The federal minimum wage has been $7.25 since 2009. In many states, it’s the federal minimum wage that holds sway. However, some states, counties and cities have enacted their own laws establishing a higher minimum wage. Wherever you live, the minimum wage in your city may feel higher or lower than the number on the books, depending on the cost of living. SmartAsset crunched the numbers to find the cities with the highest and lowest real minimum wage.
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Study Specifics
When we talk about the “real” minimum wage we mean the minimum wage adjusted for the cost of living. A person making minimum wage in an expensive city with a $10 minimum wage on the books might be worse off than a person in an affordable city with a $7.25 minimum wage on the books.
To find the real minimum wage, SmartAsset first compiled data on the minimum wage in all 50 states, and in the counties and cities that have their own minimum wage laws. Next, we pulled city-level cost of living data from the Council for Community and Economic Research (C2ER). That cost of living data came in the form of an index, with 100 being the average cost of living. For example, a city with a below-average cost of living would get a score under 100 and a city with a higher cost of living would get a score above 100.
For each city that had a cost of living index from the C2ER, we first took the city’s statutory minimum wage (the minimum wage on the books in that city). To find the statutory minimum wage we used the highest of either the city, county, state or federal minimum wage pertaining to that city. So, for a city in Georgia, which has a statutory minimum wage of $5.15, we used the minimum wage of $7.25, because the federal minimum wage supersedes the state minimum wage. For Seattle, with a minimum wage of $15, we used the $15 minimum wage and not the Washington-state minimum wage of $11.
Using the formula statutory minimum wage/(cost of living index/100), we found each city’s adjusted minimum wage. Finally, we ranked each city based on its adjusted minimum wage. The cities with the 10 highest and lowest adjusted minimum wages appear in the charts below.
This is SmartAsset’s third annual study of the cities with the highest and lowest real minimum wage. Check out the 2016 rankings here.
Key Findings
- Washington has it made. Last year, four of the cities on our top 10 list were Washington cities. This year, five Washington cities made the cut. That means half of the cities with the highest real minimum wage are in the Evergreen State.
- The federal minimum wage isn’t cutting it in many places. Six of the 10 cities on our list are places where the federal minimum wage, $7.25, is the prevailing wage. Although this is the federal minimum wage standard, it doesn’t go far in my cities around the country. No wonder activists have been fighting to raise the minimum wage.
- Preemption laws are going strong. Not all cities have the right to raise the minimum wage. Indeed, one of the cities in our original list of the 10 cities with the highest real minimum wage, St. Louis, lost its place in the top 10 when Missouri Governor Eric Greitens allowed a bill to go into effect that overturned St. Louis’s $10 minimum wage. As we mentioned in last year’s minimum wage study, there is a trend of state governments overturning city- and county-level minimum wage increases. If that trend continues, our top 10 and bottom 10 lists could look very different by the time next year’s study rolls around.
1. Kennewick, Washington
Kennewick, Washington made the top of our list in 2016 and 2015. In addition to having a low cost of living, the city has a high minimum wage. In Kennewick, the statewide minimum wage of $11 prevails. Adjusted for cost of living, the minimum wage in the city comes out to $11.39.
2. Spokane, Washington
Like Kennewick, Spokane is a city where the Washington-state $11 minimum wage prevails. Spokane hasn’t adopted a higher minimum wage of its own. However, the $11 minimum wage works out to a real minimum wage of $11.24 when you factor in Spokane’s cost of living.
3. Kalamazoo, Michigan
Last year, Kalamazoo claimed the second-place spot on our list of the top 10 cities with the highest real minimum wage. This year, it slid to third place. However, the city still boasts a double-digit real minimum wage. Though Kalamazoo’s statutory minimum wage is $8.90, when you adjust that minimum wage for Kalamazoo’s cost of living you get a real minimum wage of $11.13.
4. Yakima, Washington
With a minimum wage that’s just below Kalamazoo’s (by a fraction of a cent) Yakima, Washington came in fourth on our list. In Yakima, the $11 minimum wage stretches to a real minimum wage of $11.07. And yes, that’s the same as the real minimum wage in Kalamazoo, but it’s not a true tie (just rounding error).
5. Tacoma, Washington
Fifth on our list is another Washington city, Tacoma. Unlike Kennewick, Spokane and Yakima, Tacoma has a higher minimum wage than the state minimum wage of $11. In November 2015, Tacoma residents voted for a $12 minimum wage, to be phased in over two years. As of January 1, 2017, the Tacoma minimum wage is $11.15. On January 1, 2018 it will rise to $12. When adjusted for the cost of living in Tacoma, the current $11.15 minimum wage works out to a real minimum wage of $10.84.
6. Pueblo, Colorado
As of January 1, 2017, Colorado has a minimum wage of $9.30. In Pueblo, Colorado, that state minimum wage stretches to a real minimum wage of $10.78. However, the current state minimum wage of $9.30 is just the beginning of a four-stage plan to raise the minimum wage. By 2020, Colorado’s minimum wage will hit $12 an hour.
7. Tucson, Arizona
When adjusted for the Tucson cost of living, Arizona’s $10 state minimum wage stretches to $10.75 per hour. Arizona had a long road to a $10 minimum wage. At first, the Grand Canyon State followed a familiar pattern. After several Arizona cities passed laws mandating paid sick leave and increasing the minimum wage, the state legislature fought back. Arizona legislators passed a law authorizing the state to withhold funds from cities deemed to be violating state statutes (like the minimum wage). Cities took the state to court, defending their right to set their own labor policies.
Finally, a popular ballot initiative led to a statewide minimum wage hike. In November 2016, voters passed Proposition 206, raising the Arizona minimum wage to $10 an hour, effective January 1, 2017. Minimum wage advocates are pointing to the Arizona case as a potential template for activists in other states whose legislators are hostile to minimum wage increases.
8. Seattle, Washington
Like nearby Tacoma (fifth on our list), Seattle’s minimum wage is higher than the Washington base minimum of $11. Also like Tacoma, Seattle’s adjusted minimum wage is lower than its statutory wage. Seattle’s $15 minimum wage may sound like a lot of money. However, when you adjust for the city’s cost of living you find that Seattle’s real minimum wage is a much lower $10.35.
9. Phoenix, Arizona
As discussed in the Tucson blurb, Arizona’s minimum wage increase came about after a battle. In Phoenix $10 an hour does not stretch quite as far as it does in Tucson. Data from C2ER shows that Phoenix has a cost of living of 96 or 4% less than the national average, while Tucson has a cost of living of 93, or 7% less than the national average. Overall Phoenix has an adjusted minimum wage of $10.32.
10. Yuma, Arizona
Yuma, Arizona rounds out this top 10. The fight to increase the Arizona minimum wage to $10 an hour combined with the city’s below average cost of living gives Yuma minimum wage workers the tenth highest real minimum wage in the country.
Note: St. Louis, Missouri was initially on this list as the city with the fifth-highest real minimum wage. This was due to the city passing an ordinance to raise the minimum wage to $10, which worked out to an adjusted minimum wage of $11.07. However, Republican majorities in Missouri’s House and Senate voted to “pre-empt” (a.k.a. overturn) St. Louis’s minimum wage increase. This means that as of August 28, 2017, St. Louis residents will lose their minimum wage increase, knocking them out of our top 10. At the end of August, the city’s minimum wage will revert from the increased figure of $10 to $7.70.
1. Honolulu, Hawaii
Honolulu has the dubious honor of topping our list of the cities with the lowest real minimum wage – for the second year in a row. The Hawaii minimum wage is $9.25 as of January 1, 2017, and will rise to $10.10 on January 1, 2018. However, when you factor in the high cost of living in Honolulu, the city’s statutory minimum wage of $9.25 translates to a real minimum wage of just $4.87.
2. Arlington, Texas
Texas is one of several states with a minimum wage that’s the same as the federal minimum, $7.25 an hour. In Arlington, part of the Dallas–Fort Worth–Arlington metropolitan area, $7.25 doesn’t go far. When you adjust for the city’s cost of living you get a real minimum wage of just $4.87.
