Best States to Live in the USA in 2022

The best states to live in the USA two years after the pandemic on the basis of average wages, cost of living, unemployment rates, and state taxes.
mm
By Richard Barrington

Our articles, research studies, tools, and reviews maintain strict editorial integrity; however, we may be compensated when you click on or are approved for offers from our partners.
best state to live in

This annual ranking of the best states to live in has never been conducted after two years 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 is after two years of 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 in the first place and which ones would weather the storm if another global situation happened.

With two years of hindsight about the economic impact of widespread lockdowns, we can draw comparisons that show the magnitude of the event.

Here’s how this ranking can help you in thinking about how you would fare if COVID surged again or another global crisis happened.

If your career has been permanently changed since COVID, 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 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.

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.

Economic Conditions and the Coronavirus Pandemic

Large-scale business shutdowns due to the coronavirus began in mid-March, 2020. By the end of that month, 32 states had already seen their unemployment rate rise. Some businesses survived, many didn’t.

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 2020 alone. In 2022, Nevada is currently ranked at 48 for unemployment, with a rate of 5%, which is well over the national average. This shows that even two years later, some states are still feeling the brunt of the two-plus years of the pandemic.

Obviously, states such as Louisiana and Nevada, where tourism is a huge job creator and revenue generator, were hit particularly hard during the pandemic, but they are starting to welcome tourists back in 2022.

Best States to Live in 2022

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 2022:

1. Washington

In the 10 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.

Washington was hit hard in the early stages of the COVID-19, with Seattle one of the first cities in the U.S. to report positive COVID cases. The unemployment rate jumped by 1.3% in the month of March 2020 alone.

Two years later, the employment outlook is looking much better. Unemployment continues to go down in Washington. Steady decreases in the past six months have brought that rate down from 4.6% in October 2021 to 4.2% in March of 2022.

2. North Dakota

This is the third straight year North Dakota has made the top ten in this study and, for 2022, it climbed from ninth place all the way to second.

While it had the lowest rate of unemployment in the early months of COVID, North Dakota still has a low unemployment rate of 2.9%.

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

3. Minnesota

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

Its 2.5% unemployment rate is tied for fifth-lowest in the nation.

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

For the fourth consecutive year, Michigan has made the top 10 — and it has improved its rank in each of those years.

Michigan is one of the 10 best states to live in the U.S., 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

Though it dropped a couple of 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 in most states

6. Illinois

In addition to topping the ranking in the initial year of this study (2011), Illinois has made the top 10 in eight out of 10 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

This is the third time in 10 years Kansas has made the top ten.

It has the sixth-lowest cost of living and ties with a few other states for the fifth-lowest unemployment rate of 2.5%

8. Tennessee

This is the first time Tennessee has made the top ten since 2011, when it also ranked eighth. It has a decent unemployment rate of 3.2%, which puts it in a respectable 18th position when compared to the rest of the states for unemployment rates.

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

9. Colorado

This ranking continues a streak of making the top 10 in every year of this study.

This year, Colorado benefited from top-10 rankings for affordability and workplace safety.

Colorado’s unemployment rate took a hit as a result of COVID and currently sits at 3.7%.

10. Oklahoma

This is Oklahoma’s third time making the top 10, and its first time since 2014.

Oklahoma has the third-lowest cost of living and is one of the 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 impacted most Americans, and some states have managed to find 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 in getting your career back on track.

Even though we’ve stopped staying at home and being required to masks, you can still continue to save money as many Americans did during COVID times. Putting a little extra toward an emergency fund or your retirement savings could come in handy in the future. If COVID has taught us anything, it’s to prepare for the unexpected.

>> Compare savings accounts

Best States to Live in 2022 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 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 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. We then looked at unemployment rates from March 2022 to see how it has changed since then.
  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 U.S.:

Best States to Live in 2022
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

Previous Best States to Make a Living

About Author
mm
Richard Barrington
Richard Barrington has been a Senior Financial Analyst for MoneyRates. He has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications. Richard has over 30 years of experience in financial services. He has earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the “CFA Institute”).