Today when you get a job offer from a company (in the U.S.), your salary is quoted in dollars. If you get a job offer for $100,000 and one for $120,000, you can easily compare the compensation levels.
But can you?
It is true that comparing the salary for two jobs in San Francisco is relatively straight-forward. But what if you had to compare a job offer in San Francisco with one in Plano, TX?
A $100,000 salary in Plano goes a lot further than a $120,000 salary in San Francisco. In fact, it probably goes further than a $200,000 salary in San Francisco.
Even within countries (like the U.S.), different regions are higher-cost and others are lower cost.
The Purchasing Power Parity (PPP) between cities can be drastically different. One simple way to see the difference is the price per square foot to purchase a home. The median price per square foot for a home in the U.S. is $123 but in San Francisco it is $810 (and Detroit is just $24). So it takes a lot more dough to live in San Francisco (or Manhattan) than most places.
Also, the tax rates can change substantially between regions and cities. The top income tax rate in California is 13.3%. The top income tax rate in the State of Washington is zero (the seven states with zero income tax are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming). So even though Seattle is getting really expensive, you can save a lot of money by taking a job there instead of San Francisco.
So what would happen in there was a law that stated that all salaries need to be quoted in post-tax PPP-adjusted dollars?
Imagine that there was a law that forced every employer to quote both the absolute salary (like $120,000 in SF) and the after-tax PPP-adjusted salary (would transform to probably $50,000 in SF).
What would happen?
First thing that would happen is that many fewer people would want to work in places like San Francisco and New York City. While everyone intuitive knows that these places are high-tax and high-price, seeing the stark different on the job offer would make a significant number of people pause before taking a job.
The second think thing that would happen is that many employers would need to react to this. One way to react is to increase salaries. But the salaries in places like San Francisco are already much higher than most places and would likely need to go up another 50%+ to compensate. The more likely reaction is for employers to hire more people outside high-tax and high-PPP areas.
Long term, more people are going to start thinking about their income in “real” dollars — which means the dollars they have left over after living their life.