how the cost of living is used
the cost of living can be a significant factor in personal wealth accumulation because a salary can provide a higher standard of living in a city where daily expenses such as rent food and entertainment are less in contrast a high salary can seem insufficient in an expensive city such as new york changes in the cpi are often a triggering event in labor and other contracts with escalation clauses the contract will detail exactly how any periodic adjustments happen and what parts of the contract will change in a 2024 survey mercer a global human resources firm finds the cities with the highest cost of living in order are hong kong singapore zurich geneva and basel 1new york city was ranked the costliest city in the united states followed by los angeles honolulu and san francisco 1the cost of living indexthe cost of living index compares the cost of living in a major city to a corresponding metropolitan area the index incorporates various living expenses creating an aggregate measure that workforce entrants can use as a benchmark as college graduates weigh employment alternatives and currently employed job seekers consider relocation the index provides an informative snapshot of rental transportation and grocery costs mercer s cost of living index measures prices in 226 urban areas for a basket of goods which includes 12 large eggs one liter of olive oil espresso coffee at a popular cafe one liter of gasoline unleaded 95 men s blue jeans and women s shampoo haircut and styling 1the economic policy institute updated its family budget calculator in january 2024 with data from 2023 the calculator helps families determine how much salary they will need to cover the cost of living in 3 143 counties in all 613 metro areas 2three out of five of the world s most expensive cities are in switzerland 1most expensive urban areas in the u s according to the council for community and economic research the 10 most expensive urban areas in the u s in 2023 were least expensive urban areas in the u s according to the council for community and economic research the 10 least expensive urban areas in the u s in 2023 were u s states ranked by cost of livingu s states districts and territories ranked by cost of living from lowest to highest as of q1 2024 as provided by the council for community and economic research is as follows cost of living and wagesthe rising cost of living has spurred debate over the u s federal minimum wage and the disparity between the lowest salary allowed by law and the earnings needed to maintain an adequate cost of living proponents of a hike in wages cite increased worker productivity levels since 1968 as inequitably correlated to the minimum hourly rate of pay as pay levels once tracked the increase in productivity the divergence between earnings and worker efficiency has reached historically disproportionate levels 5by contrast opponents of a minimum wage contend that a raise could spur higher consumer prices as employers offset rising labor costs 5multinational corporations use the cost of living to assess expatriate salary packages for international assignees wage increases and cost of living adjustments colas in 1973 congress enacted legislation to address cost of living adjustments colas cola adjustments for social security and supplemental security income ssi benefits were instituted so that the payments keep pace with inflation 6for example in december 2022 the cola was 8 7 due to the high levels of inflation as a result of the covid 19 pandemic and the increased amounts were paid starting in january 2023 federal ssi payment levels increased by the same percentage 78the social security act requires colas to be based on increases in the consumer price index for urban wage earners and clerical workers cpi w the social security administration states that 