In Some Places, a High Minimum Wage Is Actually Pretty Low

Cost of living can degrade or boost your wages, depending on where you live.

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As the calendar flipped over from 2013 to 2014, thirteen states kicked off an era of higher minimum wages. New Jersey is among the states with the biggest jumps, with wages moving from $7.25 to $8.25 per hour. In addition, California in July will boost its minimum wage from $8 to $9. Washington, D.C., is set to raise its minimum wage to $9.50 per hour in July, a move that is part of a three-year phase-in toward an $11.50 minimum wage.

[READ: Washington, D.C., Council Approves Higher Minimum Wage]

The latest changes will mean 21 states will have wages above the $7.25 federal minimum wage by the end of 2014. But while workers in the highest-wage states may cheer their higher pay, a high cost of living can take a massive bite out of even the highest wage. In fact, a $7.25 minimum wage in one place can be better than getting $9 or more in another. U.S. News has crunched the numbers on wages in select U.S. cities to see how much wages are affected by high rents, grocery prices and utilities. The map below shows how much minimum wages in various U.S. cities are worth, relative to the average across a variety of U.S. cities.

Hover over a city to see its nominal 2014 minimum wage, as well as its minimum wage adjusted for cost of living. Double-click or use the tools in the upper-left-hand corner to zoom in.


Sources: C2ER, Department of Labor, National Employment Law Project, hr.blr.com

Note: Ohio's minimum wage only applies for businesses with annual receipts of $292,000 or more a year. Map reflects California's and the District of Columbia's new wages, which will go into effect in July 2014.

Cost of living measures come from the Council for Community and Economic Research (C2ER), a nonprofit organization that compiles economic data from around the country. C2ER's most recent data show the relative cost of living in hundreds of U.S. cities as of the third quarter of 2013, based on an average from all the data compiled from all those cities.

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Richmond, Va., is an example of a city that's very close to the average, meaning that for the purposes of this data set, $7.25 is worth roughly $7.25 in those cities. However, in Minneapolis, where the cost of living is higher than it is in Richmond, the minimum wage of $7.25 is worth something more like $6.57 compared to that average, and in Philadelphia, it's just under $6.

The figures show that a minimum wage job goes a lot further in some places than others. For example, in San Francisco, a city that has set its own minimum wage at $10.71 per hour – among the highest in the country – a minimum wage job actually is worth less than it is in Sioux Falls, S.D., where the minimum wage is the $7.25 federal minimum.

Many large cities in the Northeast and California, as well as cities in Alaska and Hawaii, have particularly high costs of living. In some places, like Manhattan and San Francisco, housing is the main factor pushing the cost of living upward. In Hawaiian cities, meanwhile, groceries are also a key factor – food is more costly in Hawaii relative to other U.S. cities, in part because many items must be shipped long distances to the 50th state.

Cost of living can even vary depending on where in a city you are – in Manhattan, for example, the cost of living is more than twice the average of all U.S. cities studied, whereas in Queens it's 1.5 times the average. Among the places featured in this map, Manhattan has the lowest adjusted minimum wage at $3.61, followed by Honolulu at $4.33.

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Meanwhile, Washington – the state currently with the highest minimum wage at $9.32 an hour – is home to the three cities with the highest adjusted minimum wages at $10.37, $10.29 and $9.66, respectively. Workers in those cities benefit from both low costs of living and relatively high wages.

Not that $9.32 per hour yields a large annual salary. At 40 hours a week, that wage yields annual pay of $19,400 – roughly two-thirds of the annual median income for all workers, which was about $30,000 in 2012, according to the U.S. Census Bureau.

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