You can not use inflation data like the CPI to compare living cost is one location to another. So the BEA has constructed a database of Regional Price Parities ( RPP) that allow you do do that for all states and the some 383 Standard Metropolitan Areas in the USA. I was preparing to show them when BEA published the 2018 data. But that data will not be released until next year so I’m going ahead and showing the 2008 to 2017 data. Note, that in the tables for real per capita personal income by state for 2012 and 2017, I have converted the data in 2012 $ to an index of personal income as a percent of the national average to facilitate comparisons.
The first thing I noticed in the data is Connecticut and Massachusetts at the top of the tables with per capita real incomes of 129.6% and 121.6% of the national average, respectively.
Even adjusted for the high cost of living they still have the highest real per capita income in the US. I’ve long thought of these two states as prime examples of the post-industrial economy.They were the first industrial states and went through major problems when the textile and shoe industries departed for cheap labor in the south — something quite like the rust-belt states are now experiencing. But that was decades ago and they have now developed economies based on education, finance, high technology and medical care. The basis for each was the state investing strongly in education throughout the decline of the old industries so that they had the trained labor force to take advantage of new opportunities.