15 States With the Lowest Minimum Wage Relative to Cost of Living

15 States With the Lowest Minimum Wage Relative to Cost of Living

Editor’s Word: This story initially appeared on Self.

The pandemic-era economic system has many uncommon and unsure options which have made it tough to analyze. And one of the main open questions is what this financial interval will do to wages and costs long-term.

The federal minimum wage was first created in 1938 as half of the Truthful Labor Requirements Act, which initially set the minimal wage at $0.25 per hour. The federal minimal wage shouldn’t be mechanically listed to inflation or some other financial indicator, which implies that it takes an act of Congress to elevate the minimal. Traditionally, Congress has handed will increase each few years to mirror inflation and the altering buying energy of the greenback. However the final minimal wage enhance happened in 2009 to $7.25 per hour, and the time between then and now represents the longest-ever period with out a rise. Even earlier than the current worries about inflation, regular adjustments in price of residing have made it tougher and tougher for the lowest-wage employees to subsist on that quantity.

The consequence of requiring Congress to act to elevate the federal minimal wage is that the actual worth of the wage has fluctuated over time. At its peak in 1968, the minimal wage was value $12.77 in 2020 {dollars}. When the final minimal wage enhance took impact in 2009, the wage was value $9.22 per hour in 2020 {dollars}. Which means that the actual worth of the present $7.25 wage is down 43% from its historic peak, down 21% since the final enhance, and at one of its lowest-ever ranges in current historical past.

The federal minimal wage is only one device for rising employees’ pay. One other main coverage lever is state minimal wages. At the moment, 30 states have enacted their very own minimal wages above the federal minimal of $7.25, starting from as little as $8.75 to $14 in nation-leading California. Most of the states with greater minimal wages are situated in the western or northeastern U.S., the place price of residing tends to be greater.

In some of the 20 states that haven’t raised the minimal wage, price of residing is low, so the federal minimal wage doesn’t create as a lot stress on family funds. In others, nevertheless, the actual worth of the minimal wage relative to price of residing is way decrease, and low-wage employees might have a tougher time getting by.

To find out the states with the lowest minimal wage relative to price of residing, researchers at Self Monetary calculated the cost-of-living adjusted minimal wage in every state utilizing minimal wage knowledge compiled from state authorities web sites, cost-of-living knowledge from the U.S. Bureau of Financial Evaluation, and poverty knowledge from the U.S. Census Bureau.

Listed here are the states with the lowest minimal wage relative to price of residing.

15. Indiana

(*15*)
Travis Eckert / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $8.17
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -11.3%
  • Poverty fee: 11.9%

14. Iowa

Joseph Sohm / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $8.15
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -11.0%
  • Poverty fee: 11.2%

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13. Kansas

Overland Park Kansas
Jacob Boomsma / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $8.13
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -10.8%
  • Poverty fee: 11.4%

12. North Dakota

Fargo, North Dakota
Jacob Boomsma / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $8.12
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -10.7%
  • Poverty fee: 10.6%

11. Tennessee

Knoxville, Tennessee
Kevin Ruck / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $8.08
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -10.3%
  • Poverty fee: 13.9%

10. South Carolina

Spartanburg, South Carolina
Kevin Ruck / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.92
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -8.5%
  • Poverty fee: 13.8%

9. North Carolina

Charlotte North Carolina
Kevin Ruck / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.91
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -8.3%
  • Poverty fee: 13.6%

8. Wisconsin

La Crosse, Wisconsin
Jacob Boomsma / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.89
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -8.1%
  • Poverty fee: 10.4%

7. Idaho

Coeur d' Alene, Idaho
Wollertz / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.86
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -7.8%
  • Poverty fee: 11.2%

6. Wyoming

Jackson Hole, Wyoming
f11photo / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.81
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -7.2%
  • Poverty fee: 10.1%

5. Georgia

Atlanta, Georgia homes
RodClementPhotography / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.78
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -6.8%
  • Poverty fee: 13.3%

4. Texas

Corpus Christi Texas
Sean Pavone / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.51
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -3.5%
  • Poverty fee: 13.6%

3. Utah

Park City, Utah
Sean Pavone / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.51
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -3.5%
  • Poverty fee: 8.9%

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2. Pennsylvania

Harrisburg, Pennsylvania
Jon Bilous / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $7.47
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): -3.0%
  • Poverty fee: 12.0%

1. New Hampshire

Manchester, New Hampshire
Wangkun Jia / Shutterstock.com
  • Minimum wage (cost-of-living adjusted): $6.81
  • Minimum wage (precise): $7.25
  • Cost of residing (in contrast to common): +6.5%
  • Poverty fee: 7.3%

Methodology & Detailed Findings

Inventory-Asso / Shutterstock.com

Minimum wage statistics by state have been compiled from state authorities web sites; statistics on price of residing by state have been sourced from the U.S. Bureau of Financial Evaluation’s Regional Price Parities (RPP) dataset; and poverty statistics have been sourced from the U.S. Census Bureau’s 2019 American Community Survey. To find out the states with the lowest minimal wage relative to price of residing, researchers calculated the cost-of-living adjusted minimal wage in every state by dividing the state’s precise minimal wage by its corresponding RPP. In the occasion of a tie, the state with the decrease precise minimal wage was ranked greater.

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