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Best Places to Make a Living: MoneyRates.com Ranks the Top States

MoneyRates.com Senior Financial Analyst, CFA
June 23, 2015

Whether you’re looking for work or eager to advance your career, where you choose to live can make a real difference.

Job prospects are not equally rosy across America. Some states are booming, while others still struggle with high unemployment. Living costs and local taxation can vary widely, making a dollar earned here not the same as one earned there. Yet we all seek the same goal: Finding the best possible environments for ourselves and for our families to thrive.

With this in mind, MoneyRates evaluated several factors to determine where workers had the best shot at a healthy paycheck, a decent cost of living and safe workplaces. But we also found steep pressures on wages, stunted job growth and higher rates of injury.

Methodology

Here are the five factors we evaluated and the data sources we used:

  1. Average wages. Average annual wage data is from the U.S. Bureau of Labor Statistics.
  2. State tax rates. MoneyRates analyzed the state tax information collected by the research group Tax Foundation.
  3. Cost of living. Data was sourced from the Council for Community and Economic Research’s Cost of Living Index.
  4. The unemployment rate. U.S. Bureau of Labor Statistics.
  5. Incidents of workplace illness, injuries and fatalities. This workplace safety data is from the BLS, which sourced data from employer reports to the U.S. Occupational Safety and Health Administration and the BLS Survey of Occupational Injuries and Illnesses.

Study Highlights

  • Texas was the best state to make a living for 2015, moving up from 2nd place last year. It edged out Washington, with the two states trading positions from last year. 
  • Hawaii, while ever-beautiful, is a tough place for workers looking to get ahead. It came in dead last in our analysis of all 50 states, largely due to its sky-high cost of living. Adjusted for taxes and the cost of living, workers in Hawaii get the equivalent value of just 55 cents for every dollar they make.
  • Compare that to Massachusetts where the average employee makes over 50 percent more than the average employee in Mississippi.

How did your state measure up?

Best States to Make a Living 2015

Here are the Top 10 best states to make a living:

  1. Texas. After finishing second on this list last year, Texas took over the top spot in 2015. Texas scored well across the board on a variety of employment conditions, contributing to a healthy economy. In 2013, the state’s gross domestic product expanded 3.7 percent – higher than the 1.8 percent growth rate for the rest of the U.S., according to The Texas Economy run by the state Comptroller’s office. Although average wages in Texas was only slightly above the national average, workers in Texas get good value from those wages. The cost of living in the state is below average, and there is no state income tax. On top of those economic considerations, only one state (Louisiana) had fewer incidents of workplace illness, injuries and fatalities. Put it all together, and Texas ranks as this year's best state for making a living.
  2. Washington. Having won the top spot on the list last year, Washington put in another very strong showing, though it was just edged out of the No. 1 position by Texas. Unlike Texas, which was above average across the board, Washington scored well on the strength of two outstanding attributes: it has one of the highest average wages in the country with employees earning an annual income of $52,540, and workers in the state get to keep more of their pay because there is no state income tax. The state is poised for employment growth in major sectors in the future, according to the Washington Employment Security Department. For example, economic and job growth is expected to help increase demand for tech and professional and business services in Seattle-King County.
  3. Wyoming. A common thread that ties together all three of the top states in this year's study is that they do not have a state income tax. That alone more than makes up for an average wage in Wyoming, which is slightly below the national standard. In addition, Wyoming scored near the top because the cost of living and unemployment are well below the levels in most states. The Wyoming Department of Workforce Services projects that the mining, health care and social assistance industries will experience the most hiring growth. “The Equality State” also has fewer workplace safety issues.
  4. Virginia. Moving up a few slots from last year's seventh-place ranking, Virginia has one of the highest average wages in the nation. Virginia also scored very well in terms of workplace safety, tying for the third-lowest rate of reported incidents. As a final point of strength, Virginia also has lower unemployment than the average state.
  5. Illinois. Last year Illinois just missed making the top 10, but this year it surged all the way to No. 5. The key to its high ranking is that Illinois has relatively high wages combined with a reasonable tax rate and cost of living. The one negative is that the 6 percent unemployment rate in the state is still above the national average.
  6. Michigan. Though the city of Detroit has had its well-publicized problems, the strength of Michigan's overall performance in this study may be attributed to how well the auto industry has bounced back in recent years. This year, Michigan improved all the way from 32nd to 6th in this study, and the most obvious reason is that the unemployment rate dropped from 7.4 percent to 5.4 percent. Another significant factor for Michigan is its below-average cost of living, which helps people's wages go further.
  7. Colorado. Despite slipping from No. 4 to No. 7 this year, Colorado still ranks well for high wages and low unemployment. In fact, like Michigan, Colorado made significant improvement in unemployment over the past year, dropping from 6 percent to 4.2 percent. Relatively high wages are also a driving factor in this state’s ranking.
  8. Delaware. This state climbed from 12th to 8th to crack the top 10 this year. In addition to having relatively high wages and low unemployment, Delaware also has one of the lowest rates of workplace safety incidents.
  9. Ohio. The wage situation in Ohio illustrates why it is important to look at the big picture when weighing two different job offers. On the surface, the average wage in Ohio is a little below the national standard, but when you adjust this for a low cost of living and low state income tax rate, workers in Ohio actually come out well ahead of their counterparts in most other states. On top of that, Ohio also ranked high for workplace safety.
  10. Utah. Though it slipped from the No. 5 spot last year, Utah hung on to just make the top 10 in 2015. Utah's 3.4 percent unemployment rate is well below the national average, and the cost of living in the state is also very low.

Ranking is based on performance across all featured metrics:

RankStateCOL IndexAverage IncomeState Tax on Average IncomeUnemployment RateWork Incidents/100 Workers
1 Texas 92.4 $45,330 $0.00 4.2 2.7
2 Washington 104.1 $52,540 $0.00 5.5 4.9
3 Wyoming 92.7 $44,930 $0.00 4.1 3.5
4 Virginia 99.7 $50,750 $2,660.63 4.8 2.9
5 Illinois 96.3 $48,780 $1,749.56 6 3.5
6 Michigan 90.9 $45,140 $1,918.45 5.4 3.8
7 Colorado 102.2 $49,860 $2,308.52 4.2 3.7
8 Delaware 103.1 $49,520 $2,361.86 4.5 3
9 Ohio 93.0 $43,900 $1,072.57 5.2 3
10 Utah 91.2 $43,550 $2,177.50 3.4 3.4

Sources: Bureau of Labor Statistics, Council for Community and Economic Research, Tax Foundation, MoneyRates research

Worst States to Make a Living 2015

Making a living involves overcoming a series of challenges. First you have to get a job, and then you have to strive year after year to improve your income. You need to deal with the toll that taxes and the cost of living take on that paycheck. On top of that, the workplace itself may pose a physical challenge in the form of a stressful or hazardous environment.

It's never easy, but making a living is much harder in some places than in others.

Here are the Top 10 worst states for making a living:

