Average Salaries: Are they really highest in San Francisco?

A recent article in the Portland Business Journal claims that average salaries in San Francisco are the highest in the country. Is this true? Does it pay to live in San Francisco? Is it really that bad a deal to live in Birmingham, Alabama, the place with the lowest average salaries?

If you have read my earlier posts, you know to be skeptical about any statement about "median", "typical", or "average" salaries. This particular study reports on the median salary in each city for jobs that have a national median salary of $30,000. This was a little too vague for me, so I looked in the PayScale salary survey data for my own two typical jobs: Certified Public Accountant (CPA) and Registered Nurse (RN).

Fix It San Francisco

Job title and city, even for very specific jobs like these, is not enough to nail down the median salaries. I also limited my study to employees with 1 to 9 years of experience. While a little broad, the different cities had roughly the same mix of experiences within this range in our data, so the median salaries are comparable.

To compare the article's data for a job with a $30,000 national median salary (30K job) with the PayScale data for RNs and CPAs, let's answer the question, "how much more would a typical employee earn by moving from Birmingham to Portland or San Francisco?"

The article said San Francisco pay was 25.6% above, Portland 3.9% above, and Birmingham 7.2% below the national median salary. Hence a San Francisco "30K" employee is paid 35% more, and one in Portland 12% more, than a Birmingham worker. The following table and chart compare the regional differences in pay for the "30K" job with PayScale data for RNs and CPAs:

Birmingham (AL): CPA     Reference ($54,500/year)
30K Reference ($27,840/year)
RN Reference ($20.59/hr)
Portland (OR): CPA -2% ($53,600/year)
30K +12% ($31,170/year)
RN +27% ($26.17/hr)
San Francisco: CPA +23% ($67,200/year)
30K +35% ($37,680/hr)
RN +78% ($36.65/hr)

These very large differences above between the specific jobs, and the typical "30K" job, are at the core of the PayScale's philosophy. The market for each job in each location is different. There is no such thing as a standard pay adjustment for geography that applies to all, or even most, jobs.

Yes, pay in San Francisco is generally higher than in Birmingham. However, how much higher is very job dependent. The general trends do not tell an individual whether a move would make financial sense.

San Francisco Recruiters

Given the cost of living differences between Birmingham and San Francisco, a CPA living in San Francisco would likely end up having less money at the end of the month than one in Birmingham. A nurse has a good chance of having more.

We can't even answer the question, "which job pays more, a CPA or a nurse?" In Birmingham, the median CPA is paid $10,000 more. In San Francisco, the median CPA is paid $5000 less than the median nurse.

Should a person move across country in search of a better salary, or not? It all depends on the details of the specific job, the person's experience, and the locations. You can easily compare job specifics and locations by taking the free PayScale.com salary survey, and using the "What If" feature to consider other locations than your current one.


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