Virginia tops the list in MoneyRates.com's 2012 Best States to Make a Living, displacing 2011 winner Illinois, which falls to fourth place. Hawaii earns Worst State to Make a Living for the second year in a row.
The study, which calculated rankings through an adjusted average income figure for each state, reveals sharp differences between the best and worst states. Virginia's adjusted average income was $43,677, while Hawaii's was just $22,394 - more than $7,000 less than the next-to-worst state, Maine.
"The differences between the top and bottom states are pretty extreme," says Richard Barrington, senior financial analyst for MoneyRates.com. "It's important for people to be aware of these differences. Someone who is struggling to find a job or make a living wage in one state might find things significantly easier in another state."
The ranking of some states changed significantly from MoneyRates.com's 2011 rankings. Nevada rose most dramatically, moving up 22 places to become the 18th best state to make a living. Three states appear in the top 10 list for the first time: Michigan, Wyoming and Utah.
With the exception of South Dakota, which dropped 14 places to the 10th worst state to make a living, all of the 10 worst states from the 2012 rankings were among the 10 worst states to make a living in 2011.
"The purpose of this exercise isn't to criticize states where conditions are tough," explains Barrington. "The inspiration behind the analysis is to help people. No. 1, if you are having a tough time, you can get a feel for whether things might be better somewhere else. No. 2, if you do decide to make a move, you can choose a place where the odds may be on your side."
A recent CareerBuilder survey found that 44 percent of workers said they would be willing to relocate for a job opportunity, indicating that a significant number of workers might consider crossing state lines to better their career and income prospects.
The 10 Best States to Make a Living in 2012, according to MoneyRates.com's adjusted average income calculation, is:
1. Virginia - $43,677
2. Washington - $43,662
3. Texas - $42,816
4. Illinois - $41,865
5. Colorado - $40,490
6. Michigan - $40,490
7. Wyoming - $39,745
8. Utah - $39,250
9. Delaware - $38,802
10. Massachusetts - $38,793
The 10 Worst States to Make a Living in 2012, according to MoneyRates.com's adjusted average income calculation, is:
1. Hawaii - $22,394
2. Maine - $29,703
3. Vermont - $30,433
4. Mississippi - $31,178
5. Montana - $31,256
6. Rhode Island - $31,353
7. California - $31,459
8. West Virginia - $32,297
9. South Carolina - $32,645
10. South Dakota - $33,121
MoneyRates.com used four factors in its analysis: unemployment rates and average annual wages from the U.S. Bureau of Labor Statistics, state income tax rates from the Tax Foundation and cost of living data from the ACCRA Cost of Living Index.
Starting with each state's mean annual wages, the figures were adjusted in accordance with tax rates, unemployment rates and cost of living figures. The resulting number is the adjusted average income figure used in the rankings.
MoneyRates.com has been a leading source of information on bank rates, personal finance, savings accounts and investing since 1999. The site provides the highest rates on CDs, money market accounts and high-yield savings accounts. The Web Marketing Association awarded a Financial Services Standard of Excellence to MoneyRates.com in the 2011 WebAwards competition.
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