Cost of Living Adjustment: Comparing Salaries Across Cities
A cost of living adjustment scales a salary so it buys the same lifestyle in a different place.
Adjusted salary = current salary × (destination index ÷ current index).
A cost of living adjustment, often abbreviated COLA, is the calculation that tells you how much a salary needs to change to keep your purchasing power steady. It comes up in two situations: when wages are raised over time to keep pace with inflation, and — more usefully for job seekers — when you compare what an income is worth in two different cities. A $90,000 offer in Dallas and a $120,000 offer in San Francisco are not as different as they look once you adjust for cost of living.
This page explains how the cost-of-living index works and walks through the simple formula for adjusting any salary. To run exact numbers for your own situation, use the salary converter or one of our city-by-city cost of living pages.
How the Cost-of-Living Index Works
A cost-of-living index sets the U.S. national average at 100. A city with an index of 150 is 50% more expensive than average; a city at 85 is 15% cheaper. The index blends the major spending categories — housing, groceries, transportation, healthcare, and utilities — into a single comparable number. Here is how a few well-known metros compare:
| City | COL Index | vs. Average |
|---|---|---|
| San Francisco, CA | 179.6 | +80% |
| Austin, TX | 110.3 | +10% |
| Houston, TX | 96.5 | -4% |
Adjusting a Salary When You Relocate
The formula is straightforward: multiply your current salary by the destination city's index divided by your current city's index. Say you earn $80,000 in a city at index 100 and you're moving to San Francisco at index 179.6. The cost-of-living-adjusted equivalent is about $143,680 — that's the salary you'd need to maintain the same standard of living. Conversely, moving from an expensive city to a cheaper one means you can take a nominal pay cut and still come out ahead.
Once you know the adjusted figure, convert it to per-hour and after-tax terms with the salary-to-hourly breakdown or check what an hourly rate annualizes to with the hourly-to-salary converter. For more on judging an income overall, read how much a good salary really is and whether $100K is a good salary, or browse all conversions.
Frequently Asked Questions
What is a cost of living adjustment?
A cost of living adjustment (COLA) is a change to a salary, pension, or benefit that accounts for differences in living costs — either over time (inflation) or between locations. When relocating, a COLA tells you how much your salary needs to change to maintain the same standard of living.
How do I calculate a cost of living adjustment between two cities?
Divide the destination city's cost-of-living index by your current city's index, then multiply by your current salary. For example, moving from a city at index 100 to one at index 150 requires a 50% raise — a $80,000 salary would need to become $120,000 to break even.
What does a cost-of-living index of 100 mean?
An index of 100 represents the U.S. national average. A city at 120 is 20% more expensive than average, while a city at 90 is 10% cheaper. You can compare a salary's real value by adjusting it with the destination city's index.
Does a cost of living adjustment account for taxes?
Not directly. A cost-of-living index covers housing, food, transportation, and everyday goods, but not state income taxes. When comparing offers, adjust for both the cost-of-living index and the after-tax difference between states.