WASHINGTON, D.C. — The high cost of living is more-than offset by high wages in the San Jose and San Francisco markets, making the Bay Area the best performing region for middle- and working-class households in the country’s 50 largest Metropolitan Statistical Areas (MSAs). Meanwhile, a net loss in real wages and the skyrocketing price of housing pushed Fresno, Calif., to the bottom of the list, according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The LISEP Local Analysis provides localized economic metrics for the 50 largest MSAs in the United States. The San Jose-Sunnyvale-Santa Clara MSA ranked first on the list, while San Francisco-Oakland-Fremont was third.

 “The United States is not a single economy — it’s an amalgamation of hundreds, even thousands, of regional economies,” said LISEP Chairman Gene Ludwig. “Understanding the dynamics of those economies and how they impact low- and moderate-income populations  is critical to responsible policymaking. That is why this analysis is so important.”

 LISEP conducted the analysis utilizing a series of in-house metrics combined with other metro-specific data to offer a more-accurate and detailed understanding of the economic well-being of middle- and working-class Americans in each MSA, including:

True Living Cost (TLC): A cost-of-living metric that tracks price changes for essential items (housing, food, childcare, etc.);

True Weekly Earnings (TWE): A calculation of TLC-adjusted median weekly earnings of all members of the workforce — including the part time and jobless who are seeking work (the U.S. Bureau of Labor Statistics only counts full-time workers);

True Rate of Unemployment Out of the Population (TRU OOP): A measure of the percentage of the population unable to find a full-time, living-wage job — the “functionally unemployed.” 

LISEP found that while San Jose and San Francisco are the two most expensive MSAs to live in the U.S. (first and second, respectively) and have posted some of the highest inflation rates since 2005 — San Jose is third at 78.5%; San Francisco is seventh at 70.6% — they also have the highest wage rates. The TWE for San Jose in 2022 was $1,515, or $78,800 a year, good for first in the nation; San Francisco was second at $1,370 a week, or $71,300 a year. In San Francisco, the median household with two adults and two children had 18.2% of their income leftover after covering basic necessities. In San Jose, that number is 25.4%.

 By contrast, the cost of necessities in the Fresno MSA has jumped 66.7% since 2005, fueled by a spike in housing costs — the nation’s 17th fastest housing inflation during that time period. When combined with the typical worker losing 3% of their buying power due to inflation, the average household fell 21.5% short of covering basic necessities. Nearly 60% of Fresno households (57.4%) are unable to cover their basic needs.

Rounding out the top 10 on the best performing MSAs is Austin-Round Rock, TX, at number two, followed by Baltimore-Towson-Columbia, MD; Washington, DC/MD/VA; Minneapolis-St.Paul-Bloomington, MN/WI; Portland-Vancouver-Beaverton, OR/WA; Milwaukee-Waukesha-West Allis, WI; Denver-Aurora, CO; and Salt Lake City, UT. The remaining MSAs in the bottom 10 are: Riverside-San Bernardino, CA, and Tampa-St. Petersburg-Clearwater, FL (tied for40th); Oklahoma City, OK; Los Angeles-Long Beach-Anaheim, CA; New Orleans-Metairie-Kenner, LA; New York-Northern New Jersey-Long Island, NY-NJ-PA; Memphis, TN/AR/MS; Tulsa, OK; Urban Honolulu, HI; and Las Vegas-Paradise, NV, at 49th. A complete analysis of each of the 50 markets is available at lisep.org/localanalysis.

 “Across the nation we are seeing both ends of the spectrum — communities where middle- and working-class families are faring well and others where financial survival remains a struggle,” Ludwig said. “Our challenge here is in identifying what’s working well and replicating it; what’s not, and scrapping it. This is where real-world data can be invaluable to policymakers.”