Young Money
Younger households in the Capital Region have higher incomes than those in nearly any peer metro; adjusted for cost of living, their incomes also outpace those of younger households in many big cities
Over the last few years, families across the country and world have dealt with financial shocks – between COVID lockdowns, subsequent supply chain disruptions, and ensuing rapid inflation, earnings have struggled to keep up with rising costs. Data has shown a trend in Americans moving to mid-sized metro areas for a number of reasons, ranging from amenities, to weather, to a sense of community. The largest factor, though, puts the Capital Region in an advantageous position in competing for Americans on the move: 91% of movers cited cost of living as an important factor.
Even without considering cost of living, young households in the Baton Rouge metro make more than those in nearly every southern mid-sized peer. Out of 15 similarly situated metro areas, the Capital Region boasts the fourth highest income for young households – defined as those with a householder between the ages of 25 and 44 years-old – totaling more than $73,0001. This puts Baton Rouge just behind fast-growing metros like Greenville and Chattanooga, and well-ahead of in-state peers such as Lafayette and New Orleans. This ranking holds even when adjusting for cost of living2.
Because the prices of goods and services may vary greatly between different places, it’s important to note the cost of living of an area when comparing incomes. This is intuitive – one expects to pay more for groceries in New York or Los Angeles than Little Rock. Younger professionals appear to be very aware of this fact: based on a 2023 Deloitte survey of young professionals, cost of living was the top concern for Gen Z (35% concerned) and Millennials (42%).
In the chart above, the first column shows what the median young household actually makes per year, while the column on the right adjusts that dollar amount to what that income would be in a place with a cost of living right at the national average. For instance, Baton Rouge is about 8% less expensive than the national average, so the $73,189 in average earnings has the same spending power as nearly $80,000 in the average US metro.
Because these mid-sized metros are similarly situated in size and geography, adjusting for cost of living only marginally changes their order. However, one notable pattern does emerge: every metro area’s income, but one, rises when adjusted for cost of living. This reflects the fact that southern states tend to have lower costs of living than those in other regions.
In addition to being near the top of its peers in terms of young household income, the Capital Region is surprisingly competitive with major US cities when cost of living is factored in. While these cities tend to boast higher median incomes than the national average, when adjusted for cost, their median household’s spending power is greatly diminished.
Unlike the mid-sized metro chart above, adjusting for cost of living drastically changes spending power of the average young household for almost every borough and city. While young people in Manhattan make over $127,000 annually on average, that’s the equivalent spending power of just $56,000 in the average US metro area. Once again, the relatively low cost of living in the south can be noted, as four of the top-five incomes are from southern locales once adjusted for living costs. Young people consider more than just earning power when deciding where to live, and quality of life and placemaking should be a major point of emphasis for policymakers, particularly in places like downtown Baton Rouge. But this cost of living data shows the importance of investigating beyond the dollar amount on an offer letter when considering disposable income and quality of life.
As BRAC and Visit Baton Rouge prepare to roll out a young professional talent campaign in the coming months, it is important to identify and note these types of advantages that young individuals and families have in the Capital Region compared to its peer metros, as well as how competitive Baton Rouge is with much larger places.
US Census/American Community Survey, 2022 1-Year Data
C2ER Cost of Living Index, 3rd Quarter 2023