In this article, we will look at the 25 states where everyday Americans earn the lowest incomes. We have also discussed the state of salaries in the US. If you want to skip our detailed analysis, head straight to the 10 States where Everyday Americans Earn the Lowest Incomes.
As of 2024, salaries for new roles in the US have not only been stagnant but, in some cases, have been even decreasing. Reports indicate that 48% of surveyed US companies have lowered pay for certain positions. It is concerning to note that the job market in the US has been fluctuating since the onset of the pandemic. Employers initially offered high salaries to attract talent as there was an increase in open roles. However, as economic uncertainties persisted and companies scaled back hiring efforts, the demand for workers diminished. Sectors that once experienced high demand for workers, such as hospitality, retail, and technology, are now witnessing a reset in compensation expectations due to an oversupply of labor. To read more about industries and quit rates, see the Industries with the Highest Number of Quits in the US.
While salaries have been disappointing overall in the US, average salaries by profession can also vary in different states. Massachusetts has surprisingly become the state with the highest median annual salary of about $60,690, according to the Bureau of Labor Statistics salary data. The number has surpassed the expectations that one might have for New York City or Silicon Valley. However, these high wages often come hand in hand with a higher cost of living, with Hawaii being the only state, apart from the District of Columbia, where living costs are higher than those of Massachusetts. In fact, Hawaii is also considered one of the states that make the most money for the US. On the other hand, Mississippi is one of the states with the lowest average salaries in the US. to read more about average salaries by state, see Average Salary in Each State in US.
There is no question about why salaries are one of the biggest sources for motivation for employees at work as salaries are crucial for maintaining a decent quality of life, especially considering the varying costs of living across different cities in the US. In major US cities like New York, San Jose, and Boston, the cost of living is significantly higher which makes it crucial to earn enough to cover basic expenses comfortably. For instance, in New York City, a single individual needs approximately $138,570 annually to live comfortably, while a family with two adults and two children requires around $318,406. Similarly, San Jose requires $136,739 for an individual and $334,547 for a family in similar circumstances.
Despite these concerning numbers that make high salaries look like the ultimate determinant for an average American employee, in a recent survey, 77% of respondents across 16 countries, including the United States, confirmed their personal preference for the importance of a balanced life over career growth. This trend is particularly pronounced among younger generations as 60% of millennials and 56% of Gen Z adults are willing to trade a 20% pay cut for a better work-life balance. Conversely, older demographics show less inclination, with only 45% of Gen Xers and 33% of Baby Boomers willing to make such a sacrifice.
Nevertheless, Walmart Inc (NYSE:WMT) has recently announced a major boost in annual salaries for its US store managers, effective February 1st. The decision sees the average salary and bonus for these managers rise to $128,000 annually, up from $117,000 previously. Additionally, the revamped bonus structure will offer the potential for bonuses of up to 200% of base salary, contingent on store performance and achieved targets. Moreover, Walmart Inc (NYSE:WMT) also did not let its frontline hourly associates down as they raised their average hourly pay to over $18, up from $17.50 announced in the prior year.
This increment goes hand in hand with Walmart Inc (NYSE:WMT)’s ongoing efforts to retain employees and enhance its competitive edge in the tight labor market. With approximately 1.6 million associates in the United States, Walmart Inc (NYSE:WMT)’s investment in its workforce confirm that they have a proactive approach to sustaining growth and ensuring employee satisfaction.
On the other hand, Microsoft Corp (NASDAQ:MSFT)’s CEO Satya Nadella has announced plans to resume performance-based raises for certain employees after a year of stagnant salaries. This decision is following internal discontentment over compensation and aims to address employee concerns. Despite Microsoft Corp (NASDAQ:MSFT)’s $3 trillion valuation, employee satisfaction has been an ongoing issue that has prompted actions like the 2022 across-the-board compensation raise and, more recently, an increase in stock awards to retain talent.
Moreover, Microsoft Corp (NASDAQ:MSFT)’s recent $3.3 billion investment in Wisconsin will involve the expansion of cloud computing and AI infrastructure and is expected to create approximately 2,300 union construction jobs by 2025. Moreover, the establishment of a Data Center Academy in collaboration with Gateway Technical College will train over 1,000 students to meet the demands of the burgeoning IT sector which will further enhance job prospects in the area.
25 States Where Everyday Americans Earn the Lowest Incomes
25 Poorest States in the US in 2024
Our Methodology
To list the states where everyday Americans earn the lowest incomes, we held annual median salary by state as the primary metric. We did so because median income offers a more accurate representation than mean income, as it isn't skewed by extreme outliers. By focusing on everyday Americans, we prioritize the typical worker's experience to guage the income level that most individuals in a state earn. We obtained data from the US Bureau of Labor Statistics, and the list has been presented below in descending order.
