A student asked about interpreting job offers from companies in different locations. Since one offer was much lower than expected, she wanted to know how to respond to the differences in offers. While there are many ways to approach this sort of question, this is what I normally recommend.
The cost of living will have an effect on salaries paid at different locations. (There are also many other factors that will influence salaries, but the other factors are more difficult to estimate.)
While there are difference sources that could be used to determine the cost of living, I like the ACCRA Cost of Living Index (REF HB235 U6 C58). The organization is by state, but Washington, D.C. is listed as one metro area under D.C. but including NoVA.
Use the composite index to gage the differences in buying power between different locations.
For example, if the salary was $30,000, the buying power of that $30,000 in Arlington is different from the same salary in Lexington.
If the DC metro area has a composite index of 137.0, this means that it is 37% more expensive than the average of all participating areas.
If you divide the $30000 by the index value, you will get the "average" equivalent purchasing power. So, 30000/1.37 = 21897.81
To compare this salary with one with equivalent purchasing power in Lexington (with a composite index of 99.3) multiply the average figure by the index value - 21897.81*.993=21411.53.
So, an offer of $25,000 in Lexington is better than $30,000 in Arlington (all other factors being equivalent).
Please note that the differences in taxes between two locations will also have an effect on the net salary that is not accounted for in the ACCRA Cost of Living Index.
Again, these are rough measures that allow a quick comparison between locations.