We’ve had a lot of debate in these pages concerning the cost of living in different U.S. cities. Folks have been arguing over whether the high cost of living in New York justifies the NYC pay scale of $160K and up, as opposed to the $145K pay scale that seems to have taken hold in most major legal markets outside New York.
We’ve heard a lot of trash talk. Here’s some actual data, courtesy of Michael Machen, Director of Financial Aid at the University of Chicago Law School:
David, longtime reader first-time emailer. So as you see from my title [in the signature block of my email], I’m the financial aid guy at U-Chicago. I’ve been running some numbers on the new salaries at large firms, and came up with something interesting, maybe it’s obvious to New Yorkers, but I found it surprising.
The taxes in NYC make $160,000 equal to $145,000 in Chicago. The NY State and NY City income taxes of 6% and 3.3% versus the flat 3% income tax in IL means that the after-tax pay in NY is actually less than the take home in Chicago, even if Chicago pays $15K less. I would imagine firms know this, at least those with tax departments. The attached spreadsheet illustrates this.
I didn’t run DC tax ##s, but DC has high district income tax rates (9% of income over 30K) so it would be similar to NY, unless you relocated to NoVA (gasp). So the DC folks should be bitching (a bit) while Chicago folks should be happy.
You can check out the actual numbers after the jump. Also, please treat this post as the morning open thread. Thanks!
Earlier: Prior coverage of attorney compensation news (scroll down through Skaddenfreude archives)