Arkansas offers low cost of living, second only to Mississippi

by The City Wire staff ([email protected]) 3,272 views 

There are a few perks that come with living in Arkansas, and it’s not just the natural beauty of the Ozarks but also the fact that a dollar earned here goes further than just about any other state, according to a recent report by the Tax Foundation.

Based on earnings and cost-of-living data complied by the Bureau of Labor Statistics, the relative value of $100 earned in Arkansas is really $114.29 because of the state’s lower cost-of-living.

Arkansas has the second lowest cost-of-living reading in the nation. Only Mississippi ($115.21) offered more purchasing power. In fact, both states enjoy prices about 13% lower than the national average. Arkansas also stands out among other neighboring states consistently offering its residents more purchasing power dollar for dollar.

Texas residents see $103.31 of spending power per $100, which is 10.6% less than in neighboring Arkansas. To the west in Oklahoma, the relative value of $100 is $111.23 or 2.75% less than in Arkansas. Missouri a $100 has a relative spending power of $112.11 or about 2% lower than Arkansas.

A separate report by the Bureau of Labor Statistics released July 1, found that the cost of goods and services in Arkansas had a price parity of 87.5 compared to the national average of 100. That cost savings is consistent with findings noted by the Tax Foundation.

Within Arkansas, the Fort Smith and Jonesboro metro areas ranked among the lowest in the nation in terms of the cost of goods and services. Jonesboro had a regional price parity of 81.7 compared to the national 100 and the state parity of 87.5. Fort Smith’s regional price parity was 81, tied with Pine Bluff for the lowest in the state.

Conversely, Little Rock and Northwest Arkansas had the two highest cost of living ratings in the state at 89 and 87, respectively.

Across the Midwest and the South the cost of living is lower than on either coast, predominantly because of reduced housing expenses which are the greatest in California, New England and New York City.

Outside of Honolulu, New York City metro area had the highest cost of living with a price parity of 122.3, compared to the national reading of 100. San Jose, Calif., metro showed a price parity reading of 121.3 while Bridgeport, Conn., had a reading of 120.8.

It’s true that the lower cost of living also typically means lower household incomes and sometimes slower wage growth. The Tax Foundation looked at Nebraska and California and found that per capita income was quite similar, but the added purchasing power in Nebraska meant the dollars earned went much further.

While many of the state’s largest corporate employers often recruit job candidates from out of state, The City Wire compared the cost-of-living between peer cities in and out of Arkansas.

The Fayetteville metro area is often compared to Austin, Texas, a diversified economy but slightly tilted toward technology. The household earning $60,000 in Fayetteville would need to earn $63.214 in Austin, even though Arkansas has a state income tax and Texas do not.

A cost-of-living calculator provided by indicates groceries in Austin are 8% cheaper than in Fayetteville, but housing costs are 10% higher while health care expenses are 9% more than in Northwest Arkansas.

Little Rock looks to be more expensive than Austin for a household earning $60,000. In Austin that comparable salary would be $57,619, with the savings coming in groceries down 10%, housing costing 9% less and 5% reduced utility costs, according the same calculator.

Within the Natural State, Little Rock looks to be the most expensive place to live for a family earning $60,000. That same family would need to earn $54,689 in moving to Northwest Arkansas.