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July 22, 2015

A dollar goes further in South Dakota

Which state has the highest “real" minimum wage in the country? South Dakota, according to a story by Washington Post blogger Niraj Chokshi. His report is one of three recent state-by-state comparisons that show South Dakota’s favorable cost of living.

Officially, South Dakota’s minimum wage is $8.50 per hour, according to the Washington Post story. But when you factor in the buying power of that money, the real minimum wage is $9.70 an hour. Here’s the breakdown:

State Minimum Wage Adjusted Minimum Wage
South Dakota $8.50 $9.70
Oregon $9.25 $9.37
Washington $9.47 $9.18
Rhode Island $9.00 $9.17
Vermont $9.15 $9.13

"While minimum wages range from the federal floor of $7.25 in 20 states to $9.47 in Washington state, they are only as valuable as what they can buy, which also varies by geography, according to an analysis of purchasing power by state,” Chokshi wrote.

New York has a relatively higher minimum wage of $8.50 an hour, but the Empire state’s real minimum wage is $7.59, putting New York at 10th from the bottom. Hawaii, at the bottom of the list, has a $7.50 minimum wage, but the cost of living pushes that to $6.67.

South Dakota’s low cost of living is a benefit to all income levels. Business owners who move their businesses to the state will discover that the cost of everything from housing to restaurant meals is as affordable as the cost of doing business.

“The business world is already familiar with South Dakota’s low-tax, reasonable-regulation business environment, but I’m not sure everyone is aware that the overall cost of living here can really benefit the bottom line,” said Bryan Walker, executive director of the Spearfish Economic Development Corp. “A dollar really does go a long way in South Dakota. That’s a true advantage when competing with businesses in other states.”

In a recent report from the Tax Foundation, South Dakota was among the top 5 states comparing the value of $100. In South Dakota, that Benjamin Franklin in your pocket will buy you $113.38 in goods and services. In Washington, DC, that same Franklin is worth just $84.60.

Here are the top 5 states on the $100 comparison:

  • Mississippi - $115.74
  • Arkansas - $114.16
  • Missouri - $113.51
  • Alabama - $113.51
  • South Dakota - $113.38

And South Dakota fared well in another Tax Foundation report that found the state’s per-capita disposable income rises 13.4 percent when the cost of living is factored, putting the state among the top 5 nationally.

State / DC Disposable per capita Income Real per capita Income Difference Percentage
Washington DC $65,770 $55,643 -$10,127 -15.40%
North Dakota $49,273 $54,506 $5,233 10.60%
Wyoming $45,887 $47,601 $1,714 3.70%
South Dakota $41,977 $47,593 $5,616 13.40%
Connecticut $50,534 $46,192 -$4,342 -8.60%


Bryan Walker
Spearfish Economic Development Corp.
This email address is being protected from spambots. You need JavaScript enabled to view it.

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