Purchasing Power of Nurses Across the U.S.

This article is featured in the July 2018 edition of our allnurses Magazine...

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The Fluctuating Value of the Dollar

The value of money does not stay the same. You can look back and see what you paid for your current home or first car and are shocked to look at today's sticker prices. We don't even have to consider time as a factor for value changes. You can travel across the country and see that your current dollar does not go as far in another state as it does at home. Or maybe just the opposite is true, and you find that the best bargains are not at home. This is all about your purchasing power and how the cost of living and location can affect it.

How can you factor in variations in the cost of living in different locations to see what your purchasing power really is? As someone looking at various job offers across the country or even in different sections of the state, how can you get a more realistic and accurate comparison of how far your salary will go?

Raw Salary vs. Adjusted Salaries

Below is a list of the 50 states plus the District of Columbia with the highest (Hawaii $105,750), lowest (South Dakota $57,400) and everything in between average reported (raw) RN salaries (Diploma, ADN/ASN, BSN) based on the results from almost 17,000 respondents to the 2018 allnurses Nursing Salary Survey that was conducted over 4 weeks in February 2018. This is just the beginning of where to start when making job comparisons. But be careful... Don't stop here thinking you know the rest of the story.

You need to look at more than just the raw or reported salaries. The purchasing power of a raw salary will vary in different parts of the country depending on the cost of living. For example, $75,000 can probably buy a lot more in Minnesota than it can in New York or Hawaii. As you look at results from salary surveys or articles about salaries, you tend to look at the states with the top salaries and dream of working there. Most likely, what you are seeing is a list of raw salaries. As you think about where to apply for jobs, your decision will be based partly on salary comparison. However, instead of using raw salaries as your yardstick, you should look closely at the salaries that have been adjusted factoring in the cost of living, tax burdens, and location. We have figured all of those into the equation in calculating the adjusted salaries you will see at the bottom of this article.

What are Regional Price Parities (RPP) and Why are They Important?

Regional Price Parities (RPPs) are used to give a more accurate comparison of salaries and purchasing power across states. RPPs measure the differences in price levels of goods and services across states for a given year and are shown as a percentage of the national overall price. Regional Price Parities are calculated using price quotes for a wide variety of items (rent, food, transportation, housing, recreation, education, apparel, and medical) from the Consumer Price Index (CPI). When analyzing the salary data from the 2018 allnurses salary survey, we used information from the Bureau of Economic Analysis which provides Regional Price Parities (RPPs) for each of the 50 states plus the District of Columbia.

The RPP Index uses 100 as the national average cost of living. These numbers can be used to see how the cost of living of one states compares to the National Average. RPPs exceeding 100 represent prices higher than the national average while RPPs less than 100 indicate prices lower than the national average.

Hawaii, with the highest RPP of 118.4, has a cost of living 18.4% higher than the National average cost of living, while Mississippi, with an RPP of 86.4, is 13.6% lower than the national average and has a cost of living 32% lower than Hawaii. Keep that in mind when comparing just the raw salaries. Hawaii not only has the highest RPP but also has the highest reported raw RN salary ($105,750) from the 2018 allnurses salary survey. Mississippi, with the lowest RPP has the 4th lowest reported raw salary ($58,281). As you look at the list of Regional Price Parities, you will see that in general, RPPs are lower in the middle sections of the country and are higher on the east and west coast.

What about Taxes?

No one likes taxes. State and local taxes combine with federal income taxes to take a huge chunk out of your income. Sales tax, state income tax, property tax... All of these vary from state to state, so they must be included in the purchasing power comparison. We will refer to this as the Tax Burden.

Many free online federal income tax calculators can be used to calculate the estimated tax burden based on location and reported income. The smartasset Federal Income Tax Calculator was used to arrive at the figures in the adjusted salaries below. Taxes were based on the capital city of each state.

Location Quotient

Location Quotients (LQs) are ratios that allow an area's distribution of employment by industry (nursing) to be compared to a reference, in this case, the U.S. If an LQ is equal to 1, then that location has the same share of employment than the average U.S. If the LQ is greater than 1, it indicates there is a greater share of (nursing) employment that the reference area (U.S. average). When seeking a nursing job, a state with a higher Location Quotient is more desirable since there are more employment opportunities in that area as compared to the average concentration. According to the latest May 2017 Bureau of Labor Statistics, states with the highest concentration of nursing jobs and location quotients are South Dakota, West Virginia, Delaware, Missouri, and Mississippi.

What Is YOUR Purchasing Power?

