Minimum Wages versus Cost of Living

Comparing state minimum wages with cost of living data for selected US cities

How do state minimum wages in the US compare to the federal minimum? And how far does minimum wage get you in different US cities, in terms of covering the cost of housing, food and living? 

We have selected some relevant data reflecting purchasing power and purchasing needs for a selection of US cities and compared state minimum wages with city costs of living. The data on minimum wages came from National Conference of State Legislatures; the cost of living data was collected from NerdWallet

State and federal minimum wages



Half of the selected cities are from states that have a legal minimum wage that's higher than the federal minimum of $7.25. In the other half, the state minimum is equal to the federal. Using the filter "Cost of living compared" on the chart below shows that most cities where life is more expensive than the average US city have state minimum wages that beat the federal minimum. 

Minimum wages compared: state vs federal

Source: NCLS

State minimum wage compared to federal minimum



Cost of living index and State minimum wage



Cost of living index



In a little over half of our selected cities, the cost of living is higher than in the average US city. In most of these cities, the state minimum wage is also higher than the federal minimum. New York is the outlier, with a cost of living index over 2 times higher than the average US city; Honolulu and San Francisco also fall well above the average. Philadelphia is the only city where the cost of living is above-average but the state minimum wage is not higher than the federal.

Comparative cost of living index & the state minimum wage

Showing for each city the relative cost of living compared on a scale where 100 is the average American city. Additionally the bubble color indicates if the state minimum wage is below, above or equal to the federal minimum wage of $7.25. Sources: NCLS and Nerdwallet.

Covering cost of living on minimum wage



Combining the different data available we made an, admittedly rough, estimate of each city's possible monthly expenses (based on Nerdwallet's composites of the categories Housing, Transportation, Food, Healthcare and Entertainment). 

It is fair to say that these "basic" expenses are a bit high for a lot of citizens that make about minimum wage. Surely, many citizens spend a lot less each month. On the other hand, this composite leaves out many other bills and any room for savings or unforeseen expenses.

So, it was interesting to calculate how much you would have to work, making minimum wage, to cover these monthly expenses in each city. The barchart below shows how much hours you would have to work per week to cover your "basic" monthly expenses:

Monthly expenses for each city

This composite of monthly expenses assumes housing costs to consist of median shared rent for a 2-bedroom apartment. Source: Nerdwallet

How long does your workweek need to be to cover monthly expenses:



Cost of living compared



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