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The States With the Highest Cost of Living

Few people would argue that it's easy to make ends meet with a minimum-wage job. Given that the federal minimum wage makes no allowance for different costs of living, it's been left up to states in some instances to boost the amount they make employers pay their workers. Yet even with efforts like the recent D.C. measure that would raise minimum wages to $12.50 for certain large retailers -- and was targeted specifically to include Wal-Mart (NYSE: WMT  ) while excluding other stores including Safeway (UNKNOWN: SWY.DL  ) -- minimum-wage earners still have trouble earning enough to cover even basic living expenses.

Researchers at the Massachusetts Institute of Technology recently created a living-wage calculator intended to show the minimum amount that families can earn in order to cover basic costs that low-income families have to bear. Using a methodology similar to the Economic Policy Institute's metropolitan living wage tool, the MIT calculator puts a new spin on affordability and regional differences across the nation. Let's look at the highest-cost states in the country for a family of four to see how well minimum-wage workers are able to make ends meet.

Image sources: U.S. Mint.

5. Connecticut
Families of four need to earn wages of $21.47 an hour to cover basic living expenses in Connecticut, according to the MIT calculator. Even with a minimum wage of $8.25 that's $1 above the federal minimum, families with two adults in full-time minimum-wage jobs would fall 23% short of covering basic expenses. Costs are even higher in certain parts of the state, especially those closer to New York City. Living wages in Stamford would need to be $4.25 higher to meet the difference, and beyond professional occupations, most jobs don't come close to providing enough income.

4. California
Living costs in California are even higher, at $22.15 an hour, and an $8-an-hour minimum wage leaves double-income families 28% short of covering those costs. As you can expect, city-specific costs are often much higher, with San Francisco requiring more than $3.25 in additional hourly wages to make ends meet. High-paying computer and technical jobs cover those higher costs, but supporting service workers stand little chance of earning enough to reach a living wage.

3. Maryland
In Maryland, a living wage would be $22.41 an hour, yet the federal $7.25 minimum that applies leaves a two-income family even further behind, fully 35% below basic living expenses. Areas close to Washington have even higher expenses, but even at statewide levels, few basic occupations approach what would be necessary for families to make ends meet.

2. Hawaii
At $24.10 per hour, Hawaii's living wage reflects the high costs of living off the U.S. mainland in a resort environment. The $7.25 federal minimum wage leaves two-earner families 40% short of covering that living wage, with construction workers being the only non-professional service-industry jobs that pay enough to meet cost needs. Given the difficulties among low-income families in getting affordable transportation off the islands to lower-cost locales, it's even harder for Hawaiians to deal with high living expenses.

1. District of Columbia
Topping the list is not a state at all, but the District of Columbia. D.C.'s living wage sits at $24.92 per hour, but its $8.25 minimum wage leaves it a little less repressive for double-income earners, falling short of the living-wage level by 34%. With the entire district being an urban area, housing costs are generally higher, and while wages are also at generally higher levels than you'll find elsewhere, they nevertheless make it difficult for low-income workers to cover all the expenses of living in the nation's capital.

When wages fail to keep up with costs
Interestingly, the $12.50-per-hour minimum that D.C. proposed would just barely cover its living wage for a family of four with two minimum-wage workers. But in general, even areas that already offer premiums to the federal minimum wage don't require enough additional wages to offset the higher costs of living. Still, with limited resources to finance moves to less expensive locales and with many urban areas having higher-paying jobs than less costly areas, low-income residents often have little choice but to make the best of a tough situation where they already are.

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Read/Post Comments (9) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On August 04, 2013, at 10:50 AM, True411 wrote:

    Imagine that. All liberal Democratic states. In their feeble-minded attempts to help the poor, Democrats are actually making it more expensive for everyone to live, even the poor.

  • Report this Comment On August 04, 2013, at 10:50 AM, heartvet wrote:

    Isn't it amazing that all these states are Democratic strongholds, the party whose policies are supposedly best for low income Americans. Looks like failure to me.

  • Report this Comment On August 04, 2013, at 10:59 AM, sabebrush6 wrote:

    Apples and oranges : this article is using families to support their issue when in fact min. wage was only ment to support the teenie-boppers & college students & those just starting out in the work world. However, if you're not intelligent enough to climb the ladder, pehaps a min. wage job is all you can handle. Not everyone else's fault.

