The Cities With the Highest (and Lowest) Real Minimum Wage – 2018 Edition

The minimum wage has become a hot topic of debate in the U.S. The fight for $15 has become a popular rallying cry for advocates of a higher minimum wage. And many cities have answered the call, especially those with the highest costs of living. In fact, some cities like Seattle and Belmont, California have gone a step further by planning to extending their minimum wage past $15 per hour. In doing so, they hope to improve the fortune of minimum wage workers’ saving accounts. However, with costs of living rising in step with minimum wage increases, the places with the highest nominal minimum wage may not have the highest real minimum wage. Below we look at the cities with the highest and lowest real minimum wage.

In order to rank the places with the highest and lowest real minimum wage, we compared the statutory minimum wage to the local cost of living. This allowed us to compare minimum wages across cities. Check out our data and methodology section below to see where we got our data and how we put it together to create our final rankings.

This is SmartAsset’s fourth annual study of the cities with the highest and lowest real minimum wage. Check out the 2017 rankings here.

Key Findings

• High cost of living cities in low minimum wage states – The main trend we see for cities that rank at the bottom of our study is high-cost-of-living areas in low-minimum-wage states tend to score poorly. For instance, Virginia and Pennsylvania, two states with the lowest minimum wages, have cities taking four spots in our bottom 10.
• Washington continues to score well – Thanks to Washington’s high minimum wage many cities in the Evergreen state have high adjusted minimum wages. This year four Washington cities cracked the top 10. All of them have an adjusted minimum wage above $11.

1. Yakima, WA

Yakima takes the top spot. We estimate that Yakima has an adjusted minimum wage, or real minimum wage, of $12.26 per hour. Minimum wage workers in Yakima earn $11.50 per hour which is the Washington minimum wage. However, thanks to a below-average cost of living Yakima vaults over other Washington cities to take the top spot. Yakima has a cost of living around 6% lower than the national average.

2. Spokane, WA

Spokane comes in second. Residents working in Spokane benefit from the relatively generous minimum wage in Washington. However, because Spokane has a slightly higher cost of living than Yakima (96 compared to 94) Spokane slides to second. Minimum wage workers here can look forward to the minimum wage increasing to $12.00 per hour in 2019. In total, Spokane has an adjusted minimum wage of $11.99 per hour.

3. Kennewick, WA

Kennewick, Washington rounds out our top three Washington cities. The scenario here is the same. Minimum wage workers in Kennewick earn the high Washington minimum wage while living in a relatively low cost of living area. This city costs about 1% more than Spokane on average and has a real minimum wage of $11.88 per hour.

4. Kalamazoo, MI

On paper Kalamazoo, Michigan workers earn the smallest amount in our top 10, only $9.25 per hour. However, thanks to living in one of the most affordable places in our study, that $9.25 goes pretty far. After accounting for cost of living we estimate that $9.25 in Kalamazoo is more like $11.65 per hour in a place with an average cost of living. In fact, the minimum wage in Michigan will continue to rise based on inflation starting April 2019.

5. Pueblo, CO

Residents in Pueblo, Colorado earn $10.20 per hour on paper. That means an annual salary of $20,800 before taxes, assuming they work full-time. Pueblo residents however live in a low cost of living area, meaning that $10.20 can go further than you might expect. After adjusting for cost of living, Pueblo ranks fifth with a real minimum wage of $11.28 per hour.

6. Tucson, AZ

Residents in Tucson earn the Arizona minimum wage of $10.50 per hour, a recent increase due to the recent passing of Proposition 206, the Fair Wages and Healthy Families Act. As part of that act the minimum wage in Arizona is scheduled to rise in 2019 and 2020 and from there increase with the cost of living. In total Tucson minimum wage workers earn $11.17 per hour after adjusting for cost of living.

7. Tacoma, WA

Tacoma, Washington is the first city to crack this top 10 that has a minimum wage higher than the state minimum wage. This city increased its minimum wage $0.50 per hour higher than the Washington minimum wage for 2018. That means minimum wage workers in Tacoma take home $12.00 per hour. Unfortunately most of the extra gains to the higher minimum wage are lost due to high cost of living. After adjusting for cost of living, Tacoma has a real minimum wage of $11.09 per hour.

8. Phoenix, AZ

Phoenix is the second of three Arizona cities to crack this top 10. This city is one of the most affordable big cities in the country, and with Arizona raising the minimum wage, it makes this city one of the best places for minimum wage earners. Phoenix has a cost of living about 5% lower than the national average, so $10.50 per hour is more like $11.08 after controlling for cost of living.

9. Yuma, Arizona

Yuma has a slightly higher cost of living than Phoenix but has the same minimum wage so falls into ninth. One thing that can hurt minimum wage workers in Arizona: being paid in cash. The minimum wage for cash workers is only $7.50 per hour. As a result, cash minimum wage workers in Yuma have an adjusted minimum wage of $7.80 per hour.

