How far does your money go? A new report has the answer.
Minnesota provides 2.46 percent more purchasing power than the national average, according to a new report from the Tax Foundation.
This figure was initially issued as part of the Bureau of Economic Analysis’ annual “Real Personal Income for States and Metropolitan Areas” report, which evaluates regional cost differentials across the country. The report revealed what states have the highest personal income and costs of living, and the Tax Foundation then condensed this information into their “The Real Value of $100 in Each State” map.
The map explains how far a national average of $100 does or doesn’t go in each state. So in Minnesota, $100 will buy you what would cost $102.46 in a state closer to the national average. The status as a slightly lower-cost state is by and large a good thing: The average Minnesotan is, for all intents and purposes, 2.46 percent “richer than their incomes suggest,” the report says.
Indeed, the numbers from the BEA show that compared against the national average, goods are 0.6 less expensive, rent is 4.4 percent less expensive and other services are 3.4 percent less expensive in Minnesota.
The Tax Foundation explains that there are several factors to take into consideration when evaluating a region’s financial standing, as states with higher average incomes tend to have higher price levels. NFIB State Director Mike Hickey, for example, points out that Minneapolis boasts one of the highest average salaries of any metropolitan area in the U.S.—but it also has a very high average housing cost.
Minnesota also has notoriously high taxes (a four-tiered structure that includes rates of 5.35, 7.05, 7.85 and 9.85 percent, depending on income), so it’s important to take these statistics with a grain of salt. The Tax Foundation report reads, “People in high-price-level states will often pay more in federal taxes without feeling particularly rich.”
Naturally, there’s a fair amount of variation on these numbers even within the state. The Minneapolis/St. Paul metropolitan area has a higher cost of living ($97.37), while $100 in rural Minnesota is worth $115.47. Smaller metropolitan areas fall in between the two: Rochester is $107.53, Duluth is $109.05, and St. Cloud is $106.72.
Elsewhere, the map from the Tax Foundation shows that purchasing power is the worst in Hawaii, where $100 is worth $86.06. Conversely, you get the most bang for your buck in Mississippi, where it’s worth $115.21.
