The United States has seen record inflation post-pandemic. Prices in the last three years increased by as much as they did in the ten years before them. Goods that were worth $100 before the pandemic were sold for $ 119.27 by the end of 2023.
Research by the Bank of America Cooperation (NYSE:BAC) in 2023 revealed that 67% of employees said that inflation was rising faster than their wages and salaries. This research was done in the form of focus groups. In a similar research by the Bank of America Cooperation (NYSE:BAC) in 2021, the people who said that the inflation was rising faster than their salaries were 58%. This shows that people are increasingly being affected by inflation as each year passes.
Coming toward the cost of living in the current year, it is now believed by many analysts that inflation is stubborn. Although the start of 2024 saw a decrease in inflation on a year-to-year basis, forecasters were expecting a sharper decline in inflation. According to the Bureau of Labor Statistics, the cost of living (CPI) increased by 3.1% on a year-to-year basis in the month of January. This CPI increment, or inflation, is the lowest since June last year. Inflation in December was 3.4% on a year-to-year basis.
Despite the decrease in inflation figures, it is now clear that the post-pandemic price increase is more stubborn than predicted. The breakdown of the CPI increase indicates that despite a fall in inflation, certain necessities have become more expensive. The major portion of this decline in inflation can be attributed to the fall of gasoline prices in January on a seasonally adjusted basis. However, food prices still went up by 0.4%. In addition, shelter prices increased by 0.6% on a month-on-month basis and 6% on a 12-month basis. In the context of the consumer price index, the shelter price index refers to the cost of housing, including rent and the owner’s equivalent rent (OER).
It is becoming increasingly difficult to manage the cost of living, and many people wishing to settle in large cities are becoming cautious. Our list of the 20 cities with the highest cost of living in the US can help you make better decisions in the future. Before going to the list, let’s look at how is corporate America tackling this issue.
Amazon.com, Inc. (NASDAQ:AMZN) has been quite active over the last few years to ensure that its workers can meet the cost of living. The company recently raised the wages of its warehouse and delivery workers to $20.5 per hour, up from $19 per hour. In the year 2018, Amazon.com, Inc. raised the minimum wage of its workers to $15, which was more than the double federal minimum wage for that year. Amazon.com, Inc. is a strong advocate of higher minimum wage standards.
Another company that raised its salaries in the wake of high inflation is the Bank of American Corporation. The bank increased its minimum wage from $22 to $23 in September 2023. Bank of America Corporation also announced to raise its minimum wage further to $25 per hour by 2025.
Not all companies in the country have been able to handle inflation well. Last year, tech giant Microsoft Corporation (NASDAQ:MSFT) held off on raising salaries of full-time employees. The company cited economic conditions and investment in artificial intelligence as reasons for this move. It is worth noting that in 2022, Microsoft Corporation almost doubled its budget for merit increases for certain employees. However, these employees will have to make do with the same salaries. These Microsoft Corporation employees were still entitled to bonuses and stock award budgets.
While some companies are increasing the salaries and wages of their employees, others are reacting to the inflation in the form of pay cuts. Intel Corporation (NASDAQ:INTC) is one of those companies. After a lower sales forecast, the company reduced the salaries by as much as 25%. Middle-level Intel Corporation employees saw a pay cut of 5%, whereas the higher pay cut affected the higher-level employees. It is worth noting that these cuts did not apply to hourly wage workers working at Intel Corporation
Methodology
To curate our list of the 20 cities with the highest cost of living in the US, we used two indexes. The first was Numbeo’s cost of living rankings, and the second was Expatistan’s cost of living index. We filtered both indexes for the North American region and selected the top 50 most expensive US cities in Numbeo’s ranking. Then we checked the ranking of these cities in Expatistan’s index. Finally, we averaged both ranks to arrive at the Insider Monkey Score. The lower this score, the higher the cost of living in the city.
By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional looking for the best stocks to buy you can benefit from the wisdom of hedge funds and corporate insiders.
20 – Boise, Idaho
Insider Monkey Score – 35.5
Boise, Idaho is one of the cities with the highest cost of living in the US. Recently, there has been quite an influx of people moving into the city, which, along with the rising gas prices, has made it one of the most expensive cities to live in. The city has also recently seen a significant increase in housing prices, and its real estate market has been identified as one of the most overpriced in the country.
19 – Phoenix, Arizona
Insider Monkey Score – 31.0
Phoenix, Arizona is 19th on our list of the cities with the highest cost of living in the US. The city has an overpriced housing market, owing mainly to the imbalance between the supply and demand of houses. The housing construction is not keeping pace with the population growth in the city.
18 – Philadelphia, Pennsylvania
Insider Monkey Score – 23
Philadelphia has a high demand for housing in the city center and surrounding areas. This, coupled with the increasing population and limited supply of housing, is making it costly to rent or own a place in the city. In addition, an influx of high-income earners in the city is driving prices higher.
17 – Orlando, Florida
Insider Monkey Score – 23
Orlando, Florida, is 17th on our list of the cities with the highest cost of living in the US. The city has a high influx of high-income earners, driving the prices higher. In addition, the limited housing supply in the city is also increasing the real estate prices. Some of the most expensive neighborhoods in the city include Rose Island, Lake Nona Estates, and Isleworth.
