Being poor is never easy, but your environment plays a big role in just how challenging it can be. Living in the wrong area can mean basic costs like groceries or housing are higher than they need to be, and struggling public schools or high crime rates make an already difficult life even tougher.
For this study, GOBankingRates looked at all 50 states and examined a variety of factors that contribute to or suggest a tougher life for people in lower income brackets — such as individual state income tax percentages, average ACT scores and the median listing price for houses — and used them to generate an overall score to determine which states are more detrimental to people with lower incomes.
It’s not hard to see why Hawaii’s the worst state to live in if your income is low: It’s the most expensive place to live in America, with the highest cost of living, highest median list price for a home and the highest average monthly mortgage payment. Factor in the fourth-worst average ACT scores — potentially revealing a weaker public school system — and Hawaii is hardly a paradise for the have-nots.
Oregon’s cost of living is high, and its property crime rates are also higher than most. However, the cost of a home is one of the bigger issues. Oregon is one of the worst states for first-time homebuyers, according to another GOBankingRates study.
The overall cost of living in Colorado is high, but not extreme. Pushing the state into the bottom five, though, is the cost of a home. It has the fourth-highest average monthly mortgage payment and the fourth-highest median list price, part of why it’s one of the worst states for millennials to buy a home.
Utah ranked dead last for its spending on public welfare per capita, helping land it among the five-worst states you could live in if you’re poor. But for those people who are living on a fixed income, Provo represents the state’s best option, found a previous GOBankingRates study.
46. South Carolina
South Carolina’s biggest issue for its poorest residents appears to be its public education system: The state’s average composite ACT score of 18.5 is the third-worst in the nation.
If not for Hawaii, California would be the most expensive state to live in the country. It has the second-highest cost of living and the second-highest median list price for homes. The Golden State does mediate this some with its top 10 per capita spending on social welfare.
Montana’s relatively high costs for purchasing a home make it a tougher place to live when you’re not making as much money. And there’s plenty of people who have to deal with this: Montana’s 406 area code is among the poorest in America.
43. North Carolina
North Carolina’s average ACT scores are among the bottom five in the country, potentially indicating that the public schools are weaker than most. However, North Carolina is a good state for families seeking affordable education.
Georgia spends the second-least on social welfare per capita and has the seventh-highest rate of property crimes in the U.S.
Nevada had the worst average ACT score in all four subjects, combining for an average composite score of 17.7 and helping put the state in the bottom 10 in this study.
The state of Washington has an average monthly mortgage payment and median list price that are both among the 10 highest in the country. This might be driving some of its residents to desperation. Washington also has the second-highest rate for property crimes in the country.
Arizona’s property crime rate is one of the highest in the nation — the 10th-highest to be exact. And, it’s in the bottom 20 for public welfare expenditure per capita.
Alabama is among the states spending the least on public welfare, but it’s not all bad for the state’s poor residents. Alabama has one of the lowest overall costs of living among all 50 states.
Maryland is not a great state for its poorest residents, but that might be due in part to it being among the richest states in the country: It has the highest median income of any state in the country.
The fact that Florida spends the fifth-least money per capita on welfare probably compounds what’s already an extreme discrepancy between the state’s poorest and wealthiest residents. It’s one of just a handful of states to contain at least one of the richest and poorest zip codes in the country, found a recent GOBankingRates study.
Louisiana is the state with the second-highest level of income inequality in America. And, New Orleans is one major U.S. city where 50 percent of people can’t afford to buy a home.
Missouri is actually among the cheaper places to live in the country, with its cost of living, median list price and average monthly mortgage payment all falling in the 10 lowest in the country. However, its high income tax percentage and relatively high property crime rate keep it in the bottom half of this study.
Virginia isn’t among the 10 worst states to be poor in, but it ranks in the bottom 10 among all states when it comes public welfare spending. The median home list price in the state is the 12th highest among all states as well, which pulls it further down in the rankings.
Idaho might be among the tougher states to live in if you’re poor, but there’s evidence that things are looking up for a lot of the state’s residents — Idaho had one of the most improved economies in the country last year.
Alaska’s relative remoteness makes it harder on its poorest residents, with the fifth-highest cost of living in the country. That could be what’s driving the state’s property crime rates, which are the third-highest in the country.
Texas is near the middle of the pack for the country when it comes to life for its poorest residents. However, it ranks as the fourth-lowest in the country when it comes to spending on public welfare. Meanwhile, the average levels of debt are very high, with Texans owing over $185,000 a piece, the third-highest amount in the country, according to a GOBankingRates survey.
Oklahoma ranks third-lowest for both cost of living and the income levels of the bottom fifth of the population. Interestingly, the study found those two factors to be perfectly correlated — with the state rankings in each category matching each other from top to bottom.
Massachusetts might rank higher than several other states, but that belies the reality that it’s a state of extremes, with the state finishing in the top or bottom five for all factors considered. The state has the third-highest cost of living, average mortgage payment and median list price as well as the third-highest income levels for the bottom fifth of the population.
Meanwhile, it also has the highest average ACT scores and the fourth-lowest property crime rates.
Illinois is in a middling position in terms of how well its poorest residents are faring. But things might be getting better for people in some cities. The city of Chicago is one of the cities in America where incomes are growing the fast, according to a 2017 GOBankingRates analysis.
Nebraska is both in the middle of the country and the middle of the pack in this study. The median home list price is approximately $205,000, the 15th lowest in the study. However, it also has one of the lowest public welfare expenditures.
Connecticut is really more of a state for the rich than the poor: It has the highest average household income in the country. However, some of the state’s residents could be benefiting from that in the form of a stronger public school system. Connecticut has the second-highest average ACT scores in the country behind neighboring Massachusetts.
