High Cost-of-Living Areas and Entry Level Jobs Can Provide Financial Security: Key Insights From our Wage Analysis

By Aleksandra Radeva, Lisa Simon (Revelio Labs), Zanele Munyikwa (Economist at Revelio Labs)

In today’s economic landscape – with looming uncertainty about the role of generative AI on the workforce and the pocketbook pinch of ongoing inflation – where and how can workers and their families find financial security and the stability it offers? When companies pay their employees a wage rate that meets local living expenses, they’re not only investing in operational success but also demonstrating leadership on one issue on which Americans across political affiliations agree, a seeming rarity in this election season.

To better understand the financial security of employees across America’s largest publicly traded companies, the Russell 1000, JUST Capital and Revelio Labs analyzed the amount by which employees’ wages exceed the local living wage necessary to cover basic budgetary needs. And while a living wage covers the basics, including housing, food, healthcare, and other essentials, the excess amount provides additional income that allows for the savings, discretionary spending, and improved quality of life necessary for true economic stability. The results – which indicate the financial viability of Russell 1000 employment, including among some entry-level positions, in some of America’s highest cost-of-living cities – may initially seem confounding. To learn more about how we made these calculations, click here.

Key Takeaways:

  • The Metropolitan Statistical Areas (MSAs) where Russell 1000 workers with a family of four can earn the highest relative wages compared to their local cost of living are among the highest cost-of-living regions in the U.S., including Seattle, Silicon Valley, and Austin, indicating that such regions can make economic sense for some workers.
  • Retail sales roles provide important entry-level positions for millions of American workers, and yet the wage rates earned by retail sales employees consistently fall below the living wage threshold for a family of four in many metropolitan areas.
  • Surprisingly, in some high cost-of-living regions these very roles do provide for financial security – but only when location intersects with companies that have made a decision to invest in their employees. Top companies for entry-level retail positions include Best Buy, Nordstrom, Skechers, and Macy’s.

Earnings Exceeding Living Wage Vary Across Geographies 

When considering where workers can achieve financial stability, it’s surprising to find that some of the highest cost-of-living areas in the U.S. – like Seattle, cities in the Northeast, Silicon Valley, and Austin – also top the list for areas where a family of two working adults with two children can earn above a basic needs-based living wage. This finding indicates that the companies represented in these regions, as well as the wages offered in certain roles, can offset the high living costs.

The map above shows where Russell 1000 company employees are paid a rate that, on average, exceeds the local living wage. For example, the living wage estimate, or amount needed to meet basic budgetary needs, for a family of two adults and two children in Austin, Texas is $52,800 per worker (assuming both adults work). Our data shows that on average, a Russell 1000 worker in Austin makes $114,000, which is 160% above the local living wage estimate for a family of four. This finding is certainly driven by the fact that Austin has a high concentration of high-paying companies with highly paid roles. But it also tells us that if one could be any worker with any role in a Russell 1000 company, a job in Austin would be more likely to ensure financial security.

Case Study: In Retail Sales, Location Really Matters

But when looking across different roles at Russell 1000 companies, not all tend to pay a living wage, let alone above it. The industry with some of the largest location-based variation in employees earning more than a local living wage is retail sales. That variation is driven by the industry’s large, diverse workforce and extensive presence across different regions. For those starting their careers in retail, the location of a given store plays a crucial role in determining financial viability. California, although a high cost-of-living state, not only provides a higher likelihood of achieving a wage exceeding the local living wage in retail roles but also maintains this advantage in entry-level positions. 

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For example, an entry-level retail sales employee working at a Russell 1000 company can make on average 26.4% more than the living wage for a household of one in Merced, California. In Charlottesville, Virginia, on the other hand, employees will make 21.4% percent less on average than their local living wage. 

Besides location, the employer also plays a role in determining an entry-level role’s financial viability. Certain companies – including Best Buy – stand out for their higher pay for entry-level retail jobs. Best Buy, Nordstrom, Skechers, and Macy’s are notable for offering wages that exceed the local living wage estimates for a single adult working full-time, making them attractive options for those entering the retail sector. On average, entry-level sales employees at Nordstrom make 9.1% more than their local living wage for a household of one.

*The best companies for entry level retail positions are determined based on the percentage average wages fall above the local living wage for those positions.

And while some locations and employers offer a good starting point in retail, can such jobs support a family? A more detailed examination of retail roles reveals a sobering reality: supporting a family on a retail salary remains difficult in most areas. This finding is particularly true for entry-level positions, where wages often fail to meet the local living wage estimates. However, there are exceptions. California emerges as a state where retail sales roles can offer wages exceeding the local living wage, suggesting a more favorable economic environment for retail workers.

*For the purposes of this analysis, a family is defined as two full-time working adults with two children, and the living wage is what each of the adults needs to make to meet an estimated basic needs budget in their location.

*The above graph represents the top and bottom five locations for relative wages earned by employees in retail sales roles compared to the local living wage .

These insights underscore the complex landscape of wages and living costs across the U.S., where variation exists even across Russell 1000 companies in the same industry. They highlight the importance of considering both geographic and role-specific factors when evaluating economic stability and opportunities for families.

JUST Capital and Revelio Labs are committed to identifying the corporate leaders on key workforce trends, particularly when it comes to companies investing in their workforce by paying a fair, living wage – a top priority of the American public for just business behavior. Learn more about leveraging the research insights, cabinet of experts, and peer-to-peer engagement available to corporate leaders through JUST Capital’s programming by reaching out at corpengage@justcapital.com.

Lisa Simon is the Chief Economist and Zanele Munyikwa is an Economist at Revelio Labs.

Additional Background

What is a living wage? A living wage is the amount of money needed for a given worker to cover the cost of their family’s minimum or basic needs where they live. Learn more about living wage as an important business benchmark here.

How do we calculate the percent that average wages fall below or above the local living wage in this analysis? To calculate the percentage average wages fall above or below the local living wage, we look at the average wage earned by employees working at Russell 1000 companies in a given metropolitan area, and compare that average to the local living wage. We then use the following formula to calculate the percentage above or below the local living wage:

(Average wages earned in MSA by Russell 1000 employees﹣Local living wage) / Local living wage

Why is a pay rate that exceeds the living wage important? For workers across incomes, knowing where your earnings are most likely to exceed the local, basic needs-based cost of living provides an indication of where your wages might be “worth” the most in terms of purchasing power. What’s more, the basic needs budget used to estimate living wage typically assumes the lowest-cost version of necessities, and does not include significant elements of financial security such as retirement savings. A worker earning a living wage would remain only one unexpected expense away from financial precarity. Learn more about how local living wage estimates are calculated here

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