California's seemingly large paychecks seem relatively trivial given the state's expensive lifestyle and tax burden.
It's no surprise that California is the costliest place to live.
According to BEA calculations, the state's cost of living is 11.2% higher than the national norm. California was followed by New Jersey at 8.2% above average, followed by Hawaii and Washington state at 7.9% and Massachusetts at 7.6%.
Arkansas is the country's bargain land, where living costs 15.6% lower than that of a typical American. Next is Mississippi at 14.5% below average, South Dakota at 13.5% and Louisiana and Oklahoma at 13.3%.
And how do California's major economic competitors fare on this cost metric?
Florida was eleventh with 3.4% above average. Texas had the twenty first highest costs and was 2.9% cheaper than average.
But this cost of living figure is barely a part of the general “affordability” equation.
Payday plus
For the everyday Californian, the big expenses are somewhat offset because of the generous pay of his employer.
Consider that the state's per capita income was the sixth highest in 2023 at $81,300. The typical US income was $69,800 – 14% less.
The states with higher pay than California were Massachusetts at $90,600, Connecticut at $89,900, New York at $82,300, New Jersey and Wyoming at $82,100.
At the opposite end of the salary spectrum, Mississippi had the bottom income at $49,700, followed by West Virginia ($52,800) and Alabama ($54,200), New Mexico ($55,300) and Kentucky ($55,400). ).
Texas was No. 24 with $66,300. Florida was No. 19 with $68,700.
The tax officer
California incomes also face the fourth-highest tax burden, in keeping with BEA calculations.
California's effective tax cost for 2023 – that’s, personal taxes paid as a share of income per capita – was 14.9%, in comparison with the statewide tax rate of 12.2%.
New York was No. 1 at 16.9%, followed by Massachusetts at 16% and Connecticut at 15.4%. Maryland was No. 5 at 14.2%.
Conversely, Mississippians pay the bottom taxes at 7.7% of income. This is followed by Alaska with 7.9%, South Dakota with 8.1%, Oklahoma with 8.4% and Tennessee with 8.5%.
Florida was twenty third at 11.3%, while Texas was eighth lowest at 9.2%.
Conclusion
Next, take into consideration a measure of a Californian's relative purchasing power in comparison with other states.
Taking those big paychecks, minus the increased cost of living and taxes, gives you a relative disposable income of $61,400 for each Californian in 2023. That's a mediocre twenty sixth amongst states and just $100 above the national income of $61,300.
Now, California aficionados might say that mediocre money flow is a good compensation for the state's many nonfinancial attractions. This is one reason the state has one among the bottom migration rates to other states within the nation.
But critics of the Golden State will argue that this theoretical income doesn't add up for a lot of residents, especially those earning below-average wages. This crazy spending is why California is struggling to draw residents from other states.
By the way in which, Wyoming ranks first on this cost- and tax-adjusted income at $80,100 – followed by South Dakota at $75,600, North Dakota at $73,600, Connecticut at $73,400 and Nebraska at $71,000 .
Mississippi had the least compensated staff by this wage measure at $52,500, followed by West Virginia ($53,500), Hawaii ($53,700), Alabama ($54,400), and Georgia ($54,700). .
And California's rivals? Texas ranked twenty third with $61,900, while Florida ranked thirty seventh with $58,900.
Originally published:
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