  1. Hawaii. The islands of Hawaii may be a terrific place to spend a vacation, but they are a difficult place to try to make a living. Hawaii ranks as the worst of all states for making a living. Why? Cost of living is the main issue. Hawaii has the highest cost of living of any state. One of the biggest reasons why cost of living is so great in the state is higher than average housing expenses. According to Zillow, the median home value of a house in Hawaii is $537,300, which could price some buyers out of the market. Additionally,  salaries in the state do not compensate for its high cost of living - the average wage in Hawaii is about typical for the rest of the nation. Hawaii has one of the highest income tax rates of any state. Adjusted for taxes and the cost of living, workers in Hawaii get the equivalent value of just 55 cents for every dollar they make.
  2. Oregon. Cost of living and taxes were also leading factors in why Oregon finished as the second-worst state for making a living, dropping 11 places in the 50-state ranking from last year. The cost of living in Oregon is not as high as in Hawaii, but it is 28.5 percent higher than the national average. Wages are only a little above of the national average, so they don't adequately compensate for the high cost of living and taxes. The estimate of state tax on average income in Oregon is $3,981.50. On top of those economic disadvantages, Oregon also had one of the highest rates of workplace safety incidents. In March 2015, Oregon noted that there was a slight rise in worker fatalities in 2014 from the previous year.
  3. Maine. The biggest negative factor affecting workers in Maine is a high workplace incidence rate. Maine is tied for the highest frequency of workplace illness, injuries and fatalities. The state had 5.3 workplace incidents per 100 workers. On top of that, the average wage in Maine is below the national standard at $42,140, even though the cost of living is more than above average. Job growth in the state is forecast to be sluggish compared to the rest of the nation. The Maine Department of Labor predicts just 2.3 percent in employment gains between 2012 and 2022.
  4. West Virginia. Unemployment remains a big problem in West Virginia, where the 7 percent rate of joblessness is second highest in the nation. Once you do find a job in West Virginia, chances are it won't pay very well - West Virginia has one of the lowest average wages in the country, despite a slightly above-average cost of living.
  5. Vermont. Like neighboring Maine, Vermont suffers from a combination of below-average wages and an above-average cost of living. Vermont is tied with Maine for the highest frequency of workplace safety incidents. Only a lower unemployment rate and a lower tax rate help Vermont finish a little better than Maine as a place to make a living.
  6. California. Despite having one of the highest average wages in the nation, California could not overcome several negative attributes. That average wage is more than negated by high taxes and cost of living. On top of that, the unemployment rate and the frequency of workplace safety incidents are both higher in California than national average.
  7. Montana. Even though Montana has a low unemployment rate of just 4 percent, workers in the state don't seem to have much leverage with their employers. This is because average wages are well below the national standard. Montana is also among the worst states for workplace safety.
  8. South Dakota. This is another state where low unemployment - in this case just 3.6 percent - does not seem to be translating into higher wages. The average wage in South Dakota is even lower than in Montana, though having no state income tax and a better record for workplace safety allow South Dakota to fare slightly better in these rankings than Montana.
  9. Rhode Island. Coming in ninth-worst on this list is hardly reason to cheer, but it actually represents an improvement for Rhode Island, which was fourth from the bottom last year. Rhode Island's biggest problem is high unemployment, and even its above-average wages are not enough to make up for the high cost of living.
  10.  Connecticut. Like neighboring Rhode Island, Connecticut improved by five spots this year, but still landed in the bottom 10. High unemployment is a problem in Connecticut, and even having one of the highest average wages in the country is not enough to make up for the cost of living in the state. Workplace safety is also a concern in Connecticut.

Ranking is based on performance across all featured metrics:

RankStateCOL IndexAverage IncomeState Tax on Average IncomeUnemployment RateWork Incidents/100 Workers
50 Hawaii 170.8 $46,230 $3,073.77 4.1 3.8
49 Oregon 128.5 $46,850 $3,981.50 5.2 4.1
48 Maine 115.8 $42,140 $2,709.16 4.7 5.3
47 West Virginia 104.8 $37,880 $1,479.60 7 3.8
46 Vermont 123.6 $44,540 $1,829.47 3.6 5.3
45 California 138.2 $53,890 $2,523.00 6.3 4
44 Montana 102.1 $39,880 $2,208.72 4 4.8
43 South Dakota 101.3 $37,300 $0.00 3.6 3.7
42 Rhode Island 123.3 $49,570 $1,858.88 6.1 3.7
41 Connecticut 134.7 $55,060 $2,578.30 6.3 4.1

Sources: Bureau of Labor Statistics, Council for Community and Economic Research, Tax Foundation, MoneyRates research

Best States to Make a Living

Full Ranking of 50 States

Didn't see your state named one of the Best or the Worst? Here's the full list.

