Best States to Live in the USA – 2020

This annual ranking of the best states to make a living takes into account changing economic conditions due to the coronavirus pandemic.
By Richard Barrington

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This annual ranking of the best states to live in has never been conducted in the midst of anything as disruptive as the coronavirus pandemic.

That might make this information more important than ever before.

After all, knowing how strong each state was before the crisis in terms of unemployment rates, high median wages, and other favorable job market characteristics provides clues as to which were best positioned to weather this challenge.

How did they do?

As the hard evidence comes in about the economic impact of widespread lockdowns, we can draw comparisons that show the magnitude of the event.

In addition, MoneyRates.com added an element to this year’s study to factor in the rate of job losses in the early weeks of the crisis. That allows the study to take into account where conditions are getting worse most quickly.

Here’s how that can help:

If your career has been disrupted by the coronavirus, this information might point you toward one of the top states to live in where residents enjoy high wages.

Even if your career is thriving, information in this study could help you find places where your earnings and savings could go further.

Best to Worst States: What is the Range of Economic Conditions?

Washington State was found to be the best state to live in, while Hawaii ranked last.

The chief benefits offered by Washington are an average median income that ranks fourth nationally and the fact that it has no state income tax.

Hawaii, on the other hand, suffers from the highest cost of living in the nation and compounds that with the second-highest state income tax.

To measure the best states to live in, MoneyRates.com factored in six criteria:

  1. Cost of living
  2. Median annual wage
  3. State income tax
  4. Unemployment rate
  5. Increase in unemployment since the COVID-19 lockdowns began
  6. Workplace safety

Comparing Median Annual Wage

These conditions all vary greatly from state to state. For example, the median annual wage in Massachusetts is nearly $20,000 higher than in Mississippi:

Comparing Median Annual Wage

Comparing median annual wage in light of purchasing power

Wage comparisons don’t tell the whole story, though. Take New Hampshire and Oregon, for example.

These two states have similar median wages – but Oregon is one of the worst states to live in financially.

While New Hampshire has no state income tax and only a slightly higher-than-average cost of living, Oregon has one of the highest state income tax rates in the nation and also one of the highest costs of living.

The result is that the purchasing power of the median wage in Oregon is a lot lower than that of New Hampshire after you account for state taxes and cost of living:

Similar Wages, Different Wealth

Comparing the jobless rate

Then there’s the question of getting a job in the first place. One of the best states for jobs was North Dakota, which has the lowest unemployment rate in the nation. Contrast that with the jobless rate in Louisiana which is more than three times as bad:

Comparing the Jobless Rate – Unemployed People/1000 in the Labor Force
In some states, it’s more than 3X as hard to get a job than other states.

Economic Conditions and the Coronavirus Pandemic

Large-scale business shutdowns due to the coronavirus began in mid-March. By the end of that month, 32 states had already seen their unemployment rate rise.

How conditions for making a living change in each state as the coronavirus situation continues depends both on how conditions were when the crisis began and how rapidly jobs are being lost due to business shutdowns.

Since these job losses are likely to have a growing impact on conditions in each state, MoneyRates.com included this recent development in its calculation.

As with all the factors in this study, the immediate impact of COVID-19 on the job market varied greatly from state to state. Alaska led the way among seven states that actually saw their unemployment rates drop. In contrast, Nevada saw a 2.7% jump in unemployment in the month of March alone:

Change in Unemployment Rate In Early Stages of Lockdowns

Best States to Live in 2020

MoneyRates.com used a proprietary formula to weigh the six factors listed above and produce a rank for all 50 states in terms of conditions for making a living. The following ranked as the ten best states to live in USA 2020:

1. Washington

Washington

In the ten years MoneyRates.com has been conducting this study, Washington has topped the list five times for the best states to live in the US

This year, it reclaims the top spot after coming in second last year.

Washington is one of eight states with no state income tax. Combine that with the fact that it also has the fourth-highest median income in the nation ($48,140/year) and its underlying strengths are clear.

One caution, though: Washington was hit hard in the early stages of the COVID-19 outbreak, and one consequence was that its unemployment rate jumped by 1.3% in the month of March alone.

2. North Dakota

North-Dakota

This is the third straight year North Dakota has made the top ten in this study and, for 2020, it climbed from ninth place last year all the way to second.

North Dakota has the lowest unemployment rate in the nation, and that rate was unchanged in the first month of widespread coronavirus-related shutdowns.

One negative should be noted, however: North Dakota ranks third-worst nationally for workplace safety.

3. Minnesota

Minnesota

After finishing fourth in each of the last two years, Minnesota climbed a notch to third place this year.

