employment website Payscale and takes into account housing, utilities, groceries, transportation, and healthcare. It shows, for example, that someone currently living in Des Moines and making $50,000 a year would need to earn at least $96,893 to maintain their standard of living if they were to accept a job offer in San Francisco.

On the other hand, if you were living in San Francisco and earning $50,000 a year, you could move to Des Moines and live just as well on $25,802.

How to Compare Locations (and Salaries) Like a Pro

Use these tools to run the numbers yourself:

Or use this quick formula for estimating the true value of an offer: Adjusted Salary = (New City Cost Index / Current City Cost Index) × Current Salary.

If the result of your relocation puts you in a deficit, you’re losing ground. Use this data to negotiate a higher salary or ask about relocation assistance.

The Bottom Line

The moral here is to look before you leap at a job offer in a new location, no matter how attractive it might first appear. Before making a move, compare housing and taxes, use cost-of-living calculators, look at take-home pay (not just base salary), and negotiate using real data

Armed with the right numbers, you might be able to negotiate for more money and turn a losing or break-even proposition into a winning one all around.