Class of 2018 Buying Power Index

November 2019

The relative buying power of the dollar in any two cities is very important when comparing the nominal dollar amounts of the salaries in those two cities. Those interested in this topic might, for example, ask about the "buying power" of a salary of $180,000 in Chicago compared to the same nominal salary in San Francisco. The question becomes, "Which location offers the most buying power?" The answer, and the dollars that accompany it, often translates into discretionary income and lifestyle options for new attorneys.

To illustrate purchasing power differentials, cities are ranked on the basis of a Buying Power Index (BPI). The BPI was calculated using New York City's median reported private practice salary for the Class of 2018 and cost of living as the benchmark. New York City's BPI is thus 1.00. BPI's for other cities show how much buying power the median reported law firm salary for the Class of 2018 in that city provides compared with the New York City median. The table below shows the BPI calculated for 92 cities for which at least 10 law firm salaries were reported for the Class of 2018 and for which cost of living information was available. It is evident that the buying power of the median salary in over half of the cities listed exceeds that of New York's when relative costs of living are factored in. For example, the median reported law firm salary in Cincinnati and Austin is about 60% that of New York's, but nonetheless each offers about 40% more buying power than does the New York salary. As a second example, the buying power of the median reported salary in Louisville and Richmond exceed that of New York's even though the median salary is about half that of New York.

Additionally, salaries in any two cities with similar salaries but different BPI's can be compared. For example, the difference in purchasing power between $180,000 in Chicago and $180,000 in San Francisco can be determined. The BPI in Chicago is 1.911; that in San Francisco is 1.199. This means that the Chicago salary offers 59% more purchasing power than the identical salary in San Francisco [1.911/1.199] = 1.59 or 59%. Or, viewed the other way around, the San Francisco salary offered about two-thirds of the purchasing power of the Chicago salary [1.199/1.911] x 100 = 63%.

Likewise, the BPI can be used to compare any salary in a listed city (not just the median) with that for New York because the salary required to provide the same purchasing power as the $190,000 New York salary does not change. For example, in Atlanta, that figure is about $78,000. If the actual salary obtained in Atlanta is $160,000, it will purchase twice as much as the $190,000 salary in New York [$160,000/$78,000] = 2.05 or 105%.