24. New Mexico
New Mexico has one of the highest poverty rates in the country — second only to Mississippi — so it’s maybe not all that surprising to find that it has the highest property crime rates in the country. New Mexico does mitigate this some by spending on social welfare — the third-most per capita in the country — which helps it climb to the top half of this study.
Speaking of Mississippi, if there’s one state where the quality of life among the poor really matters it’s here. Mississippi is the poorest state in the country, with the highest poverty rate and lowest average income. However, it also has the lowest cost of living, making life a little easier for those who are struggling to make ends meet.
Kansas is among the stronger states in terms of the quality of life offered to its poorest residents. That’s good because the state is also known as have some of the poorest retirees in the country.
21. New York
New York, like Massachusetts, lands near the middle of the rankings, but that’s not a reflection of middling results in any one category. The Empire State ranks in either the top or bottom five of every category except for its state income tax rates, where it’s only the eighth-highest.
New York has the fourth-highest cost of living and income for the bottom quintile, the fifth-highest average mortgage payment and median list price, the fourth-highest average ACT score, third-lowest property crime rates and the highest per capita spending on social welfare.
Ranking as the No. 20 best state for the poor, Tennessee has the fifth-lowest cost of living and the ninth-lowest incomes for the bottom 20 percent of the population.
Wyoming is sparsely populated, and it’s another state in the western part of the country that has no state income tax. And although it has one of the lowest average ACT scores, it has one of the lowest property crime rates.
Minnesota might be one of the better states for the poor, but that’s not universal. Minneapolis ranked among the worst cities to be earning minimum wage in another GOBankingRates study.
Delaware is among the better states to live in if you’re struggling to make ends meet, but it’s also one of the better states if you’re wealthy.
16. New Jersey
If New Jersey is a good place to live for its poorest residents, it’s not because they’re ducking taxes. New Jersey has the highest tax burden of any state in the country.
Residents of Wisconsin have a cost of living that’s just below the national average and a property crime rate that puts them among the 15 states with the lowest overall levels.
14. North Dakota
Not only is North Dakota doing a pretty solid job for its poorest residents, it’s doing a strong job managing its state budget. It ranks as the top state for its fiscal status in the country.
Arkansas’ high ranking in this study is a good sign as it has plenty of people in need: The state has the fourth-highest poverty rate in the country, which might correlate with its high property crime rate. That said, it also features an advantageous housing market, with the third-lowest median list price and average mortgage payment.
12. South Dakota
South Dakota isn’t spending much on public welfare. In fact, only two states are spending less. However, one potential benefit to those low expenditures could be the lack of any state income tax.
11. Rhode Island
Rhode Island might be doing a good job helping its poorer residents get by — it’s among the top 10 of states for public welfare spending. And, it has one of the lowest property crime rates.
The state of Michigan is a great place to buy a home for less and then stretch your budget while living there. The state has the fourth-lowest median list price and average mortgage payment as well as the fourth-lowest cost of living.
Maine features low crime and high average ACT scores, but there’s one area where it might squeezing residents rich and poor: groceries. The state spends the fourth-most on groceries of any state in the country, found one GOBankingRates study.
Not only is Iowa among the 10 best states for the lower class, it’s one of the best states in the country for the middle class.
Indiana features low costs of living and low prices for houses in addition to a below-average rate for property crimes. And the fact that Indianapolis is among the cheapest cities for renters means the poorest Hoosiers are in relatively good shape.
Kentucky rises up the list in this study due to high rates of per capita spending on public welfare and a housing market that features plenty of inexpensive options.
5. New Hampshire
New Hampshire is among the best states to be poor in America. Ironically, though, there are relatively few people to take advantage of the situation: The state has the lowest poverty rate and third-lowest unemployment rate.
Ohio is one of the five best states to live if you’re poor, and that isn’t limited to the lower-cost rural life. Both Toledo and Columbus are among the best cities to live if you’re earning minimum wage.
The third-best state for the poor, Vermont’s economy has bounced back from the recession, with a 33 percent drop in unemployment from the depths of the housing crisis. Plus, it has the second-highest public welfare spending in the country.
2. West Virginia
West Virginia is the No. 11 state in terms of per capita spending on public welfare, but it’s the housing market that pushes it to No. 2 overall in this study. Nowhere in the country is it cheaper to own a home, with the lowest median list price and average mortgage payment in the U.S.
The Keystone State ranks the highest in this study despite not finishing in the top five for any one category. That said, it has the seventh-lowest property crime rates and the 10th-highest average ACT score.
Best and Worst States to Be Poor in America
Apparently, the farther west you go in America, the more difficult it is to be poor. Nine of the bottom 12 states in the study are either Mountain States or located west of the Rockies.
Meanwhile, life in New England doesn’t appear to be as harsh to those with lower incomes, with four of the six states in the region cracking the top 11. Notably, all six New England states also placed within the top 10 in average ACT scores.
Click to read more about how poverty can trick you into overspending.
More on the economy:
- 31 Cities Where You Can Live Off Less Than $50K
- States That Spend the Most and Least on Education
- The No. 1 Things You Should Do to Boost Your Net Worth
- Watch: Treating Finances Like a Game Will Help Get You Rich
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Methodology: GOBankingRates determined the best and worst states to be in the lower income tax bracket by using eight different factors and scoring them in order to reach a cumulative ranking from 1-50 for each state. The factors used were: 1) monthly mortgage, 2) median home list price, 3) cost of living, 4) individual state income tax percentage for those earning less than the national median income, 5) income for people in the bottom 20 percent of earners, 6) state spending per capita on public welfare, 7) property crime rate per 100,000 people and 8) average ACT score.
About the Author
Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor.