Worst States to Make a Living 2014

by Richard Barrington, MoneyRates.com Senior Financial Analyst, CFA, June 09, 2014

Nearly five years into the economic recovery, many Americans are still struggling to find work. But in many cases, the places they live may have something to do with that struggle.

The fourth-annual MoneyRates.com study of the Best and Worst States to Make a Living reveals that working conditions among U.S. states are far from equal. This analysis is based on each state's Compensation and Quality Factor, a proprietary metric by MoneyRates.com. This measure considers:

• Average salary, according to figures from the Bureau of Labor Statistics (BLS).
• Cost of living, based on data from C2ER.
• Employment rate, based on BLS data.
• Workplace conditions, based on the "Work Environment" component of the Gallup-Healthways Well-Being Index.

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The 10 worst states for work

In a separate article, MoneyRates.com profiles the 10 best states to make a living. At the other end of the spectrum, here are the 10 worst, starting with the state with the lowest-ranked employment conditions:

1. Hawaii. The old saying "nice place to visit but I wouldn't want to live there" seems to sum up employment conditions in Hawaii, which has been ranked as the worst state for making a living in all four years of this study. The primary problem is that a cost of living more than 50 percent higher than the norm makes it very difficult to make a decent living, and wages in the state are not nearly high enough to compensate. On top of that, employees surveyed for the Gallup-Healthways study gave the state very low grades for its work environment.
2. New York. Another state that suffers from a high cost of living, New York slid a couple places to find itself next-to-last in this year's study. Incomes in the state may be above average, but when you factor in a high cost of living and a high state income tax, New Yorkers come out behind the typical worker. A relatively high unemployment rate does not help, and neither does its low ranking for work environment.
3. Mississippi. Economically, Mississippi can be thought of as the opposite of New York. Here, the problem is that wages are very low even when measured against the state's low cost of living. On top of that, unemployment is high, and workplace conditions here got the lowest rating of any state.
4. Rhode Island. In Rhode Island, a high cost of living more than neutralizes the benefits of a high average income and a low state income tax burden. To make matters worse, the unemployment rate is the worst of the 50 states, and workplace conditions are below average.
5. Connecticut. While the four states worse than it were all in the bottom 10 last year, Connecticut fell nine places this year to drop into this list. Here again, high incomes are not enough to make up for a high cost of living. Also, unemployment is high, and workplace conditions place ahead of only Mississippi's.
6. Alaska. Despite having no state income tax, Alaska's workers are effectively taxed by a high cost of living. Unemployment is above average, and workers often do not like the jobs they can find, as workplace conditions are rated near the bottom.
7. Alabama. Alabama slipped five places and made this list as a result. Alabama shares some problems with neighboring Mississippi: Low wages and high unemployment make a low cost of living less of a benefit than it would be otherwise. As with their counterparts in Mississippi, Alabama's employees also rated their workplace conditions very low.
8. Arkansas. Another neighbor of Mississippi suffers from the same problem of low wages and high unemployment negating the benefit of a low cost of living. At least Arkansas' workplace conditions fared better in the Gallup-Healthways survey than those in Mississippi and Alabama, but they are still below average.
9. New Jersey. Clearly, the worst conditions for making a living are clustered in the Southeast and the Northeast. New Jersey suffers from the usual Northeastern formula for misery: High wages are undermined by a very high cost of living. The state's unemployment rate is also fairly high, and workplace conditions are rated below average.
10. South Carolina. Back to the Southeastern version of the problem: Wages are too low to be justified by the low cost of living. Also, workplace conditions here scored below the norm.

If you live in one of these states and are having trouble finding a decent job, it may be time to expand your job search to other areas of the country. Things may be tough all over, but the above 10 states appear to have it much tougher than most.

If you didn't see your state listed here or on the list of best states for making a living, you can learn its ranking on the full 50-state list.