When we hear people talk about the highest salaries in the country, we often associate them with huge cities and trendy places. We assume that in order to hit the big time money-wise, we have to move to New York or the Bay Area, for example. 

But it’s a bit more complicated than that. While you may be able to get a higher unadjusted salary in a large city (i.e., what’s printed on your pay stub), it’s often the case that adjusted salaries are higher in smaller towns (i.e., how far your money goes based on the cost of living). For example, someone who makes $50,000 may be barely scraping by in San Diego, whereas someone with the same salary in Toledo, Ohio, could be living quite comfortably.

There are many factors that go into choosing where to live and work. But because salary is one of the most important factors to job seekers, we wanted to know where salaries go the furthest. So we sat down with Indeed Chief Economist Jed Kolko to learn more about his research on adjusted salaries.

What are the key findings?

The first and most obvious finding is that the cost of living can vary wildly from place to place. According to Jed, “There are places where it costs half as much to live than others. So thinking about a salary as a fixed number is not enough — you have to consider how far that salary is going to stretch.” This is exactly what adjusted salary tells us — how much your salary will buy where you live taking local cost of living into account. For example, a salary of $70,000 is going to stretch much further in Brownsville-Harlingen, TX, than in Honolulu, HI.

Second, for the most part, places that have higher unadjusted salaries also having higher costs of living. Jed explains, “Huge differences in salaries from one place to another aren’t so big when you factor in that places with higher salaries are also usually more expensive to live in. Generally, once you take the cost of living into account, jobs tend to pay better in smaller markets.” You’ll notice smaller metro areas, like Fort Smith, AR-OK (population 280,500), in the table of highest adjusted salaries, and larger metro areas, like Miami (population 6.2 million) in the table of lowest adjusted cities.

Unfortunately, not all jobs exist in all places. Some occupations are quite clustered, such as finance in New York and tech in the Bay Area. Workers tend to be more productive when they are located in an area where their industry is clustered, which incentivizes companies in that industry to locate there and pay the higher salary that employees need. There are also industries that cluster because they need to be physically near something like a port, a natural resource or a national or state capital. A port crane operator may not have the option of living in Kentucky.

Finally, something called “compensating differentials” can make a difference. A compensating differential is the additional amount of income a worker would need in order to take an unpleasant or dangerous job. For example, oil fracking jobs, which often require workers to relocate to remote areas and work long and arduous hours, pay quite high salaries. 

The other side of compensating differentials is that employers can sometimes pay less if they are located in a city that is very desirable, knowing that people will want to live there independent of their jobs. Miami, for example, is attractive to many people for its warm weather, beautiful beaches and proximity to Latin America. In this way, the city itself acts as a part of the “package,” allowing companies to pay less.

What does this mean for employers?

“Employers should have a good reason to hire in expensive places; otherwise, it’s not worth paying the premium that workers need to take a job in that market,” Jed says. For many jobs, employers can’t justify this because if a job can be anywhere, there’s no need to be in an expensive place. Call center jobs, for example, are rarely located in pricey metros because the job can be done from almost any location, making it unnecessary for employers to pay the salary premium to operate in a costly place. 

However, there are certain places where employers will probably have to pay more, and in some industries much more, to get workers in certain places than others. The New York finance jobs and Silicon Valley tech jobs mentioned above often command quite high salaries.

What does this mean for job seekers?

Job seekers should consider the cost of living seriously when weighing job and salary offers. A number that looks high on paper may not feel high once you’ve paid for rent, food, transportation and other necessities. And the cost of living even within one city will vary depending on your needs. Do you need a house for a family? A yard for a dog? Or would a simple studio apartment suffice?

Jed sums it up: “Generally, it’s often a better bet financially to live in a small city, as your salary will go further. However, what you make and how far it stretches isn’t the only factor to think about. It matters as much whether you can find jobs in your field. There are many places where the adjusted salary is high, but the unemployment rate is high too.” For example, the unemployment in Brownsville-Harlingen (number one on the highest adjusted salaries list) is well above the national average at 5.2%.

Finally, don’t forget the cost of moving, which is expensive in terms of dollars, time and inconvenience. You might be able to earn more money in another place, but the bump has to be big enough to cover the cost of living. Job seekers will have to consider a number of things: Do you need to find new schools for your children? Does someone else in your family need to find a new job? Do your elderly parents need care?

Aside from finances, there are lots of very personal, emotional factors that need to be considered. Though salary will never be the only thing job seekers consider, being armed with information about how far their salaries will go in different places will help job seekers make the best choice for their needs.