Class of 2020 Buying Power Index

November 2021

The relative buying power of the U.S. 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 how the buying power of a $190,000 salary in Dallas, TX compares to the same nominal salary in Washington, DC. The question becomes, "Which location offers the most buying power?" The answer — and the dollars that accompany the salary with the greater buying power — often translates into discretionary income and lifestyle options for new lawyers.

To illustrate purchasing power differentials, NALP has analyzed salary data from the Class of 2020 Employment Report and Salary Survey in conjunction with cost-of-living data from the Council for Community & Economic Research (C2ER) to rank cities on the basis of a Buying Power Index (BPI). The BPI was calculated using New York City's overall median reported private practice salary for the Class of 2020 and cost of living as the benchmark. New York City's BPI is thus 1.00. BPIs for other cities demonstrate how much buying power the median reported law firm salary for the Class of 2020 in that city provides compared with the New York City median. Table 1 below shows the BPI calculated for 93 cities for which at least 10 law firm salaries were reported for the Class of 2020, and for which cost-of-living information was available in the fourth quarter of 2020. Those cities with a BPI greater than 1.0 offer more purchasing power compared to New York City and those with a BPI below 1.0 provide less purchasing power. In well over half of the cities included in the table, the buying power of the median salary exceeds that of New York City's when relative costs of living are factored in. For example, the median reported law firm salaries in Columbus, OH and Birmingham, AL are about 60% that of New York City's, but nonetheless each offers about 50% more buying power than does the New York City salary. As another example, the buying power of the median reported salaries in Omaha, NE and Salt Lake City, UT exceed that of New York City's even though these cities' median salaries are about half that of New York.

Additionally, salaries in any two cities with similar salaries but different BPIs can be compared. For example, the difference in purchasing power between $190,000 in Boston, MA and $190,000 in Houston, TX can be determined. The BPI in Boston is 1.597 and the BPI in Houston is 2.546. This means that the Houston salary offers 59% more purchasing power than the identical salary in Boston [2.546/1.597] — 1.59 or 59%. Or, viewed the other way around, the Boston salary offered about two-thirds of the purchasing power of the Houston salary [1.597/2.546] 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 City because the salary required to provide the same purchasing power as the $190,000 New York City salary does not change. For example, in Austin, TX that figure is about $82,000. If the actual salary obtained in Austin is $160,000, it will purchase nearly twice as much as the $190,000 salary in New York City [$160,000/$82,000] = 1.95 or 95% more purchasing power.

Table 1. Class of 2020 Buying Power Index for Cities with at Least 10 Reported Salaries