City Median Reported Law Firm Salary 2018 Salary Required to Yield New York City Buying Power* Buying Power Index # of Law Firm Salaries Reported
Houston, TX $180,000 $73,555 2.447 322
Charlotte, NC 150,000 74,165 2.023 73
Atlanta, GA 150,000 77,835 1.927 197
Dallas, TX 155,000 80,590 1.923 250
Chicago, IL 180,000 94,195 1.911 548
Wilmington, DE 160,000 85,635 1.868 44
Kansas City, MO 125,000 72,635 1.721 58
Roseland, NJ 160,000 94,425 1.694 11
Philadelphia, PA 145,000 86,705 1.672 152
Boston, MA 190,000 114,690 1.657 316
Detroit, MI 120,000 72,710 1.650 38
Minneapolis, MN 133,750 81,275 1.646 90
Milwaukee, WI 120,000 74,090 1.620 72
Cleveland, OH 120,000 74,930 1.602 87
Los Angeles, CA 180,000 113,310 1.589 463
Columbus, OH 110,000 69,425 1.584 56
Nashville, TN 120,000 75,845 1.582 57
Costa Mesa, CA 180,000 114,535 1.572 36
Cincinnati, OH 110,000 72,790 1.511 52
Salt Lake City, UT 115,000 78,600 1.463 37
Austin, TX 110,000 75,235 1.462 71
Birmingham, AL 100,000 68,815 1.453 50
Washington, D.C. 180,000 124,320 1.448 661
Indianapolis, IN 101,500 70,955 1.431 65
St. Louis, MO 94,000 67,130 1.400 102
Baltimore, MD 125,000 89,380 1.399 31
Grand Rapids, MI 100,000 74,165 1.348 22
Phoenix, AZ 100,000 74,470 1.343 38
Richmond, VA 97,000 72,560 1.337 41
Louisville, KY 92,500 71,335 1.297 28
Denver, CO 110,000 86,550 1.271 121
Newark, NJ 120,000 94,425 1.271 14
Des Moines, IA 85,500 69,195 1.236 14
Pittsburgh, PA 92,500 75,770 1.221 74
Memphis, TN 75,000 61,625 1.217 21
Redwood City, CA 180,000 150,090 1.199 27
San Francisco, CA 180,000 150,090 1.199 227
Omaha, NE 86,000 72,635 1.184 30
New Orleans, LA 90,000 76,995 1.169 51
Oklahoma City, OK 75,000 64,685 1.159 53
Rochester, NY 84,000 75,080 1.119 19
Tampa, FL 75,000 68,125 1.101 69
Stamford, CT 120,000 110,635 1.085 14
Wichita, KS 75,000 69,195 1.084 10
Knoxville, TN 67,500 62,465 1.081 14
Manchester, NH 87,500 83,495 1.048 12
Seattle, WA 122,500 118,360 1.035 98
Bloomfield Hills, MI 75,000 72,710 1.031 11
Chattanooga, TN 75,000 73,935 1.014 15
Albany, NY 85,000 83,875 1.013 25
Akron, OH 75,000 74,165 1.011 12
Charleston, SC 77,500 76,995 1.007 10
Fort Worth, TX 75,000 74,930 1.001 35
Raleigh, NC 70,000 69,960 1.001 41
Madison, WI 81,000 80,970 1.000 21
New York City, NY 190,000 190,000 1.000 2,296
Orlando/Winter Park, FL 72,250 73,095 0.988 48
Tulsa, OK 65,000 66,825 0.973 30
Columbia, SC 71,000 74,320 0.955 22
Albuquerque, NM 70,000 74,090 0.945 23
Baton Rouge, LA 70,000 76,690 0.913 15
Sacramento, CA 82,000 89,915 0.912 52
Buffalo, NY 65,000 72,485 0.897 39
Santa Monica, CA 100,000 113,310 0.883 17
Winston-Salem, NC 62,500 70,955 0.881 14
Tallahassee, FL 65,000 73,860 0.880 11
Little Rock, AR 65,000 74,395 0.874 16
Jacksonville, FL 60,000 70,265 0.854 29
Miami, FL 75,000 88,845 0.844 141
Newport Beach, CA 95,000 114,535 0.829 14
Troy, MI 60,000 72,710 0.825 17
Savannah, GA 54,000 67,285 0.803 13
Portland, OR 80,000 100,160 0.799 45
Lincoln, NE 57,500 72,175 0.797 12
Spokane, WA 60,000 75,695 0.793 13
Irvine, CA 87,500 114,535 0.764 76
Southfield, MI 55,000 72,710 0.756 16
San Diego, CA 85,000 112,395 0.756 120
Providence, RI 70,000 93,510 0.749 12
Coral Gables, FL 66,000 88,845 0.743 36
Walnut Creek, CA 85,000 118,130 0.720 11
Fort Lauderdale, FL 65,000 91,600 0.710 58
Glendale, CA 80,000 113,310 0.706 15
Santa Ana, CA 80,000 114,535 0.698 11
Long Beach, CA 75,000 113,310 0.662 23
Mt. Pleasant, SC 50,000 76,995 0.649 11
Oakland, CA 75,000 118,130 0.635 16
Beverly Hills, CA 70,000 113,310 0.618 16
Pasadena, CA 70,000 113,310 0.618 15
Honolulu, HI 86,000 145,040 0.593 26
Alexandria, VA 65,000 110,865 0.586 12
Brooklyn, NY 55,000 138,925 0.396 17

*Note: For ease of presentation, these figures are rounded to the nearest $5.


Notes on Resources and Methodology for Calculating the Buying Power Index

The Buying Power Index (BPI) uses as its benchmark New York City's median starting salary and cost of living. Cost of living information was obtained from The Council for Community & Economic Research (C2ER) and its Cost of Living Index for 2016. C2ER is a nonprofit professional organization of research staff of chambers of commerce, economic development organizations, and related organizations. C2ER obtains information through the participation of local Chambers of Commerce. C2ER uses this information to develop a cost of living index relative to a U.S. average of 100. The index measures differences in the costs of goods and services; C2ER does not attempt to incorporate tax differentials into its index. The index is not available for metropolitan areas whose Chamber(s) of Commerce do not participate.

These indices were used to create an adjusted cost of living index for each city, with New York City, rather than the U.S. average, set as 1.00. This adjusted index thus indicates the dollar amount equivalent to a dollar in New York when the cost of living differential is considered. For example, the C2ER Cost of Living index for the Louisville, KY area is 93.3. Comparing this to New York's index of 248.5 means that about $0.38 is needed in Louisville to obtain purchasing power equal to that of $1.00 in New York (93.3/248.5 = 0.3755).

This adjusted index was then used to determine how the New York median private practice salary would have to be scaled to provide comparable purchasing power in each city. Using the Louisville example, the lower cost of living means that a salary of about $71,000 is equivalent in purchasing power terms to the $190,000 salary in New York ($190,000 x 0.3755 = $71,300).

This purchasing power equivalent was then compared to the actual median reported private practice salary in each city to determine a BPI. The closer the BPI is to 1.00, the closer the salary comes to providing purchasing power on a parity with New York City. Continuing with the Louisville example, the BPI of 1.297 means that the $92,500 median salary has about 30% more purchasing power than the New York salary ($92,500/$71,335 = 1.297).

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