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Cities With the Highest and Lowest Real Minimum Wage – 2022 Study
2022 SmartAsset Study: Cities With the Highest and Lowest Real Minimum Wage
2022 SmartAsset Study: Cities With the Highest and Lowest Real Minimum Wage

As federal efforts to increase the minimum wage have stalled, many states and cities are paving the way to pay workers more than $7.25 an hour. On January 1, 2022, a total of 20 states raised their minimum wage, with the largest increases taking place in Virginia (from $9.50 to $11) and Delaware (from $9.25 to $10.50). Additionally, many cities and counties are implementing pay increases. According to findings from the National Employment Law Project, 35 cities and counties increased their minimum wage beginning 2022.

Given local minimum wage increases, SmartAsset took a closer look at how far the minimum wage goes in different cities, ranking cities according to their real minimum wage rather than their statutory minimum wage.

Data and Methodology

To find the cities with the highest and lowest real minimum wage, SmartAsset collected data on state and city minimum wages around the country, pulling data from minimumwage.com along with local city government websites. Then, for 79 of the largest cities in the U.S., we adjusted the applicable minimum wage according to the local cost of living, using data from the Council for Community and Economic Research.

For example, in New York City the minimum wage is $15 per hour, but the cost of living is 86.3% higher than the national average. Thus, in terms of purchasing power, the minimum wage in the Big Apple is $8.05. This is what we consider the “real” minimum wage.

In our analysis, we used the minimum wage as of January 1, 2022. In cases where cities differentiate between small and large employer minimum wage rates, we considered the minimum wage rate required for large employers. Additionally, for cities and states that distinguish between jobs offering health benefits and those not such as Washington’s Seattle, we used the minimum wage for jobs that do not offer qualifying health benefits.

Key Findings

  • Only three cities have a real minimum wage exceeding $13. Minneapolis, Minnesota; Buffalo, New York and Denver, Colorado are the only cities we studied where the minimum wage purchasing power is upwards of $13 per hour. Assuming a 40-hour work week and 50 weeks worked per year, a real minimum wage of $13 per hour is equivalent to $26,000 annually.

  • Texas cities fall behind. Three of the 10 cities with the lowest real minimum wage are in Texas. They include Plano, Dallas and Austin. All three cities follow the Texas minimum wage rate ($7.25 per hour) and have estimated costs of living higher than the national average. As a result, in terms of purchasing power, the minimum wage is $7.16 or less in all three cities.