3. Alexandria, Virginia
Wealthy Alexandria, Virginia has a high cost of living and a statutory minimum wage of just $7.25. Democrats and Republicans in the state’s legislature have clashed over the minimum wage in recent years, with Republican legislators killing proposals to raise the state’s minimum wage. As a result, in Alexandria, minimum wage earners feel the pinch. When you adjust for the city’s cost of living you get a real minimum wage of just $5.14.
4. Sunnyvale, California
Sunnyvale’s statutory minimum wage of $13 may sound high, but that wage doesn’t go far in the expensive Silicon Valley city. When you adjust for Sunnyvale’s cost of living you get a real minimum wage of just $5.08.
5. Manchester, New Hampshire
Manchester, New Hampshire comes in fifth on our list, a slight improvement from its No. 3 spot last year. New Hampshire’s minimum wage is the same as the federal minimum, $7.25. New Hampshire’s minimum wage is also the lowest in New England. Massachusetts, Vermont, Connecticut, Rhode Island and Maine have all enacted minimum wage laws that exceed the federal minimum. When you adjust the $7.25 minimum wage for Manchester’s cost of living you get a real minimum wage of just $6.09.
6. Philadelphia, Pennsylvania
Philadelphia was second on our list of the cities with the lowest real minimum wage last year and this year comes in sixth. The Pennsylvania minimum wage of $7.25 doesn’t go far in the large city of Philadelphia. Pennsylvania has a preemption law that forbids Philadelphia from raising its minimum wage. As a result, the city’s real minimum wage is just $6.12.
7. Madison, Wisconsin
Wisconsin is another state whose legislature and governor have shot down city and county efforts to increase the minimum wage. Wisconsin prohibits local governments from passing minimum wage laws that would apply to workers in the private sector. In Madison, the state’s $7.25 minimum wage doesn’t go far. When you adjust for the city’s cost of living, the real minimum wage is just $6.82.
8. Newark, New Jersey
Though New Jersey’s minimum wage (currently $8.44) is higher than the federal minimum, it doesn’t go far in all parts of the state. In Newark, for example, when you factor in the city’s cost of living the statutory minimum wage of $8.44 translates to a real minimum wage of just $6.92. Last year, when its minimum wage was $8.38, Newark came in fifth on our list of the 10 cities with the lowest real minimum wage.
9. Stamford, Connecticut
Stamford, Connecticut was in sixth place on last year’s list and currently comes in number nine. Connecticut boasts a double-digit minimum wage, currently $10.10. But in Stamford, $10.10 doesn’t get you far. In fact, once you account for Stamford’s cost of living you get a real minimum wage of $6.93.
10. Charleston, South Carolina
Rounding out our list is Charleston. South Carolina state law blocks cities and counties from enacting their own minimum wage laws. The state’s minimum wage is the same as the federal minimum, $7.25. However, in Charleston, the statutory minimum wage of $7.25 translates to a real minimum wage of just $6.98.
Data and Methodology
To find the cities with the highest and lowest real minimum wage, SmartAsset first pulled data on state, county and city-level minimum wage laws. We used a range of sources, including the UC Berkeley Labor Center’s Inventory of U.S. City and County Minimum Wage Ordinances and the National Conference of State Legislatures.
After finding minimum wage data, we found data on the cost of living in U.S. cities. Our cost of living data was the 2016 Cost of Living Index from the Council for Community and Economic Research (C2ER).
To calculate our rankings we took each of the cities for which a cost of living index appeared in the C2ER’s data set. We pulled each city’s highest statutory minimum wage, whether it was a city-, county-, state- or federal-level minimum. We used the formula statutory minimum wage/(cost of living index/100) to get each city’s adjusted minimum wage.
Finally, to get our top 10 and bottom 10 cities, we ranked each city based on its adjusted minimum wage, a.k.a the real minimum wage in that city. The 10 cities with the highest and lowest real minimum wage made the charts above.
Questions about our study? Contact press@smartasset.com.
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