Your State's True Cost of Living: What You Really Need to Earn

Understanding how far your paycheck actually stretches depends heavily on geography. A salary that feels comfortable in one region might leave you struggling paycheck-to-paycheck in another. New research analyzing the average livable wage across the US reveals stark differences in what residents need to earn simply to cover their basic necessities.

How Much Americans Actually Need to Earn

The study examined annual expenses across all 50 states using 2022 Consumer Expenditure Survey data, focusing on five major cost categories: housing, groceries, utilities, healthcare, and transportation. Using the widely-adopted 50/30/20 budgeting framework—allocating 50% for necessities, 30% for discretionary spending, and 20% for savings—researchers calculated the minimum annual earnings threshold needed in each state.

The findings are sobering. The average livable wage in the US varies dramatically. Hawaii tops the list at $148,683 annually, primarily due to housing costs exceeding $44,000 per year. Meanwhile, Mississippi, with the nation’s lowest cost of living, requires just $63,408. Even this “affordable” figure exceeds the state’s median household income of $52,985 by over $10,400.

Regional Winners and Losers

States Where Earnings Exceed Requirements:

Colorado residents earn above their living wage threshold, with a median income of $87,598 against a requirement of $80,652—leaving $6,946 in annual surplus. Minnesota shows similar success, where median earnings of $84,313 exceed the state’s $70,115 requirement by $14,198.

Utah, Maryland, and New Jersey also demonstrate positive gaps. New Jersey residents earn a median of $97,126, comfortably surpassing the $84,278 threshold. Connecticut, despite high costs ($87,380 requirement), benefits from strong median incomes at roughly $90,000.

States Facing Significant Shortfalls:

Mississippi faces the largest challenge, with residents earning $52,985 against a $63,408 requirement—a $10,423 gap. Louisiana ($57,852 median income vs. $66,399 requirement) and Kentucky ($60,183 vs. $66,829) follow, each experiencing $6,000+ annual shortfalls.

Hawaii’s gap is staggering: despite a $94,814 median income, residents fall $53,869 short of the $148,683 threshold—the largest discrepancy in the nation. Massachusetts ($120,416 requirement), New York ($100,205), and California ($110,333) also impose substantial earning requirements that many residents cannot meet.

Breaking Down the 50 States

Northeastern States: Massachusetts leads with a $120,416 threshold due to high necessities costs, particularly housing ($32,945 annually). Connecticut requires $87,380, while Maryland ($87,865) and Rhode Island ($81,866) also rank among the highest. New Hampshire ($84,394) and Vermont ($88,598) face similar pressures.

New Jersey and Pennsylvania offer better alignments between earnings and requirements. New York, despite high incomes ($81,386 median), still faces an $18,819 gap to its $100,205 requirement.

Midwestern States: Illinois residents earn $78,433 median income against a $67,424 requirement, creating a $11,009 surplus—14th best in the nation. Wisconsin and Iowa show strong performance, with median incomes of $72,458 and $70,571 respectively exceeding their $71,524 and $66,360 thresholds.

Kansas, Nebraska, and Missouri demonstrate the region’s affordability advantage. Michigan and Ohio come close to equilibrium, with minimal gaps between earnings and requirements.

Southern States: Georgia offers the strongest financial position, with median income of $71,355 exceeding the $66,261 requirement. Texas, with median earnings of $73,035 and a $68,211 requirement, provides nearly $5,000 annual surplus.

However, Alabama ($63,074 requirement), Arkansas ($62,976), and Louisiana struggle significantly. The region’s lower housing costs ($10,000-$14,000 annually) don’t offset wage pressures, particularly in Mississippi, Louisiana, and Kentucky.

Western States: California’s living wage of $110,333 reflects the nation’s second-highest cost after Hawaii. Oregon ($90,851), Washington ($90,480), and Colorado ($80,652) also impose substantial requirements.

Arizona’s housing costs of $18,685—over $4,000 above the national average—drive its $83,561 requirement. However, Idaho ($73,594) and Montana ($77,424) offer more reasonable thresholds, though gaps between earnings and requirements persist.

What This Means for Your Finances

The gap between your region’s average livable wage and your actual earnings reveals whether you can realistically save 20% of income while covering necessities and enjoying discretionary spending. In high-cost states like Hawaii and Massachusetts, even six-figure incomes may leave limited surplus for wealth-building.

Conversely, states like Colorado, Utah, and Minnesota demonstrate that balanced living wages and strong median incomes create genuine financial breathing room. The average livable wage across the US underscores the importance of location in personal financial planning—a principle that extends beyond savings potential to career trajectory and long-term wealth accumulation.

Methodology Note: Data reflects 2022 Consumer Expenditure Survey figures from the Bureau of Labor Statistics and 2022 American Community Survey median household income data, current as of April 2024. All figures used the 50/30/20 budgeting principle, where living wage equals double the annual necessities expenditure.