South Dakota Offers Best Effective Minimum Wage; Overall Wages Still Stink

In raw dollars, South Dakota’s $8.50 an hour is the 11th-best in the nation. Nine states and D.C. guarantee a higher basic wage. No neighboring state has a higher minimum wage; Montana is closest, at $8.05, followed by Nebraska and Minnesota at $8.00.

But factor in regional price parities, the “differences in the price levels of goods and services across states and metropolitan areas” calculated by the Bureau of Economic Analysis, and South Dakota is Number One! An hour’s work at the lowest rung in South Dakota earns $9.70 in real purchasing power. That’s 3.5% more purchasing power than an hour of grunt work in second-place Oregon, where the raw minimum wage is $9.25 and real purchasing power is $9.37. South Dakota’s adjusted minimum wage is 9.7% more powerful than Nebraska’s and 18.3% higher than Minnesota’s. Boo-yah!

We can only hope that our leadership in effective minimum wage purchasing power may create some pressure to raise the rest of our wages. Looking at all occupations, our raw wages stink: we rank 48th for median hourly wage, 50th for mean hourly wage, and 50th for mean annual wage (and Capital One is still leaving Sioux Falls, due to turnover and worker shortage? seriously?). Factor in regional price parities, and our rankings in those categories don’t budge out of the 40s (42nd, 47th, and 47th, respectively).

You can view every state’s minimum wage, median hourly wage, mean hourly wage, and mean annual wage on this spreadsheet. I use the current 2015 minimum wage data posted by Chokshi, the 2013 regional purchasing power data mapped by Cole and Drenkard, and the May 2014 wage estimates posted by the Bureau of Economic Analysis for each state (for example, for South Dakota here). That’s a mishmash of years; I invite readers to find and analyze a year-unified dataset.

Let’s look at specific numbers for the septa-state region:

State Minimum wage Adjusted minimum wage 1/RPP (real value of $1)
Iowa $7.25 $8.03 $1.11
Minnesota $8.00 $8.20 $1.03
Montana $8.05 $8.53 $1.06
Nebraska $8.00 $8.84 $1.11
North Dakota $7.25 $7.93 $1.09
South Dakota $8.50 $9.70 $1.14
Wyoming $7.25 $7.57 $1.04

 

State Median Hourly Adjusted Median Hourly Mean Hourly Adjusted Mean Hourly
Iowa $15.91 $17.62 $19.77 $21.90
Minnesota $18.30 $18.76 $23.23 $23.81
Montana $15.15 $16.05 $19.17 $20.31
Nebraska $15.66 $17.30 $19.75 $21.82
North Dakota $17.75 $19.41 $21.20 $23.19
South Dakota $14.36 $16.39 $17.93 $20.46
Wyoming $18.16 $18.96 $21.60 $22.55

 

State Mean Annual Adjusted Mean Annual
Iowa $41,210 $45,644
Minnesota $48,310 $49,518
Montana $39,880 $42,258
Nebraska $41,080 $45,393
North Dakota $44,100 $48,236
South Dakota $37,300 $42,566
Wyoming $44,930 $46,913

South Dakota is leading the nation on the effective minimum wage. But on the real purchasing power of wages across the spectrum, we’re lagging all of our neighbors except for Montana.


3 Responses to South Dakota Offers Best Effective Minimum Wage; Overall Wages Still Stink

  1. Porter Lansing

    It would be hard to save up for a trip to France at those wages.

  2. If you rank top to bottom, it’s clear the states with high density, skilled blue-collar jobs (manufacturing, energy, transportation etc.) come out ahead. At the bottom is Montana and SD is next worst. I’d like to see you throw WI in and see how it changes the mix, a very high-skill production oriented state. Frankly, the rift between the skill and the gov’t / education unions is the only thing that allowed Walker’s bill to survive, it would have crashed and burned early otherwise.

    This pretty clearly show the minimum wage increase movement is nice for the bottom end, but, the $30k to $60k jobs are what really drive the numbers. Which is exactly what George Mickelson knew 30 years ago when he insisted state development efforts focus on primary job creation in production-based companies and not call centers, credit card banks, retail, etc.

    Can you imagine what the numbers would look like without the growth in skilled jobs we’ve had in Watertown, Brookings, Mitchell, etc? Sioux Falls would be a retail island with dying farm towns everywhere else.

  3. mike from iowa

    Pretty sure wingnuts had nothing to do with raising the minimum wage in SoDak.