Minimum Wage, Living Wage and Cost of Living: How Does South Dakota Compare?
SIOUX FALLS, SD (KELO) — On January 1, 2022, South Dakota’s minimum wage will increase by 50 cents, from $9.45 per hour to $9.95 per hour. That will put South Dakota in 24th place in minimum wage, behind 23 other states.
DC has the highest minimum wage in the country at $15.20, while Puerto Rico comes in with the lowest at $6.55.
Note: Not all states have announced a minimum wage increase for 2022, so the minimum wages listed below combine 2021 and 2022 wages.
|District of Colombia||$15.20|
|Caroline from the south||$7.25|
The federal minimum wage is $7.25 per hour. While individual states can institute a higher minimum within their own state, no state can go below $7.25.
The objective of the minimum wage as it was created by the Fair Labor Standards Act (FLSA) in 1938 is “create a minimum standard of living to protect the health and well-being of employees.“
However, the minimum wage itself does not tell the whole story. Missouri Center for Economic Research and Information (MERIC) provides a cost of living for each US state and Washington DC, as of the third quarter of 2021. The higher the index, the higher the cost of living.
Of the 50 states and Washington DC, 21 have an index of 94.9 or less, 12 have an index between 95 and 104.9, 7 have an index between 105 and 114.9, while 11 have an index of 115 or more.
Puerto Rico is not included in MERIC data.
Among these states and DC, South Dakota has the 29th highest cost of living, with an index of 96.2.
|District of Colombia||154.4|
|Caroline from the south||94.8|
At the crossroads of the minimum wage and the cost of living is the living wage. Essentially, the living wage is the amount a worker needs to earn to maintain a decent standard of living capable of meeting basic needs such as housing, food, healthcare, and other essentials.
The living wage in South Dakota as calculated by world population review, adjusted for inflation, is $45,000 per year. Of the 50 states, South Dakota is tied with Arkansas and West Virginia for the 2nd lowest living wage in the nation, behind Kentucky at $43,000.
|Caroline from the south||47,000|
This means that of the 50 states (Puerto Rico and DC are not included), South Dakota is the least expensive to survive. But how does a minimum wage of $9.95 correspond to a living wage of $45,000?
Assuming a 40-hour work week and 50 work weeks per year, a salary of $9.95 works out to $19,900 per year. To match South Dakota’s living wage, the minimum wage would have to increase to $22.50/hour.