How Where You Live Affects Your Earnings

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Americans move around a lot. Their decisions about where to move to are often determined by their jobs, but there are other factors involved their choices as well. How much does it cost to live in a place? What’s the weather like? Is it a low-crime area? What about amenities like proximity to outdoor recreation or cultural attractions like museums and nightlife?

The Hamilton Project of the Brookings Institution has over the past few years provided tools for workers—especially young workers—to help them make decisions about their education and careers. The tools are intended to shine a light on how labor markets work and what that implies for investing in education.

Where Work Pays: Occupations and Earnings Across the United States” is the Hamilton Project’s latest interactive feature to offer users a view of how typical earnings in different occupations vary across the metro and non-metro areas in the United States. The program also highlights how earnings by occupation change when adjusted for age, cost of living, and state and federal income taxes.

Where you live and what you do for a living matters a lot for earnings. The U.S. median earnings for all working-age full-time workers (ages 25 through 64) is $41,000, but that ranges from $15,000 to $320,000 across 320 occupation categories. Workers in the top 30 locations across the country earn an average of 20% more than the median worker and 37% more than workers in the bottom 30 locations.

Differences in education level account for 16% of the variation in earnings while age, race/ethnicity, sex and occupation account for another 20%. Location accounts for about 1.5% of the variation.

The report’s authors conclude:

Educational and occupational choices matter a great deal to workers’ careers. In addition, where workers choose to live matters significantly in many occupations. As this economic analysis has shown, there is a wide range of wage outcomes across locations in the United States. Typical pay is substantially higher in some locations than in others, though the location of the highest pay varies depending on occupation. Higher pay is sometimes partially offset by higher cost of living and taxes, depending on location, but higher cost of living and taxes are balanced in some locations by nonwage amenities that attract workers. Understanding how all of these factors—earnings, cost of living, taxes, and amenities—vary across the country is necessary for a complete account of labor market outcomes.

The Hamilton Project’s full report includes details on why earnings can vary widely within occupations and across different locations and how the value of a dollar depends on where a worker lives, among other things.