In an earlier post, we looked at data on average lawyer salaries both nationally and at the state level in several different states.
The Bureau of Labor Statistics also provides wage data for lawyers at a more local level by breaking down the United States into 579 distinct regions. Below is a list of the ten regions where average lawyer incomes are the highest:
| Metropolitan Area | Mean Income 2017 |
| San Jose-Sunnyvale-Santa Clara, CA | $198,100 |
| San Francisco-Redwood City-South San Francisco, CA | $189,660 |
| Anaheim-Santa Ana-Irvine, CA | $189,150 |
| Bridgeport-Stamford-Norwalk, CT | $182,160 |
| San Rafael, CA | $180,530 |
| New York-Jersey City-White Plains, NY-NJ | $179,470 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | $177,990 |
| Houston-The Woodlands-Sugar Land, TX | $174,870 |
| Oxnard-Thousand Oaks-Ventura, CA | $174,420 |
| Los Angeles-Long Beach-Glendale, CA | $170,210 |
What we see is some of the largest metropolitan areas in the country dominating the list – there are, after all, a lot of law firms, corporations and government agencies located in the big cities. Just falling outside the top 10 are other major cities, like Boston ($168,620) and Philadelphia ($157,180).
Some notable omissions from the top 10 include Chicago, the third most populous city in the U.S., where the annual mean wage for Chicago-Naperville-Arlington Heights is $148,260 and Phoenix, the fifth most populous city, where the annual mean wage for Phoenix-Mesa-Scottsdale is $146,180.
If you’d like to look up the data for your own region, you can go to the BLS website here
Large vs. Small Cities
The data appear to show that within a state, higher wages are concentrated in the larger cities.
California has a mean lawyer salary of $168,200, but geography matters:
| San Jose-Sunnyvale-Santa Clara, CA | $198,100 |
| Salinas, CA | $118,380 |
While the San Jose region in the heart of Silicon Valley yielded the highest average attorney incomes in the country, just 60 miles south in Salinas, where agriculture plays an outsized part in the local economy, attorney wages were 40% lower.
This split of higher and lower wages between large and small cities within a state can be found throughout the data, including these examples I found for New York, Texas, Illinois and Florida:
| New York-Jersey City-White Plains | $179,470 |
| Rochester, NY | $94,210 |
| Dallas, TX | $154,490 |
| Odessa, TX | $115,730 |
| Chicago, IL | $148,260 |
| Springfield, IL | $103,310 |
| Miami, FL | $143,730 |
| Ocala, FL | $98,220 |
One question to ponder, then, is why the bigger cities yield higher attorney wages. After all, this trend isn’t true for every profession. In medicine, it can actually be more lucrative for a doctor to practice in a smaller city than a big city.
I suspect the reason for higher attorney wages in bigger cities is because that is where the greatest demand for expensive legal services lie. A lawyer can always relocate from New York City to Small Town U.S.A., but if that lawyer is, say, a securities law expert, while she might be able to command a $400,000 wage for her services in a New York City, it’s unlikely that mom and pop clients in Small Town are going to be raising capital in the bond and equity markets.
Maybe the securities lawyer could find a way to service her clients remotely from Small Town, but it’s more likely that the securities lawyer is going to have to pivot to a very different kind of practice – wills, small business contracts, criminal law and other areas of higher demand.
Meanwhile, the family practice doctor in New York City will find her skills needed just as much, if not more, in Small Town.
What Does this all mean for Building Wealth?
Does this mean that working in a big city is the best way for an attorney to become wealthy? It might, certainly from the income generation standpoint. Some of the highest-paying attorney jobs, such as partnerships at Biglaw, are concentrated in the big cities.
However, you also have to take into account what state the big city is located in. Most of the cities that are in the Top 10 income list for attorneys are in high state income tax states, which can make a big difference in take-home pay.
After taking into account California state income taxes, the lawyer in San Jose making the average income of $198K is actually making closer to $185K after state income taxes (assuming single filer and maxing out 401k), which starts looking a lot closer to the average lawyer income in Houston of $175K where there is no state income tax.
Cost of Living
As we all know, income is only a part of the equation when it comes to building wealth. Expenses and the ability to save and grow your assets is another important part. And, it probably surprises no one that the top ten metropolitan areas where average lawyer wages are the highest are also some of the most expensive places to live in the United States.