    A big question: why is it that people on min. wage jobs can afford a pack of smokes @ $8. + a pack and a 1/2 case of beer and have money to buy some Mari-jane but can't afford food ?

  • Report this Comment On August 04, 2013, at 11:32 AM, dannyfooldan wrote:

    Fascinating... they needed an actual study - by MIT "researchers", no less - to tell us that Connecticut, California and Hawaii are more expensive to live in, more than Dakotas and Alabama? And the "researchers" newly developed calculator puts a "new spin" on calculating affordability and regional differences? Looking forward to their new study finally revealing the differences between annual rainfall in Seattle and Phoenix - that one is being eagerly awaited!

  • Report this Comment On August 04, 2013, at 12:04 PM, JonBranda wrote:

    When will people learn that every time the minimum wage is increased by just 50 cents the cost of living goes up by $1.65. What good is high wages if milk is going to cost over $10 per gallon.

  • Report this Comment On August 04, 2013, at 2:08 PM, Ronmc2 wrote:

    "D.C. measure that would raise minimum wages to $12.50 was targeted specifically to include WALMART while excluding other stores including Safeway"

    So the store that would ACTUALLY hire high-School dropouts & Senior Citizens, is Politically hammered, in the name of "Fairness".

    Ya don't wanna lose the Low-Information Voter. The Champion Party of the Poor, again shows "what's actually behind the curtain".

  • Report this Comment On August 04, 2013, at 2:37 PM, JOberman wrote:

    The difference between wealthy and lower middle class workers is that lower middle class workers aren't scheming ways to keep wages lower for the wealthy class of working people.

    Democrat & Republican politicians have failed the working class by rescinding or amending employee state labor laws which allows BIG Businesses to greatly benefit from reduced employee protection due the working class for medical, sick, vacation, holidays and wage benefits. Big Businesses will eliminate a department by reclassifying it with a new department or job title and then lay off to force an already member of their company to reapply for the same job with a falsely claimed lay off, this is WRONG. Politicians from both parties can enact laws to protect employee(s) from an illegally unjustified lay off. Shame on both political parties for allowing BIG Businesses to reduce wages in this manner. The term lay off should only apply if the job NO longer exists and not by reclassification of a department or job title.

    Hence, the false lay off practice should have politicians up in arms and enact a new federal labor law making it FRAUDULENT, a CRIME and ILLEGAL to falsely eliminate a job or department title and offer a reclassified job as the same job, even if they add one or several new job requirements, the job is overall the same. Our Government sorely needs a new federal labor law enacted to PROTECT short and long term employees from this fraudulent lay off practice by unscrupulous employers. In addition to this new labor law... Employers can not require employee(s) to reapply for the 'same work' reclassified job or re-titled department, since they are already an employee of said company. Companies must offer them the new job without lay offs or lost scaled wages earned by a senior employee(s). There is something seriously wrong with our politicians... politicians who side with unscrupulous big businesses that practice laying off their employees falsely without just cause. Politicians have become as corrupt as their unscrupulous business friends, who have perfected this fraudulent wage reduction method against NON-UNION employees.

    State & town politicians CAN NOT themselves reclassify their Police & Fire department or its job titles and lay off their employees only later to inform them they have to reapply for the same jobs under a new department or job title. There is no equal JUSTICE from our political system to penalize employers, because a fair employee labor law would penalize (themselves) state & town governments. Just ask Detroit's politicians were all the money went. Tax rates continue to go higher for the lower middle & poor workers. Meanwhile, BIG Businesses have perfected their employee wage reduction method. Shame on corrupt politicians who have allowed BIG Business to conduct themselves in this shameful wage reduction method.

  • Report this Comment On August 04, 2013, at 6:55 PM, TAmerican wrote:

    Minimum wage was never intended to be enough to raise a family on, those jobs are starting jobs, if an employee works hard in a few months they should be able to get more. Those jobs should be for the young just starting out, perhaps for students going to school at the same time or someone who isn't the main wage earner in a family. If you try to socialize minimum wage you will just turn American into more of a socialist country and we all know socialism doesn't work, it is even more corrupt than free systems.

  • Report this Comment On August 04, 2013, at 10:28 PM, deekaman wrote:

    Yes...government and business collude with wealthy workers to keep low wages low for low wage workers. Quite possibly the most absurd statement I've seen here.

    Low wage workers are low wage workers because they have no marketable skills. Employers don't need them. And there is a glut of low-skilled workers.

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