Understanding pay and COL indexes

Two indexes, two different questions

City pages on Pay by Role show a pay index and a cost-of-living (COL) index. They look similar — both are scalars you can glance at — but they answer different questions. Pay index is about how local wages tend to sit relative to a national baseline. COL index is about how expensive a typical basket of goods and housing is relative to a US-centred baseline of 100.

A city can score high on both (expensive and high-paying), high on COL only (pricey without matching wages), or high on pay only (strong wages with moderate prices). The interesting decisions live in those mismatches.

Neither index is a salary. They are lenses we apply on top of real medians so you can compare places without pretending every metro has identical price and wage levels.

What payIndex means here

For modeled city estimates, we multiply a real national median by the city’s payIndex to approximate local pay when metro-specific percentiles are unavailable. A payIndex of 1.0 tracks the national median; 1.15 implies roughly 15% above national for that modeling path; 0.9 implies about 10% below.

On observed city pages, percentiles come from metro data directly. We may still show how the city median compares to the national median (as a percentage), but that comparison is descriptive — the percentiles themselves are not invented from the index.

Pay indexes compress a messy reality: industry mix, union density, and commuting sheds differ by metro. Use payIndex as a structural adjustment, not as proof that every occupation in the city sits exactly X% above national.

What colIndex means here

colIndex is scaled so that 100 ≈ a US national-average price baseline. A city at 130 is modeled as about 30% more expensive on that basket; a city at 80 as about 20% cheaper.

We use colIndex to compute cost-of-living-adjusted salary: roughly local median × (100 / colIndex). If adjusted pay is higher than nominal, your wages go further against the baseline basket; if lower, prices are eating more of the paycheck.

We also scale illustrative rent sketches from a US baseline using the same index. That is a comparative model for education and exploration — not a scraped listing from a specific neighbourhood.

How not to misuse the indexes

Do not multiply an offer by payIndex to “localise” it yourself when you already have an observed city percentile set — use the observed figures. Do not treat COL-adjusted salary as the cash an employer will pay; employers pay nominal currency, not index-adjusted units.

Do not assume colIndex captures your personal basket. If you own a home, live with family, or spend heavily on international schooling, your effective costs can diverge sharply from the index. Swap in your rent and fixed costs; keep the salary data.

Do not compare payIndex across countries as if the national baselines were identical. Each country’s payIndex is relative to that country’s national wage level. Cross-border comparisons should start from local-currency medians (or a common display currency), then apply COL and tax lenses.

A simple reading order on a city page

Check whether the salary figures are observed or modeled. Read the local median and percentile band for your role. Glance at vs-national percentage and payIndex for wage context. Then read colIndex and COL-adjusted pay for purchasing-power context. Finish with take-home if taxes differ across options you are weighing.

If payIndex is high but COL-adjusted pay looks weak, you are looking at a high-wage, high-price market — negotiate on nominal cash and housing plan, not on vibes. If payIndex is modest but COL-adjusted pay looks strong, the city may stretch a mid market salary further than a famous coastal metro would.