While a dollar bill looks and feels the same all over the United States, its value is often very different depending on where it is used.
The prices of housing, food, and services, vary considerably across the country. To highlight these differences, which reflect the relative purchasing power of Americans, 24/7 Wall St. calculated the value of a dollar in each state based on data from the Bureau of Economic Analysis. Compared to the national average cost of goods and services, a single dollar goes the furthest in Mississippi, where the cost of living is the lowest of any state. A dollar in Mississippi is effectively worth $1.15. By contrast, in Hawaii, the most expensive state, a dollar is worth the least — only $0.86.
Income levels differ far more than costs of living between states. In states with high incomes, a single dollar tends to be worth less because of the often higher costs of living in those states. In the 15 states where the dollar is worth the least — that is, with the highest costs of living — the median annual household income exceeds the national median of $53,657. In low-income states, by contrast, a single dollar tends to go relatively far. Mississippi, the state where a dollar goes the furthest, has the highest poverty rate and lowest household median income in the nation.
In the five years through 2013, the value of a dollar increased in every state — and nationwide. While this may sound positive, the reasons for the higher dollar value were mostly related to the housing crash. The states with the largest increases in the value of a dollar also had among the largest median home price drops between 2008 and 2013. California for example, where one dollar is worth just $0.89, the median home value dropped by more than 20% over that period. Because Americans spend far more on housing than on goods and services, the housing market collapse meant that component declined considerably, leaving room for more purchases. While one dollar could therefore buy more than it did before the housing collapse, a number of Americans lost significant amounts of money through the depreciation of their homes.
> Value of a dollar:$1.06
> Chg. in value of dollar 2008-2013: +8.9% (9th largest)
> Median household income: $49,847 (20th lowest)
> Poverty rate: 16.2% (18th highest)
North Dakota is the only state that had a major increase in the cost of housing, with median home prices rising by 38.1% between 2008 and 2013, likely caused by the state’s oil industry-related economic boom. The housing cost increase in North Dakota bucked the broader trend, and the value of one dollar in North Dakota increased less than in any other state as a result.
To identify the states where a dollar is worth the most, 24/7 Wall St. calculated the relative price of a single dollar using regional price parities (RPPs) in each state in both 2008 and 2013 — the latest year for which data are available — from the Bureau of Economic Analysis. RPPs are expressed as an index of the national average price level (100) for goods and services. We also reviewed socioeconomic data, including median household income, and poverty rates from the U.S. Census Bureau’s 2014 American Community Survey.