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Just How Much Does It Cost to ‘Comfortably Live’ in Each State?
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Just How Much Does It Cost to ‘Comfortably Live’ in Each State?

A new study double counts some expenses and presents a misleading picture.

(Stock photo from Getty Images)

An image depicting “the income a family needs to comfortably live” in each U.S. state has spread widely online since last week. Hundreds of posts featuring the graphic can be found across platforms like X (formerly Twitter), Threads, Instagram, Facebook, and Reddit.

The graphic, which has garnered attention because of its high estimates, purports to show how much income a family of four needs to earn to live a comfortable life. In Mississippi, for example, the graphic indicates that a family would need a yearly household income of $178,000 to live comfortably with two children. Compare this to the state’s 2022 median household income of $48,610, and the graphic’s standard of living appears practically unachievable for most families. Massachusetts, which is identified as the most expensive state, has a similar gap. Its 2022 median household income in Massachusetts was $93,550, less than a third of the $301,000 the graphic claims is needed to live comfortably.

While the graphic does use real data to calculate its numbers, its methodology double-counts some costs and so presents a misleading picture of costs of living nationwide.

The methodology.

The income numbers used by the graphic originate from a 2024 study by the financial technology firm SmartAsset. In the study, SmartAsset uses a budgeting method known as the 50/30/20 rule—which advises families to use 50 percent of their income for needs, 30 percent for wants, and 20 percent for savings—as its measure of comfortable living and to calculate an income estimate. SmartAsset first calculates its income requirements by determining the amount a family of four would need to spend on necessities in each state, according to the Massachusetts Institute of Technology’s Living Wage Calculator (LWC). It then equates this figure to the 50/30/20 rule’s needs category, before doubling it to determine what household income would align with the 50/30/20 rule.

Where it goes wrong.

Because of the graphic’s reliance on MIT’s LWC as its lone source of data, methodological problems in the LWC—or even just different categorizations of wants and needs between the two—result in inaccurate headline income numbers. The LWC uses a complex methodology to determine a living wage, which it defines as “what one full-time worker must earn on an hourly basis to help cover the cost of their family’s minimum basic needs where they live while still being self-sufficient,” for geographies across the country. The calculator considers expenses for items like food, child care, health care, housing, transportation, civic engagement, internet, and mobile phones as basic needs, and then sums these with the cost of federal and state income taxes to determine what wage would be necessary to cover their full cost. 

Although the calculator can help compare basic living expenses in different parts of the country, the way SmartAsset uses the tool as a measure of necessary expenditures is flawed. “The methodology around [the LWC] defining livability is very problematic and is bound to overstate how many people are having a hard time getting by,” Scott Winship, director of the Center on Opportunity and Social Mobility at the American Enterprise Institute, told The Dispatch Fact Check.

According to Winship, one of the LWC’s main issues is its assumption that, to have basic needs met, a family must spend average amounts across every area of expenditure. “The LWC implicitly expects that families will be at the mean for a number of expenditures, including health care, civic engagement, internet and mobile, and other necessities,” Winship explained. Another issue with using the LWC as a substitution for necessary spending is its broad definition of basic needs. For example, the LWC considers civic engagement a basic need, which includes the cost of “education, reading, fees and admissions, pets, toys, hobbies, playground equipment, and other items necessary for participating and engaging in civic activities.” Costs related to activities like hobbies or entertainment are typically considered discretionary in the 50/30/20 rule, where needs are more narrowly defined as “the bills that you absolutely must pay and the things necessary for survival,” or “the essentials: housing, utilities, car payments, gas, insurance, groceries and so on.” Because the LWC considers many traditionally discretionary expenditures as necessary, these expenses end up being essentially double-counted by SmartAsset in the needs and wants categories of the 50/30/20 rule.

Even without this double counting, the use of mean instead of median expenditures also warps the study’s numbers. “Even if you just use median overall spending as your benchmark, by definition, half of the population is going to be below the median. So, right off the bat, you’re setting up a standard that only half the population can meet, and that bar just gets higher as you require them to be at the median for multiple categories,” Winship explained. But because a small number of very wealthy individuals can drive up mean expenditures, the LWC’s use of mean inflates these income requirements even further. “If one requires people to be at the mean on multiple categories, ignoring the ability of people to trade-off spending priorities against each other, it’s an even higher bar to clear,” Winship said.

A similar methodological issue results from the way the LWC doesn’t differentiate between items that can be both necessary and discretionary. For example, a minimum amount of clothing can reasonably be considered a basic need, but discretionary clothing purchases can also make up a significant amount of spending. Similarly, while the LWC includes audio and video equipment as a basic need, it makes no distinction between a basic $200 television and a home theater system costing thousands of dollars. Instead, the LWC relies on simple average expenditures provided by the U.S. Bureau of Labor Statistic’s Consumer Expenditure Surveys, which ask U.S. consumers how much they spend periodically on particular categories of items. These averages do not differentiate between necessary and discretionary expenditures on items like clothing or personal care products, so their use for calculating basic needs inflates LWC’s living wage calculation.

SmartAsset and MIT’s Living Wage Institute did not respond to requests for comment by The Dispatch Fact Check.

If you have a claim you would like to see us fact check, please send us an email at factcheck@thedispatch.com. If you would like to suggest a correction to this piece or any other Dispatch article, please email corrections@thedispatch.com.

Alex Demas is a fact checker at The Dispatch and is based in Washington, D.C. Prior to joining the company in 2023, he worked in England as a financial journalist and earned his MA in Political Economy at King's College London. When not heroically combating misinformation online, Alex can be found mixing cocktails, watching his beloved soccer team Aston Villa lose a match, or attempting to pet stray cats.