Are you ready to see an estimate of what you really make after all the adjustments are made? Below, you will see a comparison of all the reported and adjusted average RN salaries which incorporate the cost of goods, services, and taxes in an area. The adjusted salaries, although surprising, more accurately represent the real value of your earnings for cross-area comparisons. When you see what the adjusted salaries are, it might change your ideas of where you might want to look for jobs. The salary that you thought was so low before might now look more attractive.

Reported salary alone does not tell the entire story, and decisions to relocate for a job should not be based solely on salary numbers. Even if the salary for a potential job is higher, the purchasing power will decrease if the cost of living is also higher. When actual salaries are adjusted for regional prices, this will give the job-seeker a more accurate representation of purchasing power for realistic comparisons between locations.

AVERAGE RN SALARIES & ADJUSTED SALARIES PER STATE

Alabama

Reported Income = $57,586

Estimated Tax Burden = $17,045

Income After Taxes = $40,541

RPP = 86.6

Adjusted Income = $46,814

Number of Active RNs 82,513

Location LQ 1.26

Alaska

Reported Income = $82,037

Estimated Tax Burden = $23,377

Income After Taxes = $58,660

RPP = 105.4

Adjusted Income = $58,659

Number of Active RNs = 14,817

Location Quotient = 9.86

Arizona

Reported Income = $69,290

Estimated Tax Burden = $21,150

Income After Taxes = $48,140

RPP = 95.9

Adjusted Income = $50,198

Number of Active RNs = 90,048

Location Quotient = 0.99 = 0.99

Arkansas

Reported Income = $60,736

Estimated Tax Burden = $19,364

Income After Taxes = $41,372

RPP = $41,372

Adjusted Income = $41,372

Number of Active RNs = 41,372

Location Quotient = 1

California

Reported Income = $98,938

Estimated Tax Burden = $36,127

Income After Taxes = $62,811

RPP = 114.4

Adjusted Income = $54,905

Number of Active RNs = 429,981

Location Quotient = 0.83

Colorado

Reported Income = $68,613

Estimated Tax Burden = $21,882

Income After Taxes = $46,731

RPP = 103

Adjusted Income = $45,380

Number of Active RNs = 77,302

Location Quotient = 0.95

Connecticut

Reported Income = $74,811

Estimated Tax Burden = $27,985

Income After Taxes = $46,826

RPP = 108.7

Adjusted Income = $43,078

Number of Active RNs = 63,938

Location Quotient = 1.02

Delaware

Reported Income = $72,674

Estimated Tax Burden = $21,828

Income After Taxes = $50,846

RPP = 100.2

Adjusted Income = $50,745

Number of Active RNs = 18,484

Location Quotient = 1.29

District of Columbia

Reported Income = $70,893

Estimated Tax Burden = $22,620

Income After Taxes = $48,273

RPP = 115.9

Adjusted Income = $41,650

Number of Active RNs = 28,033

Location Quotient = 0.72

Florida

Reported Income = $64,498

Estimated Tax Burden = $18,291

Income After Taxes = $46,207

RPP = 99.7

Adjusted Income = $46,346

Number of Active RNs = 319,262

Location Quotient = 1.04

Georgia

Reported Income = $70,177

Estimated Tax Burden = $24,040

Income After Taxes = $46,137

RPP = 92.1

Adjusted Income = $50,095

Number of Active RNs = 128,169

Location Quotient = 0.85

Hawaii

Reported Income = $105,750

Estimated Tax Burden = $37,103

Income After Taxes = $68,647

RPP = 118.4

Adjusted Income = $57,980

Number of Active RNs = NA

Location Quotient = 0.84

Idaho

Reported Income = $61,482

Estimated Tax Burden = $19,852

Income After Taxes = $41,630

RPP = 93

Adjusted Income = $44,763

Number of Active RNs = 22,288

Location Quotient = 0.95

Illinois

Reported Income = $66,246

Estimated Tax Burden = $24,558

Income After Taxes = $41,688

RPP = 98.9

Adjusted Income = $42,152

Number of Active RNs = 198,104

Location Quotient = 1.02

Indiana

Reported Income = $64,383

Estimated Tax Burden = $21,308

Income After Taxes = $43,075

RPP = 90.3