Ranking is based on performance across all featured metrics:

RankStateCOL IndexAverage IncomeState Tax on Average IncomeUnemployment RateWork Incidents/100 Workers
1 Texas 92.4 $45,330 $0.00 4.2 2.7
2 Washington 104.1 $52,540 $0.00 5.5 4.9
3 Wyoming 92.7 $44,930 $0.00 4.1 3.5
4 Virginia 99.7 $50,750 $2,660.63 4.8 2.9
5 Illinois 96.3 $48,780 $1,749.56 6 3.5
6 Michigan 90.9 $45,140 $1,918.45 5.4 3.8
7 Colorado 102.2 $49,860 $2,308.52 4.2 3.7
8 Delaware 103.1 $49,520 $2,361.86 4.5 3
9 Ohio 93.0 $43,900 $1,072.57 5.2 3
10 Utah 91.2 $43,550 $2,177.50 3.4 3.4
11 Georgia 91.5 $44,670 $2,490.20 6.3 3
12 Minnesota 100.9 $48,310 $2,979.67 3.7 3.9
13 Tennessee 90.4 $40,650 $0.00 6 3.4
14 Arizona 96.3 $44,580 $1,224.90 6 3.5
15 Indiana 89.6 $41,470 $1,335.51 5.4 3.8
16 North Dakota 100.1 $44,100 $613.62 3.1 3.7
17 Kansas 91.88 $42,020 $1,647.92 4.3 3.7
18 Missouri 91.5 $42,790 $2,342.40 5.7 3.3
19 Oklahoma 89.1 $40,850 $1,934.38 4.1 3.8
20 Massachusetts 126.2 $57,610 $2,966.92 4.7 3
21 Nebraska 93.3 $41,080 $1,977.67 2.5 3.9
22 Alabama 90.7 $40,890 $2,004.50 5.8 3.2
23 Idaho 88.2 $39,770 $2,696.53 3.8 3.7
24 North Carolina 96.3 $43,280 $2,488.60 5.5 2.9
25 Maryland 120.2 $53,470 $2,487.33 5.3 3.4
26 Pennsylvania 104.2 $45,750 $1,404.53 5.3 3.9
27 Iowa 92.5 $41,120 $2,204.57 3.8 4.8
28 Kentucky 90.0 $40,040 $2,138.32 5 4.1
29 New Jersey 124.2 $53,920 $1,486.58 6.5 3.4
30 Wisconsin 97.8 $42,880 $2,394.01 4.4 4
31 Mississippi 83.7 $36,750 $1,687.50 6.6 3.7
32 Louisiana 93.8 $40,190 $1,357.60 6.6 2.6
33 Florida 101.2 $41,820 $0.00 5.6 3.7
34 New Hampshire 117.4 $47,060 $0.00 3.8 3.7
35 New Mexico 100.0 $42,230 $1,789.77 6.2 3.5
36 Arkansas 91.3 $37,940 $1,880.97 5.7 3.2
37 Nevada 105.4 $42,310 $0.00 7.1 4.1
38 Alaska 137.0 $54,040 $0.00 6.7 4.2
39 South Carolina 95.5 $39,570 $2,280.30 6.7 3.2
40 New York 136.1 $55,630 $3,253.44 5.7 3
41 Connecticut 134.7 $55,060 $2,578.30 6.3 4.1
42 Rhode Island 123.3 $49,570 $1,858.88 6.1 3.7
43 South Dakota 101.3 $37,300 $0.00 3.6 3.7
44 Montana 102.1 $39,880 $2,208.72 4 4.8
45 California 138.2 $53,890 $2,523.00 6.3 4
46 Vermont 123.6 $44,540 $1,829.47 3.6 5.3
47 West Virginia 104.8 $37,880 $1,479.60 7 3.8
48 Maine 115.8 $42,140 $2,709.16 4.7 5.3
49 Oregon 128.5 $46,850 $3,981.50 5.2 4.1
50 Hawaii 170.8 $46,230 $3,073.77 4.1 3.8

Tell us: What's your home state and how would you rate your quality of life and economic prospects? Were they as you imagined?

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