Democrats have increasingly positioned themselves as the party that can make life more affordable for Americans, but a new study suggests the reality under their governance tells a different story. According to CNBC's latest ranking of states by cost of living, nine of the ten most expensive states in the nation are run by Democratic governors, with many also featuring Democratic supermajorities in their state legislatures. The findings undercut a central Democratic campaign message ahead of the 2024 elections, as party leaders have promised to prioritize lowering costs if they regain control of Congress.
Senate Minority Leader Chuck Schumer, D-N.Y., declared in January that if Democrats win the Senate majority, «lowering costs will be our North Star.» In February, the chair of the House New Democrat Coalition rolled out an «Affordability Agenda,» stating, «That's why we are committed to taking on the cost-of-living crisis to make it easier for people to afford their home, pay for health care, keep the lights on, and build a better future.» Critics, however, point to the record of Democratic governance in states like California, New York, and Illinois, where costs for housing, energy, and everyday goods have soared under years of one-party control.
California tops the list as the most expensive state in the nation. Monthly housing costs there are the highest in the U.S., with 40% of residents paying more than 30% of their income on housing. According to RAND researchers, affordable housing in California costs $640 per square foot to build, compared with $228 for market-rate housing in Texas. The difference stems in part from California's slow permitting timelines, which average 49 months for a typical development, versus just 27 months in Texas. Those delays impose a «substantial 'time tax' of $1,284 per unit, per month,» RAND found. CNBC analysts gave California an «F» for both cost of living and business-friendliness.
Energy costs in California are also among the highest in the nation. The average monthly energy bill in the Golden State is $373, compared with $149 in Colorado and $276 in New York. Gasoline prices in California average $5.39 per gallon, far above the national average of $3.87. The state has imposed a 92-cent-per-gallon tax on gasoline, the highest in the U.S., as part of its push to shift consumers away from fossil fuels and toward electric vehicles. These policies, while aimed at environmental goals, have contributed to the state's high cost of living.
Other Democratic-led states on the top ten most expensive list include Hawaii, Oregon, New York, Rhode Island, Connecticut, Washington, Illinois, and Colorado. All have above-average rents and other costs. While Hawaii's high costs can be partly attributed to its geographic isolation, analysts argue that the other states' rankings are largely the result of Democratic policies. These include pro-labor rules that drive up wages and construction costs, regulatory overreach that creates delays, energy policies that inflate electricity and gasoline bills, and high taxes that are passed along to consumers.
The only Republican-led state to make the top ten most expensive list is Florida, which has become a victim of its own success. Millions of people and thousands of companies have moved to the Sunshine State in recent years, drawn by its low-tax, business-friendly climate. The influx, combined with several destructive hurricanes, has sent rents and insurance costs soaring. Florida's situation stands in contrast to the other high-cost states, where policy choices are seen as the primary driver.
At the other end of the spectrum, the most affordable states are overwhelmingly Republican-led. Missouri, Ohio, Indiana, and Alabama rank among the cheapest places to live. These states generally have lower taxes, fewer regulations, and more business-friendly environments, which help keep costs down for residents. The contrast is stark: rents in Democratic-run Illinois are 40% higher than in neighboring Republican-run Ohio, according to the CNBC data.
The study also highlights the economic consequences of high costs. California, which has passed legislation driving up wages for hourly employees, has an unemployment rate of 5.3%, compared with the national average of 4.2%. All of the top ten most expensive states except Hawaii and Colorado have unemployment rates above the U.S. average. Higher wages may sound appealing, but they can lead to fewer jobs when businesses struggle to absorb the costs. A higher cost of living also drives businesses away, meaning fewer job opportunities for those who remain.
Democrats have defended their record by arguing that investments in social programs, infrastructure, and clean energy are necessary for long-term prosperity. They also note that some high-cost states, like New York and California, are economic powerhouses with high median incomes. However, the CNBC ranking suggests that for many residents, the benefits of living in these states are increasingly outweighed by the financial burden. As the 2024 election approaches, the affordability gap between Democratic and Republican states is likely to remain a key point of debate.
