The Federal Reserve Bank of New York says that household debt went up roughly $1 trillion in 2021, which is the highest annual increase since 2007. Other studies estimate that the average household now owes more than $155,000. As Americans struggle to keep up with bill payments and afford basic necessities like food and housing, SmartAsset has analyzed data to identify and rank the states where residents are financially hurting most.
In this study, SmartAsset examined data from all 50 states across the following six metrics: poverty rate, January 2021 unemployment rate, one-year change in the unemployment rate, unemployment benefit replacement rate (i.e. average weekly unemployment benefit received as a percent of the average worker’s weekly salary), recent housing insecurity and recent food scarcity. For more information on our data sources and how we put all the information together to create the final rankings, read our Data and Methodology section below.
This is SmartAsset’s third annual study on the states where residents are financially hurting the most. Read the 2021 version here.
Key Findings
- Louisiana residents hurt the most for a third consecutive year. Louisiana residents fare poorly across five of the six metrics analyzed in our study. Housing insecurity is a major factor and Louisiana is one of only two states where over 10% of residents report such insecurity.
- Eight out of the top 10 states are located in the South. These states are Louisiana, Florida, Mississippi, Texas, Alabama, Tennessee, Kentucky and West Virginia. In these states, the poverty rate along with recent housing insecurity and food scarcity concerns are relatively high.
- With the expiration of COVID-19 stimulus plans, unemployment benefits relative to wages have dropped. Across all 50 states, Hawaii has the highest unemployment benefit replacement rate, at 54%, while Alaska has the lowest, at 26%.
1. Louisiana
Residents of this Southern state hurt the most financially, ranking at the bottom of our study for a third consecutive year. The National Low Income Housing Coalition says there is a shortage of affordable rental homes in Louisiana for low-income households. This state ranks worst for residents experiencing recent housing insecurity (11.5%) and has the third-highest poverty rate (17.8%).
2. Florida
Florida ranks worse this year than last year, moving up from No. 8. Florida has seen a smaller decrease in the unemployment rate than other states (-0.7%) over the past year. It also ranks second-worst for the percentage of the population expressing recent housing insecurity (10.6%) and ties Louisiana for eighth-highest percentage of residents reporting recent food insecurity (11.9%).
3. Mississippi
Residents in Mississippi face the highest poverty rate in this year’s study (18.8%), with nearly one out of five living below the poverty line. Mississippi residents also rank highest for recent food insecurity (19.6%).
4. New York
New York is the only Northeastern state in the bottom 10 and it ranks second for recent food insecurity (15.4%) and sixth for recent housing insecurity (9.0%). The Empire State also ranks fourth-highest for the unemployment rate as of December 2021 (6.2%). Despite this, New York does boast a 2.5% decrease in unemployment compared with one-year prior.
5. Texas
The most populous state in the bottom 10 improved slightly, dropping from third last year to fifth this year. The biggest difficulties that Texans face include housing insecurity (9.5%) and food scarcity (11.8%). The poverty rate (13.5%) and unemployment rate (5.0%) both rank 12th-worst.
6. Alabama
For Alabama residents, the poverty rate has improved slightly from 15.5% in 2019 to 14.7% in 2020. However, the current rate still surpasses the national average. Additionally, Alabama ranks 11th-worst for the percentage of residents experiencing recent housing insecurity (7.2%) and 14th-worst for the percentage of residents facing recent food scarcity (11.0%).
7. Tennessee
Although Tennessee has an unemployment rate below the national average (3.8%), residents face a low unemployment benefit replacement rate (33%), ranking ninth for this metric in our study. In other words, average unemployment benefits cover only a third of the average worker’s weekly salary. Additionally, 7.0% of the population report recent housing insecurity and 10.3% report food insecurity.
8. Kentucky
The poverty rate in Kentucky is 14.8%, ranking sixth-highest for this metric in our study. Like Tennessee, 7.0% of Kentucky residents reported recent housing insecurity. Food scarcity is also an issue, affecting 11.6% residents in the state. The December 2021 unemployment rate for this state is 3.9%, which is a decrease of 1.7% compared to one-year prior.
9. Arizona
Arizona jumped from ranking 17th place in our 2021 study to ninth this year. Residents here can expect an average weekly benefit amount (WBA) of $237. When compared with the average weekly wage ($789) in this state, this unemployment benefit accounts for just 30% of that wage, ranking second-worst in our study. The unemployment rate is just barely above the national average at 4.1% and the poverty rate sits at 12.8%.
10. West Virginia
This Southern state rounds out the bottom 10 with the third-worst food insecurity (15.2%) and the fourth-highest poverty rate (16.2%). Despite this, West Virginia has shown improvements over the past year: the unemployment rate (3.7%) fell below the national average (decreasing by 3%), which was the fourth-highest improvement across the country. Additionally, its overall rank in this study dropped to 10th from fifth place in 2021.
Data and Methodology
To find the states where residents are financially hurting the most, SmartAsset looked at data for all 50 U.S. states. We compared them across six metrics:
- Poverty rate. This is the percentage of residents living below the poverty line. Data comes from the U.S. Census Bureau’s 2020 1-year Experimental American Community Survey.
- December 2021 unemployment rate. Data comes from the Bureau of Labor Statistics’ Local Area Unemployment Statistics.
- One-year change in unemployment rate. This is the one-year percentage point difference between the December 2020 unemployment rate and December 2021 unemployment rate. Data comes from the Bureau of Labor Statistics’ Local Area Unemployment Statistics.
- Unemployment benefit replacement rate. This is the ratio of average unemployment benefit received to the average worker’s weekly salary. Data comes from the U.S. Department of Labor.
- Percentage of adults experiencing recent housing insecurity. This is the percentage of adults who missed last month’s rent or mortgage payment, or who have slight or no confidence that their household can pay next month’s rent or mortgage on time. Data comes from the Census Bureau’s Household Pulse Survey. Respondents were surveyed from Dec. 29, 2021 through Jan. 10, 2022.
- Percentage of adults experiencing recent food insufficiency. This is the percentage of adults in households where there was either sometimes or often not enough to eat in the last seven days. Data comes from the Census Bureau’s Household Pulse Survey. Respondents were surveyed from Dec. 29, 2021 through Jan. 10, 2022.
We ranked each state in every metric, giving a half weight to the following metrics: December 2021 unemployment rate and one-year change in unemployment rate. We gave a full weight to all other metrics. Using those rankings, we found each state’s average ranking and used the average to determine a final score. The state with the highest average ranking received a score of 100, ranking as the state where residents struggle the most financially. The state with the lowest average ranking received a score of 0, ranking as the state where residents struggle the least financially.
Tips for Handling a Financial Downturn
- Set up a budget. Controlling your expenses is key for financial independence. SmartAsset’s budget calculator can help you break down your current spending and visualize the next six months for potential cutbacks on excess expenses that can maximize your savings.
- Work with a professional. If you find yourself struggling to manage your investments or save for retirement, SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Questions about our study? Contact press@smartasset.com.
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