By the way, Insider Monkey is an investing website that uses a consensus approach to identify the best stock picks of more than 900 hedge funds investing in US stocks. The website tracks the movement of corporate insiders and hedge funds. Our top 10 consensus stock picks of hedge funds outperformed the S&P 500 stock index by more than 140 percentage points over the last 10 years (see the details here). So, if you are looking for the best stock picks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
25. Ohio
Annual Median Salary: $44,750
In 2024, Ohio's employment landscape is facing challenges with a projected slowdown in job growth with an anticipated "mild" recession. Despite a low unemployment rate of 3.6%, the region struggles with a shortage of skilled workers, compounded by a net migration loss.
Utah is one of the states with the lowest annual incomes. In addition, data reveals that Utah ranks third lowest in income inequality among states, while Salt Lake City and West Jordan City claim the lowest positions among metropolitan areas and cities respectively. Despite these achievements, approximately 360,000 Utahns still struggle with poverty.
Interestingly, Utah is also one of the richest states in America.
23. Iowa
Annual Median Salary: $44,350
In Iowa, a quarter of the population is facing asset poverty and a high college graduate debt that averages about $28,466. While the extreme poverty rate stands at 5%, nearly one in ten individuals experience food insecurity. Despite a 2.6% unemployment rate, nearly a fifth of jobs are low-wage.
22. Nebraska
Annual Median Salary: $44,100
Despite approximately 60,000 children living in poverty as of 2023, the state holds over $125 million in unspent federal funds designated for helping its neediest families. Over the past decade, the state's Temporary Assistance for Needy Families reserve has more than doubled, while cash payments to low-income households have decreased due to stringent eligibility criteria.
21. Texas
Annual Median Salary: $43,460
In Texas, the statewide poverty rate observed a slight decrease over a five-year span ending in 2022, dropping from 16% to 13.9%. However, 76 out of 254 counties, mostly rural, saw increases in poverty rates.
20. Georgia
Annual Median Salary: $42,890
Over 722,000 households are set to lose access to the Affordable Connectivity Program, which provided $30 monthly for internet access and a one-time $100 allowance for devices in Georgia. Despite enrolling 10 million households nationwide within two months of its launch, the program is approaching its closure due to funding depletion.
19. Missouri
Annual Median Salary: $42,310
Missouri is one of the 20 states with the lowest incomes in the US. Owing to the challenges of low-income families and children, the Missouri House of Representatives has recently approved a bill to extend preschool access to low-income children aged 3 to 5.
18. Montana
Annual Median Salary: $42,210
In Montana, poorer families are paying more taxes compared to richer ones. Families earning less than $22,500 pay 9.5% of their income in taxes, while the richest 1% pay only 6.7%. Recent laws have made this gap worse by giving tax breaks to the wealthy. As a result, lower-income families are feeling the squeeze.
17. Indiana
Annual Median Salary: $42,100
The recent approval of a $30 million grant by the Indiana State Budget Committee has been a pivotal moment for northeast Indiana. Aimed at stimulating population growth, increasing wages, and boosting credential attainment across the region’s 11 counties, the funding will address the socioeconomic challenges.
16. Kansas
Annual Median Salary: $41,870
In Kansas, Governor Laura Kelly has proposed a minimum wage hike exclusively for state workers to increase 969 executive branch employees to $15 hourly pay and grant all state workers an extra 5% raise. However, this raise doesn't extend beyond state employees. The minimum wage for non-state workers will remain stagnant at $7.25 per hour, unchanged for 15 years.
15. North Carolina
Annual Median Salary: $41,810
In 2022, the median wage for direct care workers in North Carolina was $13.62 per hour. Now, a recent federal rule mandates that home health care providers allocate at least 80% of Medicaid payments toward their workers' wages. This policy shift aims to address the chronic shortage of direct care workers nationally, which North Carolina also struggles with.
14. Florida
Annual Median Salary: $40,820
In Florida, the issue of low wages hits hard, especially in the education sector. According to the National Education Association's 2024 report, the average teacher salary in Florida is $53,098, placing it nearly at the bottom of the list among US states. It is one of the lowest paying states for teachers.
13. Nevada
Annual Median Salary: $40,810
In Nevada, the tax burden disproportionately affects low-income residents, as the bottom 20% of earners pay a 11.9% of their income in taxes, compared to just 2.8% for the top 1%. This tax disparity is ranked as the 5th highest in the country.
12. Kentucky
Annual Median Salary: $40,180
In Kentucky, particularly in regions like Western Kentucky and Eastern Kentucky, low-income communities have been facing major economic challenges exacerbated by recent natural disasters like tornadoes and floods. With a recent $62.5 million investment by the Environmental Protection Agency in solar energy, there's hope for relief.
11. Idaho
Annual Median Salary: $40,060
Small-business workers face challenges with low wages in Idaho, making it one of the worst states for small businesses. Ranking third from the bottom in salaries for businesses with 10-19 employees, Idaho pays its workers well below the national average. The average annual wage for employees in this category in Idaho is $38,200 which is nearly 19% below the national average of approximately $46,800.
