Everyone thinks about salary, but don’t forget about cost of living.
Interested in working for a large law firm? Here’s a number you’ve probably seen — $180,000. That’s the median starting salary for large law firms in New York City. And it often lures in students who feel like the best jobs are the ones with the highest income potential.
But salary doesn’t tell the whole story! Don’t forget that it is expensive to live in a city like New York. And sometimes making less money in a smaller city can actually lead to a higher standard of living due to the differences in cost of living.
NALP has a great resource to help illustrate this – the Buying Power Index. It compares the buying power of a dollar in 87 cities, with New York City as the benchmark. Using median reported law firm starting salaries, the Index shows where starting salaries go the furthest. (The current Index uses data from the Class of 2016, which is the most recent with reported salaries.)
For example, let’s say you practice corporate law in Wilmington, Delaware, which is just over 100 miles from both the New York City and Washington, D.C. metro areas. In Wilmington, the median starting salary for law firms is $160,000, compared to $180,000 in both NYC and DC. But Delaware’s lower cost of living (according to the Index, it only takes $85,000 in Delaware to have the same buying power as a $180,000 starting salary in New York) means you’re getting almost twice the buying power.
Let’s make it tangible. I just went online and checked out some real rentals that are searching for tenants now. Here is what $2000/month will get you in New York (well, Brooklyn):
One bedroom, one bathroom.
Here is what $2000/month will get you in Wilmington, Delaware:
3 bedrooms, 2.5 bathrooms.
Similarly, cost of living in DC is better than New York, but the $160,000 in Delaware still buys you 20% more than $180,000 in DC. And since Delaware is such a hub for corporate work, you would most likely be working with the same types of clients and doing similar work as firms in New York or DC.
Convinced? The largest law firm in Delaware – Richards, Layton & Finger – will be on campus during Notre Dame’s Early Interview Week to interview 2Ls. Submit a bid!
Here’s another example – Chicago versus Milwaukee (less than 100 miles apart). While Chicago is higher on NALP’s Index than Milwaukee, this is because the median salary in Milwaukee is lower (but both have significant buying power advantages over New York). But there are some larger firms in Milwaukee that pay significantly higher than the median and working at one of these firms may actually give you more buying power than a firm in Chicago that pays more. Some math yields the following examples:
- Median reported starting salary in Chicago – $160,000. NYC buying power index – 1.712
- Foley & Lardner, starting salary in Milwaukee – $160,000. NYC buying power index – 2.235
- Quarles & Brady, starting salary in Milwaukee – $130,000. NYC buying power index – 1.816
- Husch Blackwell, starting salary in Milwaukee – $130,000. NYC buying power index – 1.816
All three of these firms have higher buyer power in Milwaukee than the median in Chicago. And they all recruit at OCI for their Milwaukee offices.
Here is what $1700/month will get you in a not very great neighborhood in Chicago:
One bedroom, one bath.
Here is what $1700/month will get you in Milwaukee:
3 bedrooms, 2 bathrooms
Take some time to explore NALP’s Buying Power Index when crafting your bid strategy this summer. You may find that a smaller market could be a smart financial move too!