The Average Cost of Living by State, and Why Ignoring it Could Sink Your Business

You hear about it all the time in the news—Cost of living rising! Maybe you think about it on a daily basis—Do I earn enough to cover my standard of living in my state?

But, how often have you thought about the relationship between the cost of living in your state and your business? 

If it’s crossed your mind before, then you’ve probably also wondered about the average cost of living by state. Well, wonder no more—your cost of living by state guide has arrived.

What is cost of living?  

The cost of living is the amount of money an individual needs to maintain their standard of living. Housing, food, transportation, clothing, taxes, entertainment, equipment, and education costs are just some of the basic expenses included in the cost of living. 

image with illustration of map and house defining what is cost of living

Cost of living indexes let you compare basic expenses in different regions. There are cost of living indexes that compare cities, states, and countries. 

Major cities, like New York City, have a higher cost of living than smaller cities, like Albany. To offset these higher costs (e.g., rent), wages are generally higher. 

You can use cost of living information to determine how expensive it is to live and set up shop in an area. 

Why the cost of living matters to your business

Cost of living matters to workers. That means it probably matters to your employees. But, why should your business be concerned about it? 

Let’s name a few big reasons why the cost of living is important to your business bottom line. The cost of living affects:

  • Office space expenses
  • Business budgets
  • Salary expectations 
  • Product and service prices 
  • Owner’s draw or salary 
  • Raise determinations (e.g., cost of living adjustment)

Don’t care about your state’s cost of living? If that’s the case, you may struggle to create accurate budgets, set reasonable employee salaries, and establish a fair pricing model that customers want to buy from. 

Businesses that don’t put in the time to research all possible expenses may find themselves dipping into negative cash flow territory.   

Not to mention, knowing a state’s cost of living can help you decide where to start your business. Cost of labor is an important factor that goes into our best states to start a business list. 

U.S. cost of living by state comparison

Cost of living in each state data can vary depending on what factors are analyzed (e.g., housing) and who conducts the study. 

For our cost of living comparison by state, we used the following critical information:

The mean wages represent the average wages employees working in the state earn per year. This data is from May 2023. You can divide the annual mean wage by 12 to find the monthly wage amount.

Average monthly rent shows the average overall value of apartment rent in the state. This data was compiled by Forbes in August 2023. 

The value of $100 captures how much 100 George Washingtons are worth in the state. If the value of a dollar drops below $100, then it does not go as far in that state. This data was collected in February 2024.  

Cost of living chart

As you’re looking at this cost of living chart, keep in mind that states with a higher mean wage, higher monthly rent, and lower value of a dollar tend to have a higher cost of living. 

StateAnnual Mean Wage (All Occupations)Average Monthly RentValue of $100
Alaska$69,880Not provided$98.00
New Hampshire$66,110$1,682$92.40
New Jersey$73,980$1,850$91.20
New Mexico$57,520$1,295$109.00
New York$78,620$1,765$92.40
North Carolina$59,730$1,272$105.80
North Dakota$59,050$880$111.30
Rhode Island$66,610$1,565$95.30
South Carolina$54,250$1,319$106.40
South Dakota$53,230$977$112.20
Vermont$62,780Not provided$98.90
West Virginia$52,200$992$110.80

Cost of living per state: Lowest to highest list

If you just want the scoop on which states have the lowest and highest cost of living, we’ve got you covered. 

Take a look at the states ranked by cost of living from lowest (most affordable) to highest (most expensive). This data is from a resource provided by U.S. News:

  1. Mississippi
  2. Alabama
  3. Arkansas
  4. Kentucky
  5. West Virginia
  6. Iowa
  7. Oklahoma
  8. South Dakota
  9. Louisiana
  10. New Mexico
  11. Kansas
  12. North Dakota
  13. Missouri
  14. Tennessee
  15. Indiana
  16. Ohio
  17. Nebraska
  18. Wyoming
  19. Montana
  20. Wisconsin
  21. South Carolina
  22. Idaho
  23. North Carolina
  24. Michigan
  25. Georgia
  26. Maine
  27. Pennsylvania
  28. Utah
  29. Minnesota
  30. Delaware
  31. Vermont
  32. Arizona
  33. Texas
  34. Nevada
  35. Illinois
  36. New Hampshire
  37. Rhode Island
  38. Florida
  39. Virginia
  40. Alaska
  41. Oregon
  42. Connecticut
  43. Colorado
  44. Maryland
  45. Massachusetts
  46. Washington
  47. New York
  48. New Jersey
  49. Hawaii
  50. California

Cost of living calculators 

You might be wondering if there are any tools you can use to readily calculate the cost of living in one state versus another. And if you are wondering it, you’re in luck—there are a number of tools you can use.  

Here’s a list of websites that have a cost of living calculator:

You can use cost of living calculators to see how far a dollar will go in two different cities. These calculators allow users to enter information like income, current city, and prospective city. 

For example, someone who makes $50,000 per year in Cleveland, Ohio would need to make $123,635 in New York City (Manhattan), New York to keep up with the cost of living. 

Keep in mind that the cost of living calculators have a limited selection of cities. 

The Bureau of Labor Statistics also has a thorough consumer price index (CPI). The CPI details average prices for items such as food, shelter, transportation, and clothing. 

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This article has been updated from its original publication date of September 24, 2019. 

This is not intended as legal advice; for more information, please click here.

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