Detailed findings and methodology:
Much of the differences between the states’ cost of living result from divergences in housing costs. For example, with Hawaii’s relatively high housing prices, a dollar spent on rent there is worth only 61 cents. A dollar spent on rent in Arkansas, on the other hand, delivers essentially $1.58 in value.
Businesses that sell consumer goods in dense urban areas often pay a higher rent than enterprises in rural locales: Some of businesses’ extra expenses are passed on to customers in the form of higher retail prices.
In states where a dollar is worth less (those with the highest cost of living), many residents have higher incomes. While residents of New Jersey state see only $0.88 in value for each dollar they spend, the annual per capita income there is also almost $20,000 higher, more than enough to offset their lower purchasing power.
Income levels diverge more than the value of the dollar among the 50 states. For this reason, in most states with high resident incomes and steep consumer prices, the people living there can generally afford to fork out more for goods and services than can their counterparts in states with cheaper prices and lower salaries.
To determine the value of a dollar in every state, 24/7 Wall St. reviewed the Bureau of Economic Analysis’ estimates for regional price parity in 2015 — the most recent year for which data is available. We calculated the value of a dollar in each state by dividing 100 (which represents the base value of $1.00) by every state’s relative price parity figure. We also reviewed the BEA’s per capita personal income data for all states in 2015. To arrive at the effective personal income value for every state, we divided the 2015 per-capita-personal income figure by the 2015 regional price parity value. Median home values came from the 2016 U.S. Census Bureau’s American Consumer Survey.
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