Downward angle icon Downward angle icon. Some Southern cities and states are thriving economically, while others are lagging behind. AP Photo/Lynne Sladky Americans are flocking to the South in search of jobs, lower taxes and more affordable housing. But by some economic indicators, the South is home to some of the poorest states in the country. The six states with the lowest GDP per capita are all in the South.
The future of the U.S. economy may lie in the South, but some states in the region are at risk of being left behind.
What the U.S. Southern region is is up for debate, but the Census Bureau defines it as 16 U.S. states and the District of Columbia, including Delaware, Maryland, Virginia, and West Virginia.
Financial services company WalletHub in June ranked the 50 states and Washington, D.C., in three categories: economic activity, economic health and innovation potential. The analysis used 28 metrics, including the percentage of fast-growing companies, unemployment rate and entrepreneurial activity.
Five of the lowest ranking states are in the South: Mississippi, West Virginia, Arkansas, Louisiana, and Kentucky.
Additionally, the six states with the lowest GDP per capita (the size of a state’s economy divided by the number of people living in that state) are all in the South: Mississippi, West Virginia, Arkansas, Alabama, South Carolina, and Kentucky. GDP per capita is one of the metrics used to measure economic prosperity and living standards across the United States, and is calculated using the most recent state-level GDP data from the Bureau of Economic Analysis and population estimates from the Census Bureau.
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In some ways, the South’s economy is booming. Cities such as Houston, Dallas, Miami, and Nashville have the potential to become economic hubs as more businesses invest and create jobs. In addition, warmer weather, lower taxes, cheaper housing, and growing jobs have attracted many Americans to the South in recent years, boosting the region’s labor force and consumer spending.
But several economic indicators show the South is lagging behind the rest of the U.S. And even if some cities and states in the region thrive in the coming years, others could miss out on the economic growth wave.
Workers in southern states tend to have lower wages
An analysis of 2021 Current Population Survey data released in July by the left-leaning think tank Economic Policy Institute found that workers in the South earn less than workers in other regions.
The median hourly wage for workers in the South was $20.30, compared to $21.05 in the Midwest, $22.08 in the West, and $23.81 in the Northeast. Additionally, the analysis found that 22 percent of workers in the South earned less than $15 an hour, compared to 17 percent in the Midwest, 12 percent in the Northeast, and 10 percent in the West.
The Economic Policy Institute pointed to low minimum wages and low unionization rates in Southern states as two factors keeping wages low.
Of course, workers in some Southern states earn less than others. In July, the centrist think tank Economic Innovation Group published an analysis by Jacob Funk Kirkegaard, an adjunct fellow at the Peterson Institute for International Economics, that used data from the U.S. Bureau of Economic Analysis and the Bureau of Labor Statistics to determine the median annual wage in every U.S. state as of 2022.
Mississippi’s median annual wage is about $60,000, the second-lowest in the nation, trailing only Hawaii. Texas is the only southern state to make the top 10, coming in eighth with an average annual wage of about $80,000.
The South’s low unemployment rate is misleading
In recent years, unemployment in the South has been low compared to the rest of the U.S. But an analysis released in June by the Economic Policy Institute called the low rate “misleading.”
Official U.S. unemployment statistics only count people who are actively looking for work, and there’s evidence that many Southerners have given up or faced obstacles to finding work, Chandra Childers, a senior policy and economic analyst at the Economic Policy Institute, wrote in an analysis.
According to an Economic Policy Institute analysis of Current Population Survey data, the share of people ages 25 to 54 in the workforce was lower in the South than in the rest of the U.S. as of 2022. The employment rate for so-called prime-age workers, often cited as an indicator of labor force strength, was 78.9% in the South, 79.2% in the West, 80.6% in the Northeast and 81.9% in the Midwest.
These numbers could change as newer data becomes available, but if people in the South are less likely to have jobs than people in other regions, a region’s low unemployment rate doesn’t tell the whole story.
There is reason to be optimistic about the Southern economy.
To be sure, it’s not all doom and gloom for the South.
For an economy to thrive, it needs people to work and spend money, and the South is growing its population in every way possible.
Though the U.S. has suffered population declines in recent years, the South has the highest birth rate of any region. And people born there often don’t leave: As of 2021, 82% of people born in Texas still live in the state, the highest percentage in the U.S., according to a Dallas Fed analysis released in August 2023. North Carolina and Georgia round out the top three states.
Many Americans who were not born in the South are also migrating there. The states with the largest population gains between July 2022 and 2023 were all in the South: Texas, Florida, North Carolina, Georgia, South Carolina and Tennessee. Of the eight U.S. states that lost population between 2022 and 2023, only two were Southern: Louisiana and West Virginia.
Overall, there’s plenty of reason to be optimistic about the South’s economic future, but it’s still a work in progress, and some states are far more prosperous than others.
Have you moved to or from the South in the past few years and can tell us why you moved? Or are you a Southerner who can talk about the influx of new residents? If so, please contact this reporter at jzinkula@businessinsider.com.
