In the recent debate about minimum-wage jobs and living wages, McDonald’s Corporation (NYSE:MCD), Wal-Mart Stores, Inc. (NYSE:WMT), and Yum! Brands, Inc. (NYSE:YUM) have come under fire for not paying enough to help some families make ends meet. But the other main contributor to affordability is the cost of living in a particular place. With the federal minimum wage being the same across the nation, a minimum-wage job goes a lot further in terms of purchasing power in some places than in others. And although some states have set their minimum wages at higher levels than the federal minimum, even somewhat higher pay rates don’t always bridge the gap to cover basic living expenses.
One interesting study came from the Massachusetts Institute of Technology, where researchers created a living wage calculator modeled after the Economic Policy Institute’s metropolitan living wage tool. With its goal of showing minimum reasonable estimates of the cost of living for low-wage families, the calculator shows some interesting results. Let’s look at the five lowest-cost states in the country for a family of four to see how well minimum-wage workers are able to make ends meet.
5. Kentucky
According to the MIT calculator, you’d have to earn $17.18 an hour full-time to support a family of two adults and two children in Kentucky. The federal-minimum $7.25 an hour that minimum-wage jobs pay there would fall 16% short of that figure even if both adults worked full-time. As you’d expect, major cities were somewhat more expensive, with Louisville residents requiring an extra $0.50 per hour. Construction and repair jobs typically paid enough to meet the minimum, but many jobs, including transportation, food preparation, and personal services, were insufficient to meet basic income needs.
4. Wyoming
Wyoming comes in with a slightly cheaper $16.93-per-hour cost of living, but two-income-earner families would still fall 14% short of that level under the federal $7.25-per-hour minimum. Costs vary widely across the state, though, with the resort area of Jackson requiring a wage almost $3.75 per hour higher to support a family of four. Ironically, most of the jobs in the industries that support those resort services pay well below sustainable income levels.
3. South Dakota
In South Dakota, statewide figures for cost of living point to the need for a job paying $16.75 per hour, leaving two-income families 13% short. With few urban areas, statewide figures point to the need to be in high-paying areas such as technology, engineering, law, and other professional jobs to make ends meet for one-earner families.
