The best and worst states to make a living in 2014

Forbes
TSLAC Represents Texas at the National Book Festival (Washington DC) 9.21.13
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Virginia declares itself to be "For Lovers" and Texas admonishes visitors not to "Mess With" it, while North Dakota simply describes itself as "Legendary."

But does the quality of life and work in these states live up to the slogans?

To determine the Best And Worst States to Make a Living, personal finance site MoneyRates.com used data from the Bureau of Labor Statistics, C2ER, and the Gallup-Healthways Well-Being Index to examine average salary, cost of living, employment rate, and workplace conditions for each state and generat the ranking.

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"Often economic news is reported in terms of national figures," says Richard Barrington, senior financial analyst for MoneyRates.com and author of the study. "A lot of times it creates the perception that we're all dealing with the same set of conditions across the country. When you drill down, the differences state to state are huge."

Topping the list for the second year in a row is Washington state. Though the "Evergreen State" received slightly below-average marks for cost of living and unemployment, strong performance with regard to wages, state taxes, and work environment kept Washington on top once again (the state took second place for the two consecutive years preceding its current reign at number one.)

Texas scored second place with a winning combination of state tax, cost of living, and unemployment metrics, while Minnesota came in third due to low unemployment and a high work environment score.

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At the other end of the spectrum--and a different corner of the map--Hawaii ranks as the worst place to make a living in 2014, due to a cost of living that stands at 157% the national average and a poor work environment score.

New York follows close behind Hawaii. The Empire State's sky-high cost of living and high income taxes indicate that "if you can make it there, you'll make it anywhere"--but it might not be worth it. Mississippi, with low wages, low work-environment scores, and a high unemployment rate rounds out the bottom three.

Barrington says in developing the ranking, he observed two "clusters of negative environments," near equal and opposite in their scope. Northeastern states like Rhode Island and Connecticut have very high costs of living, which makes the elevated wages in those states look deceptively higher than they actually are, attracting "newly minted" college graduates who might not understand how far those wages won't carry them.

More on Forbes: Full List: The Best And Worst States To Make A Living In 2014

Meanwhile, in Southeastern states like Mississippi, Alabama, and Arkansas, cost of living is more reasonable but wages are unusually low and unemployment rates are unusually high.

While a rise in telecommuting could one day ease this dynamic--those who live in states with low costs of living could hold jobs in states with better wages--Barrington warns that a host of other issues accompany this solution, and that it would only be open to those in particular professions.

"What that’ll do is not only allow you to get the best of both worlds, but it will help even out some of the unemployment differences," says Barrington. "However that only applies to certain occupations. There are some lines of work you’ll always have to do in person."

Like Washington, most states tend to hover around the same ranking for several years. Eight of the 10 best states to make a living were in last year's top 10, while seven of the bottom 10 were at the bottom last year.

"You have areas that go through booms and busts, says Barrington. "Texas went through a huge crash in the early 80s and that’s the kind of thing that could make a radical reversal. If the bottom fell out of energy prices, North Dakota, whose economy has been doing well--that could reverse. Until that happens, this data has some staying power."

Ultimately, Barrington says he hopes the ranking will help those struggling to find employment or make ends meet in their current geography be more open to the possibilities another region could offer.

"A lot of times if you happen to be living in a state with a high unemployment rate or high cost of living it’s very easy to assume things are tough all over," says Barrington. "But there may be substantially better opportunities somewhere else."

Best states to make a living:
1. Washington
2. Texas
3. Minnesota
4. Colorado
5. Utah

Click here for the full list.

Worst states to make a living:
1. Hawaii
2. New York
3. Mississippi
4. Rhode Island
5. Connecticut

Click here for the full list.

 

Follow me on Twitter  @KathrynDill.

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