The Impact of Cost of Living on Salary Requirements in the U.S. 

The Impact of Cost of Living on Salary Requirements in the U.S. 


The Concept of Cost of living 

The Concept of Cost of living 

The Cost of living, or, mainly refers to the money required for an individual to cover all the necessities such as food, taxes, housing, and even healthcare.  is applied to specific locations for a specific period. 

 is mostly a measuring stick, so you can compare how much people can afford based on their regions or countries.  

When an individual earns more than their expenses or Cost of living, we can say that people can afford to live there.  

A low salary may make you frustrated living in an expensive city. 

The Importance Of The Cost Of living Index  

Calculating the Cost of living can help in many different ways.  

Here are the factors that can help you determine the importance of Cost of living 

  1. The index measures the rise and fall of prices in a particular economy. This information is vital for government bodies to make the necessary adjustments to the Cost of living.  
  1. The calculation of the index can help you understand an individual’s choice of work, place of residence, and ability to save money for lege expenses or debts.  
  1. The index also helps you track basic expenses and understand how they may vary from region to region. 
  1. Lastly, the index also helps you to have a better idea about housing affordability, expenses they require almost every day, healthcare costs, and the standard of their living habits.  

Calculation of Index 

A comparison between two different regions or cities based on the Cost of living helps us calculate the Cost of living.  

It considers all the basic factors such as housing, healthcare, groceries, transportation, and other essentials. 

Using the high or low index, we can calculate whether a particular place is affordable.  

For example, if a region shows a high index, it can be said that it is affordable for people with high incomes.    

What Is The National Cost Of Living 

What Is The National Cost Of Living 

Let’s examine the average household expenses required for a person to live or, better, the Cost of living in United States. I will also provide a brief overview of estimated spending in different categories, which can help you make better financial decisions.  

Average Household Expenses 

  • An American household would spend an average of $61,334 per year, about $5111 monthly.  
  • These household expenses are responsible for 82% of after-tax income.  

Expense Categories  

The expense category includes housing, transportation, utilities, taxes, and food. 

  • Housing: This expense includes mortgage payments, interest, maintenance and repair, and insurance. $1784 is spent on housing expenses each month.   
  • Transportation: A person needs an overall of $819 for transportation purposes.  
  • Tax: A person is required to pay around $784 each month.  
  • Utilities and Cost of Other Household Factors: This takes about $734 per month for an average person.  
  • Food: A person in the U.S. would need $610 per month.  

Statistics For The Key Budget  

  • In 2020, the entire median of an average U.S. household was about $84352. 
  • Housing and household expenses account for most of the Cost of living and hold the major share. 
  • The food expenses take up 68% of the monthly food budget. This is about $412 per person, solely spent on groceries.   
  • As for the clothing expenses, the rate is really low. Only 2% of the total income is needed for clothing purposes.  

Utilities And Other Supplies 

In this section, I will list the utility expenses required for the average person, as their Cost of living in United States.  

Electricity  $126 
Cellular phone service  $120 
Water and other services  $57 
Natural gas $35 
Other expenses for fuels $9 

The Statewide Cost Of Living Index 

The Statewide Cost Of Living Index 

The Cost of living in United States may vary from region to region. This index can help an individual get an idea of the expenses associated with a common person’s basic necessities. 

Apart from that, The Cost of living in United States includes food, transportation, housing, healthcare, and other essentials.  

In this section, I will give you a brief overview of the index in different regions of the U.S. and list the highest and lowest indices to help you understand the comparison.  

The states with the highest Cost of living in United States 

  1. Hawaii 

Recently, Hawaii has topped the list with a  index of 179.00. Maybe you are planning to move to Hawaii. But that might cost you a premium amount due to the high rate of housing expenses and amenities. 

  1. D.C. or District of Columbia 

Closely following the Hawaii index, D.C. is currently having an index of 148.70. 

The nation may help you have a flamboyant lifestyle, but it also demands a high rate of living expenses.  

  1. California  

California, also known as Golden State, is famous for its scenery and technical hubs. The state currently has a 134.50 index.  

This is high for an average low-income household planning to move to California. 

Mississippi : The states with the lowest Cost of living in United States 

Mississippi shows a low index rate in terms of Cost of living. Among the states in the U.S., this specific state offers better affordability to the population.  

From housing costs to other amenities, Mississippi makes it attractive for low—or average-income households to live budget-friendly in the U.S.  

The housing cost of living is around 66.3 in this state, considered the lowest in the country.   

However, Mississippi is currently facing a 20% poverty rate despite having such a low cost of living rate.  

Comparison of Cost of living with countries 

Comparison of Cost of living with countries 

If we compare the Cost of living in the United States and India, we can notice a vast difference. However, rates might vary based on regions or other circumstances. 

Regarding consumer prices, India’s is 70% lower than that of the United States. While including the rent, the consumer price in India is even lower, by around 75.9%, than in the United States.  

India’s rent price is 86.7% lower than that of the United States. Similarly, in terms of grocery and restaurant prices, the United States is in a better position than India.  

Compared to the United States, India is 77.5% lower than the United States. Meanwhile, the percentage difference between the grocery prices in India and the United States is about 68.4%.   

The comparison of the index between India and the United States can help us understand the difference. But remember, personal preferences or lifestyles might vary from person to person. So, if you are planning to move to other cities, I suggest you do some research beforehand.   

The Cost of living in Specific Cities 

The Cost of living in Specific Cities 

If we compare the index, state-wise, we can clearly understand their Cost of living. 

One of the famous cities in India, Ludhiana, is less expensive than New York. The overall percentage is around 78.4%, making Ludhiana’s index lower than New York’s.  

But like I said, these numbers might vary based on personal preferences and their choice of lifestyle.  

Based on recent data, Ludhiana’s total monthly Cost of living for a family of four members is around ₹96366.2 or $1156.1. As for a single person, the Cost of living may be reduced to ₹28673.5 or $344.0.  

The rent in Ludhiana is also 93.5% lower than in New York.  

As for food expenses, a proper meal for two people might cost you ₹550.00 in a medium-range restaurant. Similarly, people use one-way local transport, which costs them ₹55.0 at max.  

Quality Of Life  

Quality Of Life  

The Cost of living in United States offers a better and higher quality of life, including better healthcare services, safety, and less pollution.  

On the contrary, in India, an individual can find affordable and attractive property prices and a low cost of living. 

The Cost of living, or, and quality of life, or QoL, are highly interconnected. Even though both are defined through different aspects, both factors help determine how a person can live in that specific place or how satisfying it will be.  

The quality of life and Cost of living also helps to improve the quality of life in a specific region.  

Here, I have listed the breakdown to help you understand the differences between the Cost of living in the United States and India.  

Factors  United States  India  
Quality of life index  177.87 118.57 
Purchasing power index  131.63 74.34 
Safety index  50.62 55.69 
Health Care Index 67.30 64.99 
Cost of Living Index 72.10 21.62 


In summary, the Cost of living in United States is higher in rate than in most countries worldwide. This includes all the regular expenses, which may vary from region to region or city.  

The U.S. is currently ranked 7th based on the current Cost of living.  

However, for a more detailed analysis, we will need to explore every factor related to the Cost of living in United States. This analysis can further help to understand how much income is required to move to a city or place to live a quality life while taking care of all the expenses.    


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