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For younger millennials or Gen-Zers planning to live alone for the first time, it can be challenging to determine how much money is needed to live comfortably. Many different expenses must be accounted for, and they vary depending on where you choose to live. Thankfully, a new tool helps calculate these costs and provides an estimate of the minimum income needed to live in every state or major U.S. city.
How the Living Wage Tool Functions
The Massachusetts Institute of Technology’s living wage tool evaluates whether a person’s income is sufficient to live in a specific location, taking into account local cost estimates for food, childcare, medical expenses, housing, and transportation. The results are detailed based on the number of children and the number of working parents in a household.
The calculator provides insights into the required income to sustain oneself in a given state or city, including a 'living wage' (the minimum annual income needed to avoid federal aid), a 'poverty wage' (the income threshold to qualify for federal assistance), and the local minimum wage. While the term 'living wage' generally refers to an amount that exempts individuals from federal programs, this tool takes into account extra expenses, such as healthcare and daycare, which are usually overlooked in standard calculations. However, it remains a basic estimate and doesn't include optional costs like entertainment or vacations.
The gap between regions can be significant: for example, the required living wage to live in Manhattan is $41,600, which is $12,000 higher than what you'd need in Texas (these figures are based on 2,080 hours worked annually, or 40 hours per week). This discrepancy is mainly driven by differences in housing costs and taxes.
Given such vast differences, whether or not to live independently largely depends on the location you choose. In this case, it may be wise to either save up or spend some time living on your own in your home state before relocating to a pricier city.
A detailed state-by-state analysis of minimum living wages
For more information on the minimum living wage in every state, here's a helpful breakdown provided by Clark.com:
Alabama: $28,652
Alaska: $31,333
Arizona: $31,077
Arkansas: $27,652
California: $38,823
Colorado: $34,009
Connecticut: $33,240
Delaware: $31,868
Florida: $30,825
Georgia: $31,940
Hawaii: $40,412
Idaho: $29,007
Illinois: $31,975
Indiana: $27,955
Iowa: $28,327
Kansas: $28,093
Kentucky: $28,048
Louisiana: $29,251
Maine: $31,043
Maryland: $35,879
Massachusetts: $36,889
Michigan: $28,354
Minnesota: $30,997
Mississippi: $27,936
Missouri: $28,535
Montana: $29,004
Nebraska: $28,234
Nevada: $28,442
New Hampshire: $30,089
New Jersey: $33,696
New Mexico: $29,057
New York: $38,729
North Carolina: $30,617
North Dakota: $27,211
Ohio: $27,369
Oklahoma: $28,133
Oregon: $35,050
Pennsylvania: $27,861
Rhode Island: $30,763
South Carolina: $30,328
South Dakota: $26,225
Tennessee: $27,563
Texas: $29,134
Utah: $30,211
Vermont: $31,057
Virginia: $34,552
Washington: $33,982
Washington, DC: $41,850
West Virginia: $27,837
Wisconsin: $29,160
Wyoming: $27,425
