Sunday, April 14, 2024

Income Ranking By Metro: Cities That Pay The Most

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One of the best ways to increase your chances of making more money is to move to a city that has a high number of high-paying jobs. Ideally, you should secure a high-paying job offer first before moving to one of these cities. Otherwise, it may be tough going given the higher cost of living in the highest-income ranked cities.

Even though working from home is more prevalent post-pandemic, if you’re still early in your career, working from home is a career limiting move. When you’re in your 20s and 30s it’s best to be in the office networking so that you have more people pulling for you as they ascend.

Let’s look at the latest income ranking by metro city according to the U.S. Department of Commerce.

City Metros That Pay The Most Amount Of Income

Below is the list of the highest income city metros as of 2021. The top five highest income city metros are:

  1. San Jose-Sunnyvale-Santa Clara, CA
  2. Bridgeport-Stamford-Norwalk, CT
  3. San Francisco-Oakland-Berkeley, CA
  4. Boston-Cambridge-Newton, MA-NH
  5. Seattle-Tacoma-Bellevue, WA

If you want to make a lot of money, you might as well look for jobs in one of these top 10 income metros.

Personally, I’m biased towards San Francisco since I’ve lived here since 2001. It’s the metro many people, including the media, love to hate given its weather, high cost of living, and tremendous wealth creation.

If I had had more money when living in New York City from 1999 – 2001, I would have enjoyed it even more. New York City is truly the best city in America for six months out of the year.

Strong Staying Power With Most Of The Highest Income Metro Areas

Six of the top ten highest income metros in 2021 were ranked in the top ten in 1980. Therefore, one could say high-income places 40 years ago were able to build upon its positive network effects. Meanwhile, low-income places 40 years ago are still relatively low-income today.

This might be akin to the rich staying rich and the poor having difficulty getting out of poverty due to structural issues. However, staying poor is not an inevitability!

The rise of Fayetteville-Springdale-Rogers, AR (from #107 to #10), Austin-Round Rock-Georgetown, TX (#55 to #9), and Boston-Cambridge-Newton, MA-NH (#31 to #4) are particularly impressive.

In retrospect, betting on the Boston metro in 1980 was pretty obvious. I remember visiting in the early 1990s and wondering why Boston was so cheap compared to New York City, despite having the same dreadful winter. With its world-class universities and lower cost of living, it seemed like an inevitability Boston would one day catch up to New York City.

What Are The Next Top Income City Metros?

The billion dollar question is which are the next metro areas to surge up the income rankings chart?

Northwest Arkansas, Provo-Orem, Austin, Nashville, Charleston, Milwaukee, and Raleigh look like some of the most promising city metros. Job growth and income growth are strong and their cost of living is relatively affordable.

Raleigh is already a finance center, while tech seems to be growing rapidly in Austin. Once a metro has job growth momentum, the momentum tends to continue. More jobs attract more businesses. More businesses attract more infrastructure. Better infrastructure attracts more migration and so forth.

The Key To Higher Income Growth Is Technology

The chart below highlights which metros outperformed since 1980 (above the straight yellow line). Since 1980, the biggest driver of income growth looks to be technology followed by finance.

The best-performing stocks over the past several decades have mostly been tech companies such as Apple, Google, Microsoft, and Amazon, all of which are based in the San Jose, San Francisco, and Seattle metros.

Metro income ranking

The development of the finance industry was also key to boosting incomes in the Bridgeport, Boston, and New York metros. From leveraged buyouts to junk bonds to mortgage backed securities to the creation of enormous active funds, finance has made plenty of citizens wealthy since 1980.

Finally, with the ever-increasing size of the government, it is no surprise that the Washington-Arlington-Alexandria metro continues to be one of the top ten highest income metros for more than 40 years in a row. Like inflation, the government’s growth is mostly unstoppable.

Logical Conclusions If You Want To Get Rich

The data from the U.S. Department of Commerce show that if you want to get rich, do the following:

  • Get a job in one of the top-income metros
  • Work in finance, technology, or for the federal government
  • Work for as long as possible
  • Invest in real estate in the top income metros as winners tend to keep on winning
  • Look for real estate investments in up-and-coming metros with the highest job growth
  • Relocate to a lower income metro with lower cost of living once you’re experienced or want to retire

My Income Journey In Two Top Income Metros

I spent my first two full-time work years in New York City and the next twenty-two years in San Francisco so far. I am pretty confident that if I had stayed in New York City, I would have continually made a healthy six-figure income as my career progressed.

If I was still working in finance today, after twenty four years, I assign a 65% chance I’d regularly be making over $1 million a year. I also might have a pot belly, lots of grey hair, TMJ, and chronic lower back pain. But at least I’d be rich!

Although hard work and skill are involved in getting rich, putting yourself in the right place to maximize your chances of getting rich might be even more important. There are plenty of regular people in New York and San Francisco who have gotten incredibly rich just by joining the right firm and sticking with it.

You could be the smartest person in the world, but if the best company in your city doesn’t even have a billion dollar market cap after 20 years, you might never get into the top 1%.

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