From City Journal:
According to the self-help adage, you can’t fix a problem until you first admit that you have it. So it should be of interest to New York policymakers that if you adjust census data for cost of living, Gotham is the poorest big city in America, though Detroit could gain that unwanted distinction when new data become available. And New York State, at least by one reckoning, is the poorest state, substantially worse off than the runner-up, Mississippi. Seriously.
Let’s begin with the city. Based on data from C2ER, a company that has been producing cost-of-living estimates for years, someone earning $50,798 in Chicago or $62,741 in Washington, D.C. enjoys the same standard of living as someone earning $100,000 in New York City. Not surprisingly, housing is the biggest factor. In Chicago, the cost of housing is 69 percent lower than in New York. In Washington, D.C., it’s 46 percent lower. Utility costs are also lower—29 percent in Chicago and 39 percent in Washington. So are groceries, by 28 percent in both cities. The result is that New York City residents have far less purchasing power than anyone seems to realize. (What applies to New York City also applies to its suburbs. A person earning $76,256 in Chicago has the same standard of living as someone earning $100,000 in New York’s Nassau County. Once again, housing is the main reason: its cost is 42 percent lower in Chicago than in Nassau.)
The next step is to apply these cost-of-living differentials to the most recent census estimates for per-capita income. This calculation yields a measurement of each city’s average standard of living. Once you crunch the numbers, you find that the real standard of living in Washington, D.C. is 118 percent higher than in New York City. In Chicago, it’s 75 percent higher.
There's more to this analysis here.