16 – Tampa, Florida
Insider Monkey Score – 20
More than half of renters in Tampa, Florida, pay more than 30% of their income towards rent. The average rent in the city is well above $2,000. The region’s inflation rate has remained high in the recent past, and the city has high food and energy prices. Despite the rising income in the city, the inflation is outpacing the overall salary increase of the residents.
15 – Dallas, Texas
Insider Monkey Score – 19
Dallas, Texas, is 15th in our list of 20 cities with the highest cost of living in the US. It has a very competitive housing market with high demand and limited supply. In 2021, the median home prices in the city surpassed the $400,000 mark. In addition, the cost of housing in the city is about 15.9% above the national average.
14 – Austin, Texas
Insider Monkey Score – 18
Austin is 14th on our list of the 20 cities with the highest cost of living in the US. Its rapid population growth is driving the prices of housing in the city high. Rent prices in the city increased by 35% between January 2021 and January 2022, where the average rent in the city crossed the $2,200 mark.
13 – Atlanta, Georgia
Insider Monkey Score – 17
Number 13 on our list of the most expensive cities in the US is Atlanta, Georgia. Apart from the usual factors, such as inflation and high rent prices, the cost of living in the city is also affected by income inequality. The city has one of the highest income inequalities among all US cities. The disparity in wealth contributes to the high cost of living for low-income households as they struggle to afford housing and other essentials.
12 – Portland, Oregon
Insider Monkey Score – 16.5
Portland is one of the most expensive cities in the United States. The city has higher than usual transportation, healthcare, and utility costs. It is also experiencing rapid growth in tech and other high-wage industries jobs, attracting high earners from all around the country. The influx of these high earners is driving the prices in the city higher.
11 – Chicago, Illinois
Insider Monkey Score – 12.5
High housing costs and inflation have made Chicago one of the most expensive cities to live in the US. Its cost of living is 5.7% higher than the national average and 12.8% higher than the state average.
10 – Denver, Colorado
Insider Monkey Score – 11.5
Denver is among the top 10 cities with the highest cost of living in the US. The cost of living in the city is 11% higher than the national average. In addition, housing expenses in the city are 36% higher than the national average.
9 – Seattle, Washington
Insider Monkey Score – 11
Seattle, Washington is 9th on our list of the 10 cities with the highest cost of living in the US. The city has high housing, transportation, and healthcare costs. Housing in the city is 111% higher than the national average.
8 – Los Angeles, California
Insider Monkey Score – 9
Los Angeles is 8th on our list of cities with the highest cost of living in the US. The median home price in the city is 169.9% more expensive than the national average, and the median rent for a two-bedroom unit is $2,370 per month, 65.7% higher than the national average.
7 – Miami, Florida
Insider Monkey Score – 7
Miami, Florida, is 7th on our list of the 20 cities with the highest cost of living in the US. The cost of living in the city is 21% higher than the national average, with housing expenses being the most significant contributor. In addition, the median home price of $517,987, is much higher than the national average.
6 – Washington, DC
Insider Monkey Score – 7
Washington, DC, is one of the top 7 most expensive cities in the US. The city has high rent, food, and transportation prices. Housing expenses in the city are particularly high. A house costs 148% more in Washington, DC than the national average. The median home price in the city is $1,117,362, and the median rent is a whooping $3,397 per month.
5 – Boston, Massachusetts
Insider Monkey Score – 5
Boston is among the top 5 cities with the highest cost of living in the US. The cost of living in the city, for one person, is $2,899 per month, placing it in the top 1% of the most expensive cities in the world. Transportation and food costs in the city are 38.1% and 24% higher than the national average, respectively. In addition, the city’s housing expenses are almost 300% of the national average.
4 – San Jose, California
Insider Monkey Score – 5
San Jose is one of the most expensive cities to live in the world. The city has high housing, transportation, and healthcare costs. Its cost of living is 49% higher than the national average. In addition, houses in the city are 61.5% more expensive than the state average.
3 – San Diego, California
Insider Monkey Score – 5
San Diego, California, is among the top 3 cities with the highest cost of living in the US. Housing expenses in San Diego, in particular, are higher. A two-bedroom unit in the city costs upwards of $3,000. Housing costs in the city are 123% higher than the national average.
2 – San Francisco, California
Insider Monkey Score – 2.5
San Fransisco is one of the most expensive cities in the world. Its cost of living is 79% higher than the national average. Houses in the city, on average, are 207% more expensive than the national average, and the median home price is upwards of $4,000 a month.
1 – New York City, New York
Insider Monkey Score – 1.5
New York City tops our list of the 20 cities with the highest cost of living in the US. According to the Economist Intelligence Unit’s Worldwide Cost of Living Report, it is the third most expensive city in the world. The city has a thriving economy, diverse culture, and an excellent quality of life, which attracts high earners from all around the world, driving the prices higher. The median rent for a two-bedroom apartment in New York City is $6,191. For perspective, the national median rent for a two-bedroom apartment is $1,306.
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This article is originally published at Insider Monkey.