15 States With the Lowest Minimum Wage Relative to Cost of Living
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Editor’s Note: This tale initially gave the impression on Self.
The pandemic-era financial system has many abnormal and unsure options that experience made it tricky to investigate. And probably the most main open questions is what this financial duration will do to wages and costs long-term.
The federal minimal salary used to be first created in 1938 as a part of the Fair Labor Standards Act, which initially set the minimal salary at $0.25 in keeping with hour. The federal minimal salary isn’t robotically listed to inflation or some other financial indicator, this means that that it takes an act of Congress to boost the minimal. Historically, Congress has handed will increase each and every few years to replicate inflation and the converting buying energy of the greenback. But the final minimal salary build up came about in 2009 to $7.25 in keeping with hour, and the time between then and now represents the longest-ever duration with out an build up. Even ahead of the hot worries about inflation, commonplace adjustments in charge of dwelling have made it more difficult and more difficult for the lowest-wage staff to subsist on that quantity.
The results of requiring Congress to behave to boost the federal minimal salary is that the true worth of the salary has fluctuated through the years. At its height in 1968, the minimal salary used to be price $12.77 in 2020 bucks. When the final minimal salary build up took impact in 2009, the salary used to be price $9.22 in keeping with hour in 2020 bucks. This implies that the true worth of the present $7.25 salary is down 43% from its ancient height, down 21% because the final build up, and at one in every of its lowest-ever ranges in contemporary historical past.
The federal minimal salary is only one software for expanding staff’ pay. Another main coverage lever is state minimal wages. Currently, 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 upper minimal wages are positioned within the western or northeastern U.S., the place charge of dwelling has a tendency to be upper.
In one of the most 20 states that experience no longer raised the minimal salary, charge of dwelling is low, so the federal minimal salary does no longer create as a lot force on family funds. In others, on the other hand, the true worth of the minimal salary relative to price of dwelling is way decrease, and low-wage staff will have a more difficult time getting by means of.
To resolve the states with the bottom minimal salary relative to price of dwelling, researchers at Self Financial calculated the cost-of-living adjusted minimal salary in each and every state the usage of minimal salary knowledge compiled from state govt web sites, cost-of-living knowledge from the U.S. Bureau of Economic Analysis, and poverty knowledge from the U.S. Census Bureau.
Here are the states with the bottom minimal salary relative to price of dwelling.
15. Indiana
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- Minimum salary (cost-of-living adjusted): $8.17
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -11.3%
- Poverty charge: 11.9%
14. Iowa
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- Minimum salary (cost-of-living adjusted): $8.15
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -11.0%
- Poverty charge: 11.2%
13. Kansas
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- Minimum salary (cost-of-living adjusted): $8.13
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -10.8%
- Poverty charge: 11.4%
12. North Dakota
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- Minimum salary (cost-of-living adjusted): $8.12
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -10.7%
- Poverty charge: 10.6%
11. Tennessee
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- Minimum salary (cost-of-living adjusted): $8.08
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -10.3%
- Poverty charge: 13.9%
10. South Carolina
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- Minimum salary (cost-of-living adjusted): $7.92
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -8.5%
- Poverty charge: 13.8%
9. North Carolina
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- Minimum salary (cost-of-living adjusted): $7.91
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -8.3%
- Poverty charge: 13.6%
8. Wisconsin
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- Minimum salary (cost-of-living adjusted): $7.89
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -8.1%
- Poverty charge: 10.4%
7. Idaho
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- Minimum salary (cost-of-living adjusted): $7.86
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -7.8%
- Poverty charge: 11.2%
6. Wyoming
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- Minimum salary (cost-of-living adjusted): $7.81
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -7.2%
- Poverty charge: 10.1%
5. Georgia
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- Minimum salary (cost-of-living adjusted): $7.78
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -6.8%
- Poverty charge: 13.3%
4. Texas
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- Minimum salary (cost-of-living adjusted): $7.51
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -3.5%
- Poverty charge: 13.6%
3. Utah
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- Minimum salary (cost-of-living adjusted): $7.51
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -3.5%
- Poverty charge: 8.9%
2. Pennsylvania
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- Minimum salary (cost-of-living adjusted): $7.47
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): -3.0%
- Poverty charge: 12.0%
1. New Hampshire
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- Minimum salary (cost-of-living adjusted): $6.81
- Minimum salary (precise): $7.25
- Cost of dwelling (in comparison to reasonable): +6.5%
- Poverty charge: 7.3%
Methodology & Detailed Findings
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Minimum salary statistics by means of state have been compiled from state govt web sites; statistics on charge of dwelling by means of state have been sourced from the U.S. Bureau of Economic Analysis’s Regional Price Parities (RPP) dataset; and poverty statistics have been sourced from the U.S. Census Bureau’s 2019 American Community Survey. To resolve the states with the bottom minimal salary relative to price of dwelling, researchers calculated the cost-of-living adjusted minimal salary in each and every state by means of dividing the state’s precise minimal salary by means of its corresponding RPP. In the development of a tie, the state with the decrease precise minimal salary used to be ranked upper.
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