The Lowest Wages in the United States for Labor
There is more to this report on Labor than what I am presenting here. Consulting to manufacturing gave me an excellent background on the costs of Labor as compared to Overhead and Materials. Whacking Labor does not gain business much in return and will lead to inefficiency in manufacture and delivering a timely product. If you wish to make more return on your product? Become more efficient in how you use Labor.
Ok, this is about Labor, Labor in a particular part of the country . . . the South. They appear to be the leader in paying the lowest wages to Labor.
Southern states consistently have the lowest wages of any region Chandra Childer, EPI
Southern states have lower median wages than other regions
For over 40 years, the typical worker in the South has been paid less than their counterparts in every other region of the country. Figure A shows the median hourly wage for workers by region since 1979 in constant 2021 dollars. The median wage is the wage of the worker in the exact middle of the wage distribution: This worker is paid more than half the workforce and less than the other half.
In 1979, the median Southern worker was paid the equivalent of $16.42 per hour in 2021 dollars. This is 16.4% less per hour than their counterparts in the West, the region with the highest median wages in 1979. It was also 12.6% and 10.2% lower than the wages of workers in the Midwest and Northeast, respectively. Median wages have risen nationwide since 1979, with growth ranging from 12.1% in the Midwest, 12.4% in the West, 22% in the South, and 30.2% in the Northeast by 2021, as shown in Figure A.
Since the early 1980s, the Midwest has consistently had the second-lowest wages, but over time the gap between the South and the Midwest has somewhat closed; wages in the South were only 4.8% lower than Midwest wages in 2021. However, wages in the South have never been as high as those in other regions. They remained substantially lower in 2021, when they were 9.3% lower than wages in the West and 15.9% lower than wages in the Northeast—regions where most state governments have rejected the Southern economic development model. In fact, the gap between typical wages in the South and the Northeast in 2021 is roughly the same as the gap between the South and West in 1979—meaning that the Southern model has not afforded any advantage in pay to workers in the South relative to workers in other regions over the last 40 years. Instead, the Southern model has ensured that eight of the 10 lowest-wage states in 2021 were in the South: Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and West Virginia.
What Childer’s data doesn’t really get into — and what I think is worth flagging here — is what the Southern model has actually produced in place of higher wages. It’s a state-by-state hustle for tax dollars from sources outside the paycheck. Corporate relocation deals, right-to-work laws, tourism, expanded lotteries, and lately the licensing of digital gaming. West Virginia, sitting right there on the lowest-wage list above, was one of the early states to legalize online casinos, choosing to grab the gaming tax revenue rather than watch it cross state lines. Mississippi and Louisiana lean on Gulf Coast resort gaming and lottery dollars in much the same way. None of which has done a thing for what workers in those states actually take home. All it has done is let state legislatures fund their budgets without ever having to lean on the kind of broad-based wage taxes that higher pay would naturally generate.
Low-wage workers make up a larger share of the workforce across the South
While the median wage is an important indicator of the economic well-being of workers overall, it does not tell us how particular groups of workers are faring, such as the low-wage workforce. The low-wage workforce here is defined as workers that are paid less than $15 per hour. Figure B shows the share of workers that are paid less than $15 per hour in each region.
The share of the workforce made up of low-wage workers has fallen nationwide since the COVID-19 recession. In 2019, before the pandemic, the share of workers in the South that were paid less than $15 per hour was 26%—more than one in four workers. This is a much higher share than other regions; in the Midwest, 22.2% of workers were part of the low-wage workforce, and fewer than one in five workers in the Northeast and West made up that share.
After the pandemic, (a period when strong labor market conditions gave workers leverage to command a higher wage and many states were raising their minimum wages), the share of workers that were paid less than $15 per hour fell in all regions (Gould and deCourcy 2023). However, the smallest decline was in the South. The share of workers paid less than $15 per hour fell from 26% of workers to 22%, a decline of just four percentage points. There were much larger declines in the share of workers that were paid low wages in the Midwest (5.6 percentage points), the Northeast (5.9), and the West (7.8).
Figure C shows the share of workers that are part of the low-wage workforce in each state (see also EPI 2024a). These data show that the differences between regions are not driven by a few outlier states. In several Southern states—Mississippi (29%), Louisiana (27%), Oklahoma (24%), Arkansas (23%), West Virginia (23%), and Alabama (22%)—the share of the workforce that is low wage is higher than that of the region as a whole (22%). Delaware (13%), Virginia (12%), and Maryland (9%), however, have the smallest low-wage workforces of all states across the South. Notably, although these states are part of the South Census Region, their state economic policies tend to be more in line with those of Northeastern and Western states.
Outside the South, New Mexico (21%) is the only state with more than one in five workers paid less than $15 per hour. In New Hampshire and North Dakota, just 9% of workers are low-wage workers. Even fewer workers receive such low pay in Alaska (6%), Colorado (7%), Minnesota (7%), and Vermont (7%).
Every state that lacks a state minimum wage is in the South
In addition to Maryland and D.C. that have minimum wages of $15 or higher, several other Southern states have minimum wages above the federal level but below $15. Not all were the result of actions by policymakers. The District of Columbia ($17), Maryland ($15), Delaware ($13.25), Virginia ($12), and West Virginia ($8.75) all have higher minimum wages as the result of legislation or a city council ordinance. In Florida ($12) and Arkansas ($11), higher minimum wages were the result of a ballot measure (EPI 2024b; FPI 2024; Hickey 2023).
Figure E shows a map with the nominal median annual earnings and the median annual earnings adjusted for differences in the cost of living for all 50 states. Median 2022 earnings are adjusted using the regional purchasing power parity index from the Bureau of Economic Analysis (2023). This allows us to compare the real purchasing power of a typical workers’ annual pay across states, as if the overall cost of living (i.e., prices) were the same across the country.
Figure E shows that adjusting for state-level differences in the cost of living has a substantial impact on our understanding of the purchasing power of workers in different states. States with extremely high costs of living such as New York, California, and Hawaii have lower relative earnings—i.e., the purchasing power of each of their dollars is lower—when we take the higher cost of living into account. The high costs of living in these states are typically driven by an inadequate housing supply, a problem less acute in Southern states, where an abundance of land and limited regulation of housing development has resulted in sprawling growth in and around many Southern cities. Thus, it is true that despite lower relative earnings in many Southern states, their dollars provide them with greater purchasing power than the nominal value of those dollars would suggest. Median annual earnings of $44,499 in Mississippi have about the same purchasing power as $54,040 in Maine or $53,811 in Arizona.
Even when state-level differences in the cost of living are considered, Southern states continue to have some of the lowest wages in the country. Only two Southern states (Maryland and Virginia) are among the 10 highest-earning states. And among the 10 states with the lowest cost-of-living-adjusted median earnings, half are Southern states. Of the Southern states with the lowest earnings, Florida has the lowest of all states, followed by Mississippi, Arkansas, South Carolina, and Oklahoma.