10. Minneapolis, MN

Rounding out the top 10 is the western portion of the twin cities, Minneapolis, Minnesota. This city has been a front runner in the fight for $15 and in February a court upheld Minneapolis’ minimum wage plan to reach $15.00 per hour by 2022. In the meantime, though, the minimum wage is $11.25, which is equivalent to $10.74 in an average cost of living location.

1. (tie) Alexandria, VA

Once again Alexandria, Virginia ranks in the top three for lowest real minimum wage in the country. Minimum wage workers here earn $7.25 per hour, which is in line with the federal minimum wage. Unfortunately, Alexandria is a fairly pricey place to live, with a cost of living nearly 40% higher than the national average. That means Alexandria workers earn an adjusted minimum wage of only $5.03.

1. (tie) Arlington, VA

Arlington comes in tied with its neighbor Alexandria. The cost of living here is roughly the same as Alexandria and the minimum wage is identical. The minimum wage in Virginia is at least indexed to inflation so the adjusted minimum wage should not get any lower in the coming years. However, trying to live in Arlington on $7.25 per hour may leave your checking account bone dry.

3. Honolulu, HI

Honolulu is one of the most expensive places in the country. So without a high-paying job, you may be struggling to make ends meet. While $9.25 per hour in Kalamazoo might be enough to cover costs, in Honolulu it would be nowhere near enough. Even $10.10 per hour, which is the Hawaii minimum wage, does not seem like it gets you much. After adjusting for cost of living in paradise, $10.10 per hour turns into a measly $5.37 per hour.

4. Philadelphia, PA

The City of Brotherly Love has given its minimum wage brethren little support, according to our data. Although, to be fair, the pinch minimum wage workers in Philadelphia feel is not the city’s fault. In 2006, Pennsylvania passed a law to raise the state minimum wage, but as part of that law, local ordinances like Philadelphia are not allowed to increase their own minimum wage unilaterally. At the moment, minimum wage workers in Philadelphia earn $7.25 per hour. But after adjusting for cost of living, that’s more like $6.20 per hour.

5. Manchester, NH

Compared to some other cities in this top 10, Manchester is fairly affordable. However, even living in a place with an average cost of living is difficult when you only earn $7.25 per hour. On a yearly basis, $7.25 per hour is only around $15,000 per year. Overall, we estimate Manchester minimum wage earners take home an adjusted minimum wage of $6.32 per hour.

6. Plano, TX

Plano takes sixth. The minimum wage in Texas is $7.25 per hour, and Plano has no minimum wage laws to increase it. That $7.25 per hour does not go too far in Plano, which as far as Texas goes is fairly pricey. According to our research, Plano is about 7% more expensive than the country on average. We estimate that Plano has an adjusted minimum wage of $6.76 per hour.

7. Allentown, PA

Like in Philadelphia, minimum wage workers in Allentown take home $7.25 per hour. Because Allentown is slightly more affordable than Philadelphia, its real minimum wage is higher. After accounting for cost of living, which is roughly 5% higher than the national average, Allentown has an adjusted minimum wage of $6.86.

8. Fort Lauderdale, FL

The minimum wage in Florida is $8.25 per hour, $1 per hour more than the federal minimum level. That gives minimum wage workers in Florida some breathing room, but not much and definitely not much in our eighth ranked city. Fort Lauderdale has a high cost of living relative to the rest of Florida. According to our data Fort Lauderdale is 19% more expensive than the national average. That drags the nominal minimum wage of $8.25 per hour down to an adjusted $6.92 per hour.

9. Charleston, SC

Charleston is one of the most undervalued cities in America. Yet despite being undervalued, minimum wage workers still struggle there. South Carolina has no minimum wage and so defaults to the federal minimum wage of $7.25 per hour. Despite being relatively affordable for a mid-sized city, Charleston is still more expensive than the average place in America. So, after adjusting for cost of living the average Charleston resident earns the equivalent $6.98 per hour.

10. Newark, NJ

The final city in this top 10 is Newark, New Jersey. The minimum wage here is $8.60 per hour, the same as the statewide New Jersey minimum wage. Given its proximity to New York City, it is no surprise that Newark has a cost of living above the national average. According to our data, living in Newark costs about 23% more than the national average. That leaves Newark with an adjusted cost of living of $7.00 per hour.

Data and Methodology

To find the cities with the highest and lowest real minimum wage, SmartAsset looked at data on 172 cities. Specifically we compared them across the following two metrics:

Statutory minimum wage. Data comes from the UC Berkeley Labor Center. Our list of minimum wages includes data at the city, county and state level.

Cost of living. Data comes from the Council for Community and Economic Research and is for 2017.

To create our final rankings we divided the statutory minimum wage by the cost of living. This allowed us to compare minimum wages. We then ranked the cities from highest to lowest based on the adjusted minimum wages.

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