You have been looking for a new job for the last six months and (much to your relief) your search has paid off. You have just received offers from two potential employers, one in Milwaukee and one in Boston. Although you have lived in Milwaukee all of your life (and like the city very much), you have always imagined that it would also be great to live in Boston. Thus, from an emotional perspective, the two offers are of equal appeal. As it happens, the two offers are also very similar in terms of the position offered, prospects for promotion, conditions of employment, fringe benefits, etc. The two offers, however, do differ in terms of the gross salary you will be paid. To be specific, ABC Corporation (located in Milwaukee) is offering a starting salary of $50,000, while XYZ Corporation (located in Boston) is offering a starting salary of $65,000.
1. From the standpoint of current purchasing power (as measured by the CPI), which offer is the most attractive and why? [Hint: Think about the relative differences in salary and compare that to the relative differences in the CPI.]
2. If we were to assume that the salary rate for both of these positions will change over time in exactly the same proportion as the change in the CPI (over the last 10 years) for each of the two cities, what will the two starting salaries be in ten years, i.e., in 2024?
[Although I planned originally to have you find the appropriate CPI data on the BLS site, finding the right numbers on the vast BLS site can be a bit challenging for the uninitiated.]
So, here are the two tables that you will need for the two metro areas.