How to correctly compare small city salary to a big city salary?

Question

During these times of the pandemic, since most jobs are going remote and companies are offering salaries depending on your location, I was wondering what would be the right way to compare the salary you make living in a small town vs the salary you would make in a big city. My specific case is a bit different. I have an offer for $x in a small city and a second interview lined up for a job located in a big city. If given an offer, how much money should I ask for given that I already have an offer for $x in a small city.

ggm · Accepted Answer

The variance is on cost-side* cost of rent/purchase* cost of transport: public transport vs car+park vs walk* cost of goods: city prices are less than country prices!Its highly city specific. The variance for NY or SF is not the same as the variance for Philly or Buffalo.Arguably, (as a non US resident so this is theoretical) the HMO and associated costs might vary because of provider choice. Also, if you have a family, there are associated costs of schooling and recreation for kids.You cannot realistically set financial value on "quality of life" directly from others. Its innately subjective. I place a very high value on quality of life: I prefer inner city and I would demand a premium to have to work rural, but I know people with exactly the opposite drives and motivations!

nostrademons · Answer

Ideally, go look at housing (which is usually the biggest CoL expense) in both locations before accepting the job, have some idea where you'd want to live, and do up a budget. Straight "multiply by cost-of-living" adjustments are better than nothing, but often obscure a lot of subtleties. A TV or a cruise costs the same in Silicon Valley as it does in Detroit; a 1 BR apartment or house costs dramatically more; things like food, utilities, and gas are marginally more but not by the same proportion that cost-of-living would suggest. Also don't forget taxes (which can be quite high in high-CoL states), and remember that a dollar saved is the same regardless of where you save it. If you make $50K in Iowa but live on $40K, while you make $200K in San Francisco but live on $160K, you are saving 20% in both cases but the absolute dollar value of your savings in San Francisco could pay for a full year in Iowa. If you're hoping to retire early, you can do that in ~10 years in Silicon Valley but it'd take ~40 elsewhere. (Though remember that lifestyle tends to adjust to income.)Also, don't set your salary requirements based on what it'd take to live off of. Set your salary requirements based on what your peers are making, which you can easily find out through GlassDoor, levels.fyi, etc. these days. It's very easy to low-ball yourself with cost+ accounting, while if you have a good picture of market rates you charge what it'd take to replace you and can bank the excess.

gregjor · Answer

Pretty easy to look up the cost of living in different places and do the math. Housing and transportation costs are good proxies. State and local income and sales taxes can make a significant difference.