Adjusted Income = $47,702

Number of Active RNs = 114,338

Location Quotient = 1.11

Iowa

Reported Income = $57,446

Estimated Tax Burden = $20,125

Income After Taxes = $37,321

RPP = 90.2

Adjusted Income = $41,356

Number of Active RNs = 54,620

Location Quotient = 1.06

Kansas

Reported Income = $61,408

Estimated Tax Burden = $21,208

Income After Taxes = $40,200

RPP = 90.5

Adjusted Income = $44,420

Number of Active RNs = 58,405

Location Quotient = 1.04

Kentucky

Reported Income = $63,250

Estimated Tax Burden = $22,414

Income After Taxes = $40,836

RPP = 87.8

Adjusted Income = $46,510

Number of Active RNs = 71,600

Location Quotient = 1.16

Louisiana

Reported Income = $67,582

Estimated Tax Burden = $20,271

Income After Taxes = $47,311

RPP = 90.4

Adjusted Income = $52,335

Number of Active RNs = 67,866

Location Quotient = 1.19

Maine

Reported Income = $64,357

Estimated Tax Burden = $21,563

Income After Taxes = $42,794

RPP = 98.4

Adjusted Income = $43,490

Number of Active RNs = 25,199

Location Quotient = 1.16

Maryland

Reported Income = $70,796

Estimated Tax Burden = $24,404

Income After Taxes = $46,392

RPP = 109.5

Adjusted Income = $42,367

Number of Active RNs = 81,217

Location Quotient = 0.99

Massachusetts

Reported Income = $88,440

Estimated Tax Burden = $29,856

Income After Taxes = $58,584

RPP = 107.8

Adjusted Income = $54,345

Number of Active RNs = 130,875

Location Quotient = 1.15

Michigan

Reported Income = $66,797

Estimated Tax Burden = $25,222

Income After Taxes = $41,575

RPP = 93

Adjusted Income = $44,704

Number of Active RNs = NA

Location Quotient = 1.08

Minnesota

Reported Income = $68,922

Estimated Tax Burden = $24,189

Income After Taxes = $44,733

RPP = 97.5

Adjusted Income = $45,880

Number of Active RNs = 110,093

Location Quotient = 1.12

Mississippi

Reported Income = $58,281

Estimated Tax Burden = $18,487

Income After Taxes = $39,794

RPP = 86.4

Adjusted Income = $46,058

Number of Active RNs = 49,979

Location Quotient = 1.26

Missouri

Reported Income = $62,866

Estimated Tax Burden = $20,044

Income After Taxes = $42,822

RPP = 89.5

Adjusted Income = $47,846

Number of Active RNs = 110,642

Location Quotient = 1.27

Montana

Reported Income = $63,776

Estimated Tax Burden = $19,662

Income After Taxes = $44,114

RPP = 94.1

Adjusted Income = $46,880

Number of Active RNs = 16,912

Location Quotient = 1.08

Nebraska

Reported Income = $63,667

Estimated Tax Burden = $20,542

Income After Taxes = $43,125

RPP = 90.5

Adjusted Income = $47,652

Number of Active RNs = 30,606

Location Quotient = 1.16

Nevada

Reported Income = $78,707

Estimated Tax Burden = $22,378

Income After Taxes = $56,329

RPP = 97.4

Adjusted Income = $67,073

Number of Active RNs = 39,464

Location Quotient = 0.79

New Hampshire

Reported Income = $66,212

Estimated Tax Burden = $20,798

Income After Taxes = $45,414

RPP = 105.9

Adjusted Income = $42,884

Number of Active RNs = 22,792

Location Quotient = 1

New Jersey

Reported Income = $78,938

Estimated Tax Burden = $29,839

Income After Taxes = $49,099

RPP = 113.2

Adjusted Income = $43,374

Number of Active RNs = 127,564

Location Quotient = 0.99

New Mexico

Reported Income = $69,348

Estimated Tax Burden = $21,363

Income After Taxes = $47,985

RPP = 93.6

Adjusted Income = $51,266

Number of Active RNs = 28,865

Location Quotient = 1

New York

Reported Income = $78,178

Estimated Tax Burden = $27,224

Income After Taxes = $50,954

RPP = 115.6

Adjusted Income = $44,943

Number of Active RNs = 328,761

Location Quotient = 0.96

North Carolina

Reported Income = $64,125

Estimated Tax Burden = $20,703

Income After Taxes = $43,422

RPP = 90.9

Adjusted Income = $47,770

Number of Active RNs = 135,157

Location Quotient = 1.13

North Dakota

Reported Income = $59,342

Estimated Tax Burden = $16,916

Income After Taxes = $42,426

RPP = 91.5

