Do Americans Earn More in Big Cities? Maybe Not

Conventional wisdom says that you would earn more if you worked in a big city. That’s called the “urban wage premium” and it has often held true. But with remote work, and companies opening satellite offices in desired parts of the country, this premium may be disappearing.

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The pandemic accelerated several trends, including remote work and migration. The opportunity to work from anywhere has meant workers could shrink their cost of living by moving without having to change jobs. And while some companies adjust pay depending on where in the nation an employee is located, it still takes the focus off the big cities.

Migration patterns of the past years also showed Americans flocking to the so-called Sunbelt, in the nation’s south. Lower cost of living and lower housing costs were a key driver, but job opportunities were aplenty as well.

Meanwhile, housing unaffordability is very pronounced for urban dwellers — and that’s especially true for those without degrees. Non-college-educated workers now pay a penalty, rather than earn a premium, for living in the city, according to a report from the Economic Innovation Group. For now, the urban wage premium does persist for college-educated workers.

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