SIOUX FALLS, S.D. (KELO) — On January 1, 2022, South Dakota’s minimum wage will rise 50 cents from $9.45 an hour to $9.95 an hour. This will put South Dakota in 24th place in terms of minimum wage, behind 23 other states.
D.C. has the highest minimum wage in the nation 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 wages from 2021 and 2022.
|District of Columbia||$15.20|
The federal minimum wage is $7.25 per hour. While individual states may institute a higher minimum within their own state, no state can go lower than $7.25.
The purpose of the minimum wage as it was created by the Fair Labor Standards Act (FLSA) in 1938 is to “create a minimum standard of living to protect the health and well-being of employees.“
Minimum wage itself does not tell the whole story, however. The Missouri Economic Research and Information Center (MERIC) provides a cost of living for each U.S. state and Washington D.C., as of Q3 of 2021. The higher the index, the higher the cost of living.
Of the 50 states and Washington D.C., 21 have an index of 94.9 or lower, 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 greater.
Puerto Rico is not included in MERIC’s data.
Among these states and D.C., South Dakota has the 29th highest cost of living, with an index of 96.2.
|District of Columbia||154.4|
At the crossroads of minimum wage and cost of living, is the living wage. In essence, the living wage is the amount a worker must earn to maintain a decent standard of living, able to provide for 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. Out of all 50 states, South Dakota ties with Arkansas and West Virginia for the 2nd lowest living wage in the nation, behind only Kentucky at $43,000.
This means that of the 50 states, (Puerto Rico and D.C. are not included) South Dakota is one which costs the least to survive in. But how does a $9.95 minimum wage match up to a $45,000 living wage?
Assuming a 40-hour work week, and 50 working weeks per year, a $9.95 wage comes to $19,900 per year. To match the living wage for South Dakota, the minimum wage would need to rise to $22.50/hour.