For nearly two years, inflation has hit Americans where it hurts most: their wallets. Despite a strong labor market, a higher percentage of American families are struggling to make ends meet today when compared with two years ago. In early February 2021, 34.9% of adults reported having difficulty paying for usual household expenses, according to Census Bureau data. Two years later, that number has risen to 39.7%.
With inflation hitting families in the pocketbook, SmartAsset analyzed where residents are hurting most financially. We compared all 50 states across seven different metrics that focus on poverty, unemployment, inflation, as well as food and housing insecurity. For more information on the data we used and how we compiled our rankings, read the Data and Methodology section below.
This is SmartAsset’s fourth annual study on the states where residents are financially hurting the most. Read the 2022 edition here.
- Louisianans are financially hurting most. The Bayou State has the highest poverty rate (19.6%) in our study and the second-highest percentage of adults who recently haven’t had enough to eat (13.8%). Minnesota, the state where residents are financially hurting least, has the third-lowest poverty rate (9.3%) and the fourth-lowest unemployment rate (2.5%).
- Financial hardships are most prevalent in the South. Nine out of the 10 states where residents are struggling the most are in the South. New York is the only non-southern state in the top 10. That’s partly due to inflation, which averaged 6.9% across the South region in the 12-month period that ended January 2023.
- This state’s unemployment benefits go the furthest relative to the average salary. In Iowa, unemployment benefits replace 49% of the average worker’s salary – the highest replacement rate in our study. Alaska lies at the other end of the spectrum, with average workers expecting to get unemployment benefits worth only 27% of their salary (ranking at the bottom of our study).
In addition to high rates of poverty and food scarcity, Louisiana has the second-lowest unemployment replacement rate. Benefits replace just 28% of the average worker’s weekly salary. Louisiana also has the third-highest housing insecurity rate, as 9.3% of adults either reported missing the previous month’s rent or mortgage payment or said they have little to no confidence that their household can pay for housing on time next month.
Mississippi has the highest percentage of adult residents struggling with food scarcity. Just under 15% of all adults in the Magnolia State reported living in households where there was not enough to eat either sometimes or often in the last seven days. Meanwhile, Mississippi’s 19.4% poverty rate is the second-highest across our study.
3. West Virginia
Like Louisiana and Mississippi, West Virginia struggles with high poverty, as 16.8% of residents live below the poverty line (fourth-highest). The state also has the 11th-highest unemployment rate (4.1%) in the country and the 13th-lowest unemployment replacement rate (34%).
Florida is tied with Louisiana for having the second-highest percentage of adults experiencing recent food insufficiency. The Sunshine State also has the fifth-lowest unemployment replacement rate (30%) and the seventh-highest recent housing insecurity rate. Roughly 7% of adults missed making the previous month’s housing payment or reported little to no confidence that their household could pay next month’s rent/mortgage on time.
Georgia has the fifth-highest percentage of adults who reported not getting enough food to eat within the previous week (13.3%). At the same time, 7.2% of adults in Georgia have experienced recent housing insecurity – that’s the eighth-highest across all 50 states. The Peach State is also home to the nation’s 12th-highest poverty rate (14%).
6. North Carolina
In North Carolina, 13.4% of adults reported experiencing food scarcity in the previous week, which ranks fourth-highest among the 50 states. Unemployment benefits in North Carolina replace just 30% of the average worker’s weekly salary, which is lower than all but seven other states.
Arkansas has the sixth-highest percentage of people living below the poverty line (16.3%) and the 12th-highest proportion of adults experiencing recent food insecurity (12.3%). Meanwhile, the state’s unemployment replacement rate (34%) ranks 15th overall.
8. New York
New York has the highest percentage (11.3%) of adults who either couldn’t make their most recent rent/mortgage payment or doubted their ability to pay on time the next month. The Empire State also had the fifth-highest unemployment rate (4.3%) in December 2022. Additionally, 13.9% of New York residents live below the poverty rate, the 13th-most across our study.
In Alabama, 7.8% of adults reported missed their rent/mortgage payment the previous month or said they doubted their ability to pay on time the following month. That ranks as the fifth-highest rate of recent housing insecurity in the nation. The state also has the seventh-highest poverty rate (16.1%) and the 12th-lowest unemployment replacement rate (32%) across our study.
The Lone Star State has the sixth-highest percentage of adults who reported food scarcity within the previous week (13.2%). Poverty is also high in Texas, where 14.2% of adults live below the poverty threshold – that’s more than 40 other states.
Data and Methodology
To find the states where residents are financially hurting most, SmartAsset analyzed data for all 50 U.S. states. We compared them across seven metrics:
- Poverty rate. This is the percentage of residents living below the poverty line. Data comes from the U.S. Census Bureau’s 2021 1-year American Community Survey.
- December 2022 unemployment rate. Data comes from the Bureau of Labor Statistics’ Local Area Unemployment Statistics.
- Two-year change in unemployment rate. This is the two-year percentage point difference between the December 2020 unemployment rate and December 2022 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 and is from the third quarter of 2022.
- 12-month Consumer Price Index. This is a measure of the average change in consumer prices for goods and services. It is considered a measure of inflation. Data comes from the Bureau of Labor Statistics January 2023 Consumer Price Index.
- 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 April 27, 2022 through May 9, 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 January 4, 2023 through January 16, 2023.
We ranked each state in every metric, giving a half weight to the following metrics: December 2022 unemployment rate and two-year change in the unemployment rate. We gave full weight to all other metrics. We then found each state’s average ranking. The state with the best average ranking places first in our study, while the state with the lowest average ranking places last.
Tips for Improving Your Financial Position
- Build an emergency fund. If you don’t have one already, start building an emergency cash reserve, preferably in a high-yield savings account. Experts recommend keeping between three to six months worth of living expenses in cash for emergencies or for a safety net if you lose your job. Even if money is tight, try your hardest to allocate a portion of each paycheck to this fund. You’ll be glad you did if and when you need the money.
- Consider a career change. If you’re struggling to make ends meet, perhaps it’s time to consider switching careers. Check out SmartAsset’s recent studies on high-paying jobs that are expected to grow over the next decade and the top jobs that don’t require a bachelor’s degree. Switching careers may require additional training or education, but the change could pay off in the long run.
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