Can Londoners now earn twice as much in New York?

Chat to a white collar worker in London about career prospects, and you are increasingly likely to see New York coming up as a topic of conversation. Not necessarily because they are thinking of upping sticks for the US, but because there is a growing acknowledgment and resignation to the fact that - when it comes to salaries - Brits are being left in the dust. 

As far as I can tell (admittedly from a series of pub conversations), a rule of thumb seems to be emerging across the professions: take a London salary, double it, and that’s roughly how much you could make in the Big Apple or big city America more broadly. 

A quick glance at online jobs boards suggests to me that this may well be true (it certainly seems to hold true for economists, at least…). 

But what do the official stats actually say on the matter? And for how long has the pay gap between NY and London been as large as it is today? I’ve tried to dig into the data in search of answers.

First, some caveats around what follows. Occupation and industry classifications in UK and US statistics are not exactly the same, so I have gone with what looks most comparable to me. Secondly, there are numerous ways of defining New York and London geographically. For the UK, I have gone with “London” as a government office region, which captures the whole capital (inner and outer London). For New York, I have used data for New York City (which includes the Bronx, Brooklyn, Manhattan, Queens, and Staten Island).  

London salary data is taken from the official Annual Survey of Hours and Earnings. In a similar vein, New York data is taken from the Quarterly Census of Employment and Wages. To convert into common currency in each year, I have used currency spot prices from the Bank of England. 

What comes out of the data is striking and, unfortunately, verifies the rule of thumb that’s been doing the rounds in Britain's capital.

Flip back to 2010 and average salaries in London and New York were practically identical when converted into the same currency units.  Fast forward to 2024 and New York workers are now earning about a third more than their London peers. Much of this is due to the depreciation of the pound over that time period (down 17% against the dollar), but it also reflects more sluggish pay growth in London - in pound terms workers in London saw average wages rise by 39% since 2010, compared with a 56% increase in dollar salaries for New York workers. 

A 32% wage premium for New York is large, but far from the earlier-cited rule of thumb that NY salaries are twice as high. But this is data across the whole workforce. When we zoom in on white collar professions, not only did New York workers enjoy a wage premium in 2010 but it has widened substantially since then:

• In finance & insurance, the NY wage premium has increased from 77% to 114%

• In legal & accounting services, it has risen from 40% to 106%

• In advertising services it has risen from 40% to 114%

• In architectural and engineering services it has risen from 21% to 84%

• In computer programming and ICT consulting, it has risen from 47% to 173%

(for these comparisons, New York salaries were converted into British pounds using exchange rate data for each year from the Bank of England)

I.e. in four of the five professions above, average wages in New York are now over twice as high. 

Adjusting for living costs

One fair challenge to this analysis is that it is not adjusting for differences in the cost of living between London and NY (though both are phenomenally expensive cities). An albeit imperfect way we can adjust for this to to look at average salaries in purchasing power parity (PPP)-adjusted dollars. PPP equates the purchasing power of different currencies by comparing the cost of a common basket of goods and services across countries, allowing a fairer comparison. 

Making the PPP adjustment certainly paints a more muted picture for how far New York has shot ahead of London - across the whole workforce the PPP-adjusted wage premium was 12% in 2024 compared with 32% without adjusting for purchasing power of the currency. In finance & insurance, the pay premium in New York has actually narrowed slightly in PPP terms. 

However, in other white collar professions, there has been a substantial widening in the pay gap even after adjusting for purchasing power:

• In legal & accounting services, the PPP-adjusted NY pay premium has risen from 48% to 75%

• In advertising services it has risen from 47% to 82%

• In architectural and engineering services it has risen from 27% to 56%

• In computer programming and ICT consulting, it has risen from 55% to 132%

So, less bleak that a straight-up currency comparison suggests, but still pretty bleak. And with big implications for where top, internationally mobile talent will choose to base itself over the coming years.