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.
Cityscapes (source: Wikipedia)
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
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
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: