What does cost of living mean? How we calculate the comparison for states and cities.

More than half a million people left New York City in 2022, 23% of them citing the high cost of living as one of the reasons they chose to move. Out-going New Yorkers flocked to states like Florida, New Jersey, Connecticut and Pennsylvania. 

It’s not just New York – USA TODAY previously reported that many Californians were leaving the Golden State for Texas, which has no income tax, a lower cost of living and job opportunities in high-earning tech and energy industries.

Here’s a look at how Americans fare with salaries and expenses across the country.

What is cost of living? 

The cost of living is the amount of money it takes to cover basic expenses. State and region scores across the country give a snapshot of how expensive it is to live in a place based on earned wages. It's not enough to just compare wages and consumer prices because people who live in areas with higher expenses often make more money than those who live in less expensive places.

Cost of living index scores compare a certain area to the national average. There isn’t one federal index, and not every index calculates the cost of living the same, according to Investopedia. The score is generally pulled from the cost of housing, utilities, groceries, transportation, health care and miscellaneous goods and services.

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What is the U.S. average cost of living?

Cost of living indexes often use a score of 100 to represent a base cost of living. States with scores over 100 have a higher cost than the national average.

According to the most recent Consumer Expenditure Survey from the Bureau of Labor Statistics, the average household income after taxes in 2022 was $83,195 and annual household spending was about $72,967.

The Council for Community and Economic Research’s Cost of Living Index from Q3 of 2023, showed Manhattan had a cost of living twice that of the national average. Decatur, Illinois was more than 20% below the national average.

Here are the most expensive urban areas from the 2023 index:

1. Manhattan, New York (227.8)
2. Honolulu, Hawaii (179.2)
3. San Jose, California (171.3)
4. San Francisco, California (169.5)
5. Brooklyn, New York (159.7)
6. Orange County, California (151.2)
7. Boston, Massachusetts (148)
8. Los Angeles-Long Beach, California (147.3)
9. Seattle, Washington (145.7)
10. Washington, D.C. (145.3)

Here are the least expensive urban areas:

1. Decatur, Illinois (77)
2. Harlingen, Texas (79.7)
3. McAllen, Texas (80.2)
4. Ponca City, Oklahoma (80.4)
5. Augusta, Georgia and Aiken, South Carolina (82.8)
6. Anniston-Calhoun County, Alabama (83)
7. Florence, Alabama (83)
8. Ashland, Ohio (83)
9. Conway, Arkansas (83.1)
10. Tupelo, Mississippi (83.1)

What is the cost of living increase for 2023?

In 1973, the Social Security Administration began providing cost-of-living adjustments, also known as COLAs. These benefits track with inflation and use the Consumer Price Index to calculate the exact number, according to the SSA.

The most recent COLA for Social Security and Supplemental Security Income benefits is 3.2% for 2024. This is a drop from last year’s 8.7% increase.

What state has the lowest cost of living?

Here are the states with the lowest composite scores based on the third quarter of 2023:

1. West Virginia (85.2)
2. Mississippi (86.7)
3. Oklahoma (86.8)
4. Kansas (87.4)
5. Alabama (88.2)
6. Missouri (88.3)
7. Arkansas (88.5)
8. Iowa (89.9)
9. Tennessee (90.4)
10. Louisiana (90.7)

The states with the highest cost of living were Hawaii (179.2) and Massachusetts (148).

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