This year for the first time, the federal government released data comparing price differences among states and metro areas. The new measurements are known as Regional Price Parities (RPP) and Real Personal Income (RPI). These simple, but powerful data points allow individuals in each state to measure how far their money goes compared to individuals in other states.
This may initially seem like boring math stuff, but it is actually a big deal when you take a second to consider the implications.
For instance, a Floridian or Georgian who is weighing whether to take a job in Alabama can now see that their salary will buy them more goods and services in the Yellowhammer State than it will where they currently live. (There are other considerations, like state taxes, etc., but you get the point.)
Or when policymakers are debating how much to pay state government employees, they will have hard numbers comparing Alabama’s low cost of living to other states, and potentially save taxpayers millions of dollars per year by adjusting accordingly.
So just how far does a buck go in Alabama?
Well, for starters, $53,046 — the nation’s median household income — will actually buy you about $60,213 worth of goods and services in Alabama. Or, to look at it a different way, a household income of $46,732 in Alabama is essentially equal to that of the national median.
In short, Alabamians are about 13.5 percent richer than their nominal incomes suggest.
But let’s break it down even simpler.
If you’ve got $100 bill, how far does it go in each state?
In Alabama, $100 will get you $113.51 worth of goods and services. That’s tied with Missouri for the third most bang for your buck in the nation, behind just Mississippi ($115.74) and Arkansas ($114.16) (insert “SEC” chant here).
But in Washington, D.C., that same $100 will only get you $84.60 worth of goods and services, the lowest in the nation, followed by New York ($86.66), New Jersey ($87.64), and California ($88.57).
To compare the entire nation, check out the map below.
Follow Cliff on Twitter @Cliff_Sims