While attorney incomes may be higher in the big cities, so are potential expenses. The big city offers more opportunities to spend – there’s no Gucci store in Ocala, FL, but there’s four in Miami. And, if you’re not one of the laywers making a higher income in the big city, you may find yourself struggling to build your wealth in the big city if your city has a high cost of living.
There is no official U.S. government index tracking cost of living, but there are a number of proprietary data sets and public resources available.
I found a website Infoplease that uses a number of these data sources and produces its own cost of living index for 325 urban areas in the United States. Each of the urban areas is assigned a number, with 100.0 being the average composite for the nation. Numbers above 100 mean the city has a higher than average cost of living, and numbers below 100 mean a lower than average cost of living.
The data from Infoplease show that the big cities have some of the highest cost of living numbers, while many of the smallest cities have the lowest cost of living numbers (note: Infoplease’s numbers are from 2010. No doubt that many of the California cities where there have been huge run-ups in housing prices now have cost of living index numbers that are even higher than what is reflected below):
| Rank | Urban Area | 100% Composite Index |
| 1 | New, York, (Manhattan), NY | 216.7 |
| 2 | New, York, (Brooklyn), NY | 181.7 |
| 3 | Honolulu, HI | 165.7 |
| 4 | San, Francisco, CA | 164 |
| 5 | New, York, (Queens), NY | 159 |
| 6 | San, Jose, CA | 156.1 |
| 7 | Stamford, CT | 146.9 |
| 8 | Truckee-Nevada, County, CA | 146.9 |
| 9 | Orange, County, CA | 146.4 |
| 10 | Nassau, County, NY | 145.7 |
| 11 | Washington-Arlington-Alexandria, DC-VA | 140.1 |
| 12 | Oakland, CA | 139.1 |
| 13 | Fairbanks, AK | 137.4 |
| 14 | Juneau, AK | 136.5 |
| 15 | Los, Angeles-Long, Beach, CA | 136.4 |
| 16 | Framingham-Natick, MA | 134.5 |
| 17 | Boston, MA | 132.5 |
| 18 | San, Diego, CA | 132.3 |
| 19 | Bergen-Passaic, NJ | 131.3 |
| 20 | Bethesda-Gaithersburg-Frederick, MD | 130.5 |
| 320 | Springfield, IL | 85.8 |
| 321 | Cookeville, TN | 85.7 |
| 322 | Pueblo, CO | 85.6 |
| 323 | McAllen, TX | 85 |
| 324 | Pryor, Creek, OK | 84.5 |
| 325 | Harlingen, TX | 82.8 |
How Many Years of Your Income is Your House Worth?
One of my favorite metrics for cost of living comparisons is looking at the price of housing, which for most people, is their single largest expense.
According to Zillow, the median home price in San Jose as of this writing is $1,073,500. Compare that with the average San Jose lawyer income of $198,100, and you have a home price that is 5.4x the average lawyer income.
However, when you look at Salinas, CA, where the average income was much lower at $118,380, the median home price is also much lower at $478,800, and the ratio of the median home price to average lawyer income is also lower at just 4x.
So, relatively speaking, it’s a lot cheaper for the average income lawyer to buy the median house in Salinas than in San Jose.
In Naperville, IL, a suburb of Chicago, the ratio of the median home price of $397,200 to average Naperville lawyer income of $148,260 is 2.7x, much lower than for San Jose or Salinas. However, when compared to Springfield, IL, the ratio of median home price to average lawyer income is just 1.0x.
Maybe it’s time for the California lawyer to move to Illinois (if you can tolerate those winters and don’t mind taking another Bar exam) – housing is going to be a lot cheaper and you’ll save on state income taxes. If you can generate a comparable income in Illinois to the one you had in California, you’re going to be able to save a lot more money in Illinois.
Conclusion
Back to the original question in this post: does it matter where you live if you want to build wealth?
I think the answer is a lawyerly one: it depends. It depends on what type of law you practice, where you can practice that law, what kind of income you can generate from your practice and what your spending and saving habits are.
Sure, it’s a lot cheaper to live in Springfield, IL than San Jose, CA, and it could turn out to be a huge financial win to move. But, if you can’t generate enough income or moderate your spending (or pass the bar exam), moving halfway across the country to a low cost of living location could very well end up as a wealth-destroying move.
What do you think? Is it easier to build wealth when you work and live in a major metropolitan area? Does working in a high cost of living area entitle you to a higher income?
