What Is the Cost of Living?

The cost of living refers to the money needed for essentials like housing, food, t🍬axes, and healthcare in a specific location and time. It is often used to compare the expenses of living in different cities. Higher living costs, like in New Y🅺ork, require higher salaries to afford living in the area.

How the Cost of Living Is Used

The cost of living can be a significant factor in personal wealth accumulation because a salary can prᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚovide a higher standard of living in a cityಌ where daily expenses such as rent, food, and entertainment are less.

In contrast, a high salary can seem insufficient in an expensive city such as New York. Changes in the Consumer Price Index (CPI) are often a 澳洲幸运5官方开奖结果体彩网:triggering event in labor and other🍬 contraඣcts with 🃏escalation clauses✱. The contract will detail exactly how any periodic adjustments happen and what parts of the contract will change.

In a 2024 survey, Mercer, a global human resources firm, finds the cities with the highest cost of living in order are Hong Kong, Singapore, Zurich, Geneva, and Basel. New York City ranked as the 澳洲幸运5官方开奖结果体彩网:costliest city in the United Stateඣs, followed by Los Angeles, Honolulu, and San Francisco.

The Cost of Living Index

The 澳洲幸运5官方开奖结果体彩网:cost of living index c💝ompar♕es the cost of living in one area to another. The index incorporates various living expenses creating an aggregate measure that workforce entrants can use as a benchmark.

As college graduates weigh employment alternatives and currently employed job seekers 澳洲幸运5官方开奖结果体彩网:consider relocation, the ind🌱ex provides an informative snapshot of rental, transportation, and grocery costs.

Mercer’s cost of living index measures prices in 226 urban areas for a basket of goods, which includes 12 large eggs, one liter of olive oil, espresso coffee at a popular cafe, one liter of gasoline (unleaded 95), men’s blue jeans, and women’s shampoo, haircut, and styling.

The Economic Policy Institute updated its in January 2025 with data from 2024. The calculator helps families determine how much salary they will need to cover the cost of living in 3,143 counties in all 613 metro areas.

Most Expensive Urban Areas in the U.S.

According to The Council for Community and Economic Research, the 10 most expensive urban areas in the U.S. 🎶in 2023 (the most recent annual listing available from𒆙 the council) were:

1. New York (Manhattan)
2. Honolulu
3. San Jose, California
4. San Francisco
5. New York (Brooklyn)
6. Orange County, California
7. Los Angeles and Long Beach, California
8. Washington, D.C.
9. Boston
10. Seattle
    

Least Expensive Urban Areas in the U.S.

According to The Council for Community and Eco🧜nomic Research, the 10 least expensive urban areas in the U.S. in 2023 (the most recent annual listing available from the council) were:

1. Decatur, Illinois
2. Harlingen, Texas
3. McAllen, Texas
4. Tupelo, Mississippi
5. Ponca City, Oklahoma
6. Muskogee, Oklahoma
7. Conway, Arkansas
8. Florence, Alabama
9. Kalamazoo, Michigan
10. Lawton, Oklahoma

U.S. States Ranked by Cost of Living

The following is a list of U.S. states, districts, and territories ranked by cost of living from🌞 lowest to highest during 2024:

1. West Virginia
2. Oklahoma
3. Kansas
   
4. Mississippi
5. Alabama
6. Arkansas
7. Missouri (tied for 6th)
8. Iowa
9. Michigan
10. Tennessee
11. Indiana
12. Georgia
13. North Dakota
14. South Dakota
15. Louisiana (tied for 14th)
16. Texas
17. Kentucky
18. Nebraska
19. New Mexico
20. Ohio
21. Illinois
22. Montana
23. Minnesota
24. Pennsylvania
25. Wyoming
26. South Carolina
27. Wisconsin
28. North Carolina
29. Virginia
30. Delaware
31. Nevada
32. Idaho
33. Puerto Rico (tied for 32nd)
34. Colorado (tied for 32nd
35. Florida
36. Utah
37. Arizona
38. Oregon
39. Maine
40. Rhode Island
41. Connecticut
42. New Hampshire
43. Washington
44. Vermont
45. New Jersey
46. Maryland
47. New York
48. Alaska
49. District of Columbia
50. California
51. Massachusetts
52. Hawaii

Cost of Living and Wages

The rising cost of living has spurred debate over the U.S. federal minimum wage and the disparity between the lowest salary♓ a🌠llowed by law and the earnings needed to maintain an adequate cost of living.

Proponents of a hike in wages cite increased worker productivity levels since 1968 as inequitably correlated to the minimum hourly rate of pay. As pay levels once tracked the increase in productivity, the divergence between earnings and worker efficiency has reached historically disproportionate levels.

By contrast, opponents of a minimum wage contend that a raise could sওpur higher consumer prices as employers offset rising labor costs.

Wage Increases and Cost-of-Living 🅘Adjustments (COLAs)

In 1973, Congress enacted legislation to address 澳洲幸运5官方开奖结果体彩网:cost-of-living adjustments (COLAs). COLA adjustments for 澳洲幸运5官方开奖结果体彩网:Social Security and 澳洲幸运5官方开奖结果体彩网:Supplemental Security Income (SSI) benefits were instituted so that the payments keep pace with inflation.

For example, in December 2022, the COLA was 8.7% due to the high levels of 澳洲幸运5官方开奖结果体彩网:inflation as a result of the COVID-19 pandemic, and the increased amounts were paid starting in January 2023. Federal SSI payment levels increased by the same percentage.

The Social Security Act requires COLAs to be based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Worker🀅s (CPI-W).

The 澳洲幸运5官方开奖结果体꧙彩网:Social Security Administration (SSA) announced a 澳洲幸运5官方开奖结果体彩网:COLA increase of 2.5% for 2025. That’s lower than what was announced for 2024, which was 3.2%. The agency noted that the average increase over the last 10-year period was 2.6%.

The Bottom Line

The cost🔥 of living refers to the expenses required to sustain a particular standard of living, including housing, food, taxes, and healthcare. It serves as a benchmark for comparing expenses across different areas and informs decisions about salaries and relocations.

A cost of living index aggregates these expenses, offering a detailed measure tha🔯t helps individuals understand the financial requirements of different locations.

Rising♏ living costs have ignited debates about wa♕ge increases and the need for cost-of-living adjustments. These measures seek to ensure that earnings are in step with inflation so that purchasing power is not reduced and economic stability is maintained.