Business & Tech

Evan Horowitz | Quick Study

Your Mass. paychecks aren’t just big, they stretch

George Patisteas/globe staff

Paychecks are bigger in Massachusetts. Then again, rent checks and mortgage payments are too.

So the question is: Are we really better off, or does the high cost of living erode all the benefit of our nation-leading wages?

The short answer is that in Massachusetts, wages trump housing costs.

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Bay Staters are still better off than most everyone else, even after you adjust for the cost of living.

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Elsewhere, things are different.

In New York, prices have climbed so high that the average worker would benefit from taking a job in notoriously low-wage Tennessee.

In Massachusetts, good wages beat high costs

When it comes to wages, Massachusetts is the envy of the nation. Up and down the income ladder, workers here out-earn their peers in every other state. It’s not even close: The median hourly wage in Massachusetts is $21.19, a full dollar higher than you find in Connecticut and Maryland, our nearest rivals.

Trouble is, Massachusetts is also a fairly expensive place to live, the seventh-most-expensive in the country, according to the latest government estimates. And there’s no mystery as to why: It’s all about the high cost of housing.

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The good news is that while rents and mortgage payments certainly take a big chunk out of family budgets, wages more than compensate.

When you adjust for the high cost of living — using the regional price parities calculated by the Bureau of Economic Analysis — Massachusetts still looks like a good place to live and work. Not tops in the nation, but close, with the second-highest cost-adjusted wages in the country, behind Minnesota.

That doesn’t mean that Massachusetts rents are easily affordable for struggling, low-wage workers, but it does mean that despite our high housing costs, balancing a family budget is still easier here than just about anywhere else in the United States.

In other states, the cost of living is unaffordable

Look at New York and New Jersey. Both have relatively high wages, but the exorbitant cost of living has become a biting problem. So much so that when you adjust for rising costs, New York and New Jersey turn out to be two of the worst places to earn a decent living. Better to pick up your paycheck in a low-cost state such as Arkansas or Kentucky.

In fact, there are a number of inexpensive states where cost-adjusted wages look surprisingly robust. In Missouri, for instance, paychecks may be small but they stretch extremely far. And that same pattern seems to hold across much of the Midwest.

It’s all about housing

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By far, the biggest factor in all this is the cost of housing. The price of goods just doesn’t vary that much across states; even in hard-to-reach Hawaii, goods are only about 10 percent above the US average.

Meanwhile, housing costs in expensive coastal regions are more than double what you find in flyover country.

So when you hear people talk about the cost of living, don’t think about groceries. Just housing. That’s the real reason big New York paychecks dissolve into nothing while Missouri workers can afford so much.

Americans don’t care about good wages

OK, maybe that’s an overstatement. People probably do want good paychecks and affordable housing — just not enough to pick up and move.

Americans simply aren’t resettling to areas with a low cost of living or far-stretching paychecks. Not around the country and not here in Massachusetts, which has good wages but few new entrants.

And while there may be fine reasons for staying put — a desire to be closer to family, a taste for the pleasures of a bustling metropolis — there are also real economic costs.

In a world of greater mobility, a 50-state map of cost-adjusted wages could serve as a kind of life-planner — an aid to figuring out where to build the most cost-effective life.

Instead, it is a map of economic dysfunction, a picture of the overpriced pockets where people (choose to) get stuck and the more affordable landscape where Americans aren’t pursuing new opportunities.

Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the United States. He can be reached at evan.horowitz@globe.com. Follow him on Twitter @GlobeHorowitz.