Adjusted Income = $46,367

Number of Active RNs = 14,821

Location Quotient = 1.06

Ohio

Reported Income = $63,637

Estimated Tax Burden = $23,807

Income After Taxes = $39,830

RPP = 89.3

Adjusted Income = $44,602

Number of Active RNs = 208,895

Location Quotient = 1.14

Oklahoma

Reported Income = $64,400

Estimated Tax Burden = $21,034

Income After Taxes = $43,366

RPP = 89

Adjusted Income = $48,726

Number of Active RNs = 53,184

Location Quotient = 0.87

Oregon

Reported Income = $84,375

Estimated Tax Burden = $30,471

Income After Taxes = $53,904

RPP = 99.8

Adjusted Income = $54,012

Number of Active RNs = 60,846

Location Quotient = 0.94

Pennsylvania

Reported Income = $67,875

Estimated Tax Burden = $24,103

Income After Taxes = $43,772

RPP = 98.4

Adjusted Income = $44,484

Number of Active RNs = 220,174

Location Quotient = 1.21

Rhode Island

Reported Income = $75,119

Estimated Tax Burden = $26,074

Income After Taxes = $49,045

RPP = 99.6

Adjusted Income = $49,143

Number of Active RNs = 20,572

Location Quotient = 1.22

South Carolina

Reported Income = $65,547

Estimated Tax Burden = $21,405

Income After Taxes = $44,142

RPP = 90.3

Adjusted Income = $48,884

Number of Active RNs = 70,656

Location Quotient = 1.05

South Dakota

Reported Income = $57,400

Estimated Tax Burden = $16,250

Income After Taxes = $41,150

RPP = 88.3

Adjusted Income = $46,602

Number of Active RNs = 18,353

Location Quotient = 1.47

Tennessee

Reported Income = $58,627

Estimated Tax Burden = $16,422

Income After Taxes = $42,205

RPP = 90.2

Adjusted Income = $46,790

Number of Active RNs = 101,797

Location Quotient = 1

Texas

Reported Income = 101,797

Estimated Tax Burden = $22,753

Income After Taxes = $48,283

RPP = 96.9

Adjusted Income = $49,828

Number of Active RNs = 318,505

Location Quotient = 0.88

Utah

Reported Income = $61,455

Estimated Tax Burden = $19,258

Income After Taxes = $42,197

RPP = 97.3

Adjusted Income = $43,265

Number of Active RNs = 34,479

Location Quotient = 0.74

Vermont

Reported Income = $65,556

Estimated Tax Burden = $23,096

Income After Taxes = $42,460

RPP = 101.6

Adjusted Income = $41,791

Number of Active RNs = 15,092

Location Quotient = 1.01

Virginia

Reported Income = $69,533

Estimated Tax Burden = $22,997

Income After Taxes = $46,536

RPP = 102.3

Adjusted Income = $45,490

Number of Active RNs = 105,034

Location Quotient = 0.83

Washington

Reported Income = 79,181

Estimated Tax Burden = $23,873

Income After Taxes = 55,308

RPP = 105.5

Adjusted Income = $54,253

Number of Active RNs = 97,859

Location Quotient = 0.88

West Virginia

Reported Income = $63,393

Estimated Tax Burden = $19,684

Income After Taxes = $43,709

RPP = 87.6

Adjusted Income = $50,414

Number of Active RNs = 33,838

Location Quotient = 1.45

Wisconsin

Reported Income = $66,156

Estimated Tax Burden = $24,471

Income After Taxes = $41,685

RPP = 92.8

Adjusted Income = $44,920

Number of Active RNs = 94,836

Location Quotient = 0.97

Wyoming

Reported Income = $68,226

Estimated Tax Burden = $18,369

Income After Taxes = $49,857

RPP = 96.7

Adjusted Income = $51,558

Number of Active RNs = 14,534

Location Quotient = 0.9

To see more results from the allnurses 2018 Salary Survey go to:

2018 Nursing Salary Survey Results Part 1 - Demographics

Safe Staffing: How Does Your Workplace Stack Up? 2018 Salary Survey Results Part 2

When and Why Nurses are Leaving the Workforce - 2018 allnurses Salary Survey Results Part 3

How Much Do Nurses Make? - 2018 allnurses Salary Survey Results Part 4

Resources

• Bureau of Economic Analysis U.S. Department of Commerce
• Smartasset Federal Income Tax Calculator
• Bureau of Labor Statistics - Purchasing Power: using wage statistics with regional price parities to create a standard for comparing wages across U.S. areas
• Bureau of Labor Statistics/Help & Tutorials/Location Quotient