Worst States to Make A Living 2013

MoneyRates.com looked at wages, jobs, taxes, cost of living and work environment to identify these 10 worst states for making a living.
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The halting economic recovery in the years since the Great Recession has created hardships for many American workers, but people in some areas have had it much worse than others. While the employment conditions in some states are relatively strong, others continue to feel the effects of low wages, high inflation, unemployment and rising taxes.

For the third consecutive year, MoneyRates.com has ranked the best and worst states for making a living. Quantitative factors used in this study include average wage and unemployment data from the Bureau of Labor Statistics, cost of living data from C2ER (formerly ACCRA) and state tax information from Tax-Rates.org. This quantitative analysis was then adjusted for qualitative workplace conditions, according to each state’s Workplace Environment ranking in the Gallup-Healthways Well-Being Index poll.

Here are MoneyRates.com’s 10 Worst States to Make a Living for 2013.

1. Hawaii

While Hawaii’s natural beauty appeals to many, it hasn’t necessarily helped its employment landscape: The state has earned the distinction of worst state for making a living in all three years of this study. The chief culprit is the highest cost of living of any state, and a relatively high state tax burden compounds the problem. Hawaiians do like their workplaces — the state ranked first in the poll on workplace environment — but economic factors still make this the toughest place for making a living.

2. Mississippi

Mississippi’s challenges include the lowest average wage of any state, and a high unemployment rate. On top of that, its work environment ranks third-worst in the nation. This is Mississippi’s third straight year in the bottom-10 states for making a living, and it has done a little worse in each successive year.

3. Rhode Island

Employees in Rhode Island ranked their state dead last for quality of work environment. Besides getting low marks qualitatively, Rhode Island struggles with two key quantitative issues: a high cost of living and a stubbornly high unemployment rate. At the end of 2012 that unemployment rate was 9.9 percent, the highest of any state.

4. New York

Wages in New York are among the highest in the nation, but this is largely offset by the fact that the cost of living in the state is nearly 38 percent higher than the national average, and the state income tax burden is high. New York also has a worse unemployment rate than most states, and ranked in the bottom 10 in the work-environment poll. With everything besides income going against it, New York landed among the worst 10 states for the first time.

5. South Carolina

A combination of low wages and high unemployment have landed South Carolina in the bottom 10 twice before, and those conditions persist. In addition, people in the state gave it the country’s fifth-worst rating for quality of work environment.

6. New Jersey

Relatively high incomes in New Jersey are undermined by a high cost of living and one of the country’s highest unemployment rates. On top of that, the state ranked second-worst for work environment. After just escaping the bottom 10 last year, New Jersey lands there this year.

7. West Virginia

West Virginia’s main problem is one of the lowest average wages in the country. It also suffers from high unemployment and a below-average ranking for its work environment.

8. Vermont

Vermont is actually about average in most criteria, but its downfall is a cost of living that is about 20 percent higher than the national average. Many states with high costs of living have higher average wages to compensate for it, but Vermont does not.

9. Alaska

You can make a high wage with no income tax in Alaska, but you’ll pay for it with a very high cost of living. In addition, Alaska ranked near the bottom for work environment, which isn’t surprising given the often-harsh conditions in the state.

10. South Dakota

Having no state income tax is not enough to make up for an extremely low average wage — South Dakota’s is the second lowest of any state’s. That average wage is low enough to give South Dakota the 10th spot on this list for the second year in a row.

To a large extent, people in the above states may be well aware that job conditions are difficult. But a ray of hope may come from knowing that they may be able to find better conditions elsewhere — perhaps in one of the places that made the list of 10 Best States to Make a Living.

Also see the full 50-state rankings of Best and Worst States to Make a Living.

About Author
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”).