Its 3.1% unemployment rate is tied for seventh-lowest in the nation, and that rate was unchanged in March.

However, Minnesota’s biggest weakness as a place to make a living is a state-income-tax burden that is higher than that of most states.

4. Michigan

Michigan

For the fourth consecutive year, Michigan has made the top ten – and it has improved its rank in each of those years.

Michigan is one of the ten best states to live in the US and when combined with a median income that is higher than most states, it goes a long way toward making it a good place to make a living.

5. Texas

Texas

Though it dropped a couple slots after two consecutive third-place finishes, Texas remains a strong place to make a living based on a few factors:

  • No state income tax
  • More affordable than most states
  • Workplace safety is better than most states

6. Illinois

Illinois

In addition to topping the ranking in the initial year of this study (2011), Illinois has made the top ten in eight out of ten years.

This year, a top-ten ranking for workplace safety is its greatest strength, with the most obvious flaw being that it has one of the highest state-income-tax burdens for median earners.

7. Kansas

Kansas

This is the third time in ten years Kansas has made the top ten.

It has the sixth-lowest cost of living and seventh-lowest unemployment rate of any state – and that unemployment rate held steady in the first month of coronavirus lockdowns.

8. Tennessee

Tennessee

This is the first time Tennessee has made the top ten since 2011, when it also ranked eighth.

Tennessee benefits from both a low cost of living and a relatively low state-income-tax burden.

9. Colorado

Colorado

This ranking continues a streak of making the top ten in every year of this study.

This year, Colorado benefited from top-ten rankings for affordability and workplace safety.

An emerging concern is that Colorado’s unemployment rate jumped by 2% in March, the second-biggest rise in unemployment of any state.

10. Oklahoma

Oklahoma

This is Oklahoma’s third time making the top ten, and its first time since 2014.

Oklahoma has the third-lowest cost of living and best states to live in financially. So even though the median income is relatively low, the money goes a long way.

Oklahoma also has one of the ten lowest unemployment rates, so the prospects for getting a job there should be relatively good.

Your Career and Personal Finance Situation

The economic impact of the COVID-19 outbreak has impacted most Americans, but some states went into it on a stronger economic footing than others.

If you find yourself in one of the worst states to make a living, you might consider taking a broad view of the job market. Conditions might be much better in another state, so relocation might be helpful to getting your career back on track.

If you’ve been fortunate enough to keep your job despite the economic lockdown, look at this as an opportunity to save a little extra money.

Staying at home means there are fewer ways to spend money. Putting a little extra toward an emergency fund or your retirement savings could come in handy in the future.

>> Compare savings accounts

Best States to Live in 2020 Methodology

The six factors used in calculating the best states to live in the US came from the following sources:

  1. Cost of living by state was based on an average of each state’s metro area costs of living data as reported by the Council for Community and Economic Research.
  2. Median annual wage was based on the 2019 state-by-state average for all occupations from the Bureau of Labor Statistics.
  3. State income tax was calculated using state income-tax brackets from the Tax Foundation and applying them to the median income in each state.
  4. Unemployment rate was based on March, 2020 state unemployment data from the Bureau of Labor Statistics.
  5. Increase in unemployment since the COVID-19 lockdowns began was calculated by comparing the March and February 2020 state unemployment data from the Bureau of Labor Statistics.
  6. Workplace safety was based on Bureau of Labor Statistics data on both rates of non-fatal occupational injuries and illnesses and fatal occupational injuries.

Full Listing

Here’s the complete ranking of all 50 best states to live in the US:

Best States to Live in 2020
Rank

State

1 Washington
2 North Dakota
3 Minnesota
4 Michigan
5 Texas
6 Illinois
7 Kansas
8 Tennessee
9 Colorado
10 Oklahoma
11 Virginia
12 Ohio
13 Missouri
14 Nebraska
15 Wyoming
16 Wisconsin
17 Georgia
18 Iowa
19 Indiana
20 New Hampshire
21 New Mexico
22 Massachusetts
23 Arizona
24 Alabama
25 North Carolina
26 Connecticut
27 Utah
28 Idaho
29 Pennsylvania
30 New Jersey
31 Delaware
32 Alaska
33 Rhode Island
34 Florida
35 Arkansas
36 South Carolina
37 Kentucky
38 Maryland
39 Mississippi
40 Vermont
41 Louisiana
42 South Dakota
43 West Virginia
44 Montana
45 New York
46 Maine
47 Nevada
48 California
49 Oregon
50 Hawaii

Archive of Best State to Make a Living