Same salary, different city, different life.
A $120k San Francisco offer and a $75k Austin offer can be roughly equivalent in purchasing power. A $120k San Francisco offer and a $45k Bangalore offer can also be equivalent. The cost-of-living math behind the comparison.
What “cost of living” actually means
Cost-of-living indices typically compare the total cost of a standardised basket of goods and services across cities. The basket includes housing (the dominant component, often 35–45 % of the index), groceries, transportation, healthcare, utilities, and discretionary categories.
Different indices use different baskets and different weighting methodologies. The Bureau of Labor Statistics' Consumer Price Index, the Numbeo crowd-sourced index, the Mercer Cost of Living Survey (used by employers for international assignments), and the EIU Worldwide Cost of Living Survey all produce different rankings. The figures below use a US-centric weighting; for relocations involving non-US destinations, validate against Mercer or local sources.
Reference: cost-of-living index by city (US = 100 at SF/NYC level)
| City | Cost of living index | Equivalent of $120k SF | Notes |
|---|---|---|---|
| San Francisco, CA | 100 | $120,000 | Reference base |
| New York, NY (Manhattan) | 95 | $114,000 | Slightly cheaper than SF; significant intra-city variance |
| Boston, MA | 82 | $98,400 | ~18% cheaper |
| Seattle, WA | 78 | $93,600 | ~22% cheaper, no state income tax |
| Chicago, IL | 68 | $81,600 | Major Midwest |
| Austin, TX | 62 | $74,400 | ~38% cheaper, no state income tax |
| Atlanta, GA | 58 | $69,600 | Major Southeast |
| Cleveland, OH | 48 | $57,600 | ~52% cheaper |
| London, UK | 75 | $90,000 / £71,000 | Subject to FX volatility |
| Berlin, Germany | 52 | €57,200 | Cheaper than most major US |
| Singapore | 85 | S$135,000 | Comparable to NYC level |
| Bangalore, India | 23 | ₹2,300,000 (~$28k) | Heavy housing/transport differential |
| Mumbai, India | 28 | ₹2,800,000 (~$34k) | Most expensive Indian city |
The equivalent-purchasing-power formula
For a base salary SA in city A with cost-of-living index COLA, the equivalent salary in city B with index COLB is:
SB = SA × (COLB / COLA)
For the SF $120k → Austin example: 120,000 × (62 / 100) = $74,400.
What the formula doesn't capture
- Tax differentials. SF (California) state income tax tops at 13.3 %; Austin (Texas) has no state income tax. The same gross salary in Austin produces materially more take-home, magnifying the cost-of-living advantage.
- Housing tenure. A renter in SF and a homeowner in Austin face different cost trajectories over time. Housing inflation in expensive metros tends to outpace the broader CPI.
- Lifestyle differences. Two cities with similar COL indices can offer very different quality-of-life. The index is a price-of-basket measure, not a quality-of-life measure.
- Career capital. Some industries are concentrated in specific cities (finance in NYC, tech in SF/Seattle, government in DC). The career-progression value of being in the hub may exceed the cost premium.
The remote-work normalisation question
A persistent post-2020 question: should a US tech company pay the same salary to a remote employee in San Francisco and a remote employee in Cleveland? The economically rational answer (no, adjust by COL) and the actual market practice (mostly yes, with some companies adopting partial COL adjustments) have diverged.
For the worker negotiating a remote role, the rule of thumb: ask for the high-COL-city salary if you're working in a high-COL city; expect a 15–25 % adjustment if you're moving to a low-COL city while staying remote at the same employer. Companies' “location-agnostic” pay policies are eroding.