City Class of 2020 Median Reported Law Firm Salary ($)* Salary ($) Required to Yield New York City Buying Power* Buying Power Index # of Law Firm Salaries Reported
Houston, TX $190,000 $74,635 2.546 309
Dallas, TX 190,000 84,980 2.236 267
Charlotte, NC 152,500 77,685 1.963 84
Roseland, NJ 190,000 98,770 1.924 12
St. Louis, MO 135,000 70,230 1.922 49
Chicago, IL 190,000 98,930 1.921 539
Wilmington, DE 175,000 91,795 1.906 70
Atlanta, GA 155,000 81,610 1.899 205
Richmond, VA 147,500 78,885 1.870 38
Philadelphia, PA 160,000 89,710 1.784 113
Cleveland, OH 135,000 76,960 1.754 77
Nashville, TN 130,000 77,765 1.672 59
Minneapolis, MN 140,000 84,255 1.662 94
Los Angeles, CA 190,000 118,010 1.610 476
Santa Monica, CA 190,000 118,010 1.610 13
Milwaukee, WI 125,320 78,005 1.607 61
Boston, MA 190,000 118,970 1.597 279
Costa Mesa, CA 190,000 119,690 1.587 27
Indianapolis, IN 115,000 72,875 1.578 44
Washington, DC 190,000 124,500 1.526 685
Baltimore, MD 130,750 86,020 1.520 38
Birmingham, AL 115,000 76,160 1.510 56
Columbus, OH 110,000 73,435 1.498 71
Austin, TX 122,500 82,015 1.494 62
Detroit, MI 120,000 82,495 1.455 41
Cincinnati, OH 107,500 74,155 1.450 36
Kansas City, MO 106,250 76,160 1.395 66
Hartford, CT 125,000 90,830 1.376 19
New Haven, CT 130,000 95,480 1.362 14
Chattanooga, TN 100,000 74,715 1.338 16
Midland, TX 100,000 74,715 1.338 10
Grand Rapids, MI 100,000 75,520 1.324 27
Phoenix, AZ 105,000 83,215 1.262 55
Omaha, NE 94,000 75,040 1.253 42
Fort Worth, TX 92,000 74,235 1.239 18
San Francisco, CA 190,000 154,165 1.232 258
New Orleans, LA 107,000 87,625 1.221 36
Des Moines, IA 85,000 70,710 1.202 16
Denver, CO 110,000 91,795 1.198 89
Savannah, GA 82,500 70,310 1.173 20
Irvine, CA 140,000 119,690 1.170 83
Salt Lake City, UT 96,500 83,855 1.151 38
Wichita, KS 80,000 71,350 1.121 25
Lafayette, LA 80,000 71,910 1.112 10
Columbia, SC 80,000 73,675 1.086 25
Pittsburgh, PA 90,000 83,135 1.083 85
Memphis, TN 75,000 69,985 1.072 21
Newark, NJ 105,000 98,770 1.063 10
Winston-Salem, NC 80,000 76,640 1.044 14
Tampa, FL 80,000 77,445 1.033 72
Baton Rouge, LA 80,000 77,525 1.032 22
Rochester, NY 85,000 83,135 1.022 17
Las Vegas, NV 84,000 82,495 1.018 11
Manchester, NH 88,500 87,225 1.015 12
Newport Beach, CA 120,000 119,690 1.003 15
New York City, NY 190,000 190,000 1.000 2,006
Madison, WI 85,500 86,100 0.993 20
Miami, FL 90,000 91,230 0.986 157
Knoxville, TN 65,000 66,620 0.976 18
San Antonio, TX 75,000 76,960 0.975 27
Jacksonville, FL 72,000 73,995 0.973 37
Albany, NY 85,000 88,345 0.962 18
Seattle, WA 120,000 125,065 0.960 95
Orlando/Winter Park, FL 72,000 75,280 0.956 58
Tulsa, OK 65,000 68,545 0.948 25
Louisville, KY 72,500 77,040 0.941 26
Portland, OR 100,000 106,385 0.940 42
Oklahoma City, OK 65,000 69,425 0.936 27
Raleigh, NC 72,750 77,925 0.934 64
Sacramento, CA 90,000 96,445 0.933 39
Lubbock, TX 67,000 73,915 0.906 10
San Diego, CA 102,110 116,485 0.877 139
Mt. Pleasant, SC 70,000 80,170 0.873 10
Albuquerque, NM 65,000 75,600 0.860 33
Little Rock, AR 65,000 77,445 0.839 24
Lincoln, NE 62,500 74,475 0.839 13
Buffalo, NY 65,000 77,525 0.838 38
Fort Lauderdale, FL 75,000 95,160 0.788 23
Charleston, SC 62,500 80,170 0.780 19
Montgomery, AL 55,250 71,270 0.775 10
Coral Gables, FL 70,000 91,230 0.767 25
Portland, ME 69,750 94,440 0.739 12
Alexandria, VA 80,000 109,510 0.731 11
Akron, OH 55,000 78,085 0.704 12
Long Beach, CA 82,750 118,010 0.701 18
Spokane, WA 60,000 85,700 0.700 14
Providence, RI 65,000 95,640 0.680 18
Oakland, CA 85,000 125,305 0.678 20
Beverly Hills, CA 77,500 118,010 0.657 12
Glendale, CA 77,500 118,010 0.657 24
Pasadena, CA 72,500 118,010 0.614 16
Honolulu, HI 77,500 158,975 0.487 28
Brooklyn, NY 67,500 139,335 0.484 20

*Note: For ease of presentation, these figures are rounded to the nearest $5.
Sources: Cost-of-living information comes from the Council for Community & Economic Research (C2ER) and its Cost of Living Index for the fourth quarter of 2020. Median law firm salary data is from NALP's Jobs & JDs, Class of 2020.


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 the fourth quarter of 2020. C2ER is a non-profit professional organization of research staff of chambers of commerce, economic development organizations and agencies, and related organizations. C2ER obtains information through the participation of local Chambers of Commerce or similar organizations. 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; however, 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. Median salary information for each city was obtained from analysis included in NALP's Jobs & JDs, Class of 2020 report.

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 City when the cost-of-living differential is considered. For example, the C2ER Cost of Living index for Indianapolis, IN is 90.9. Comparing this to New York City's index of 237.0 means that about $0.38 is needed in Indianapolis to obtain a purchasing power equal to that of $1.00 in New York City (90.9/237.0 = 0.3835).

This adjusted index was then used to determine how the New York City median private practice salary would have to be scaled to provide comparable purchasing power in each city. Using the Indianapolis example, the lower cost of living means that a salary of about $73,000 is equivalent in purchasing power terms to the $190,000 salary in New York ($190,000 x 0.3835 ? $72,900).

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 par with New York City. Continuing with the Indianapolis example, the BPI of 1.578 means that the $115,000 median salary has about 58% more purchasing power than the New York salary ($115,000/$72,875 = 1.578).

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