Is Earning $23 an Hour a Good Salary?

Is an hourly wage of $23 considered a good salary? This common question does not have a simple answer, as its assessment depends on various personal and external financial factors. What one individual considers sufficient can be vastly different for another, influenced by their unique circumstances and financial obligations.

Calculating Your Annual Earning Potential

Understanding your gross annual income is the first step in evaluating an hourly wage. A standard full-time work week in the United States typically consists of 40 hours. Assuming an individual works 52 weeks per year, the calculation for annual earnings becomes straightforward.

Earning $23 per hour for 40 hours a week over 52 weeks results in a gross annual income of $47,840. This figure represents total earnings before any deductions are made. It is important to distinguish this gross income from net income, which is the actual amount of money received after taxes and other withholdings are subtracted. The difference between these two figures highlights the importance of understanding all factors that impact take-home pay.

National Wage Context

Placing an hourly wage of $23 within the national wage context provides a broader perspective on its standing. The federal minimum wage in the United States is $7.25 per hour, a rate that has remained unchanged since 2009. While some states have set their own minimum wages above this federal floor, many still adhere to the $7.25 rate.

In comparison, an hourly wage of $23 significantly exceeds the federal minimum wage. The national average hourly earnings for all private employees in the U.S. was approximately $36.44 as of 2025. The average annual salary in the US is around $65,470. Therefore, earning $23 an hour, which translates to a gross annual income of $47,840, positions an individual below the national average annual salary, but well above the federal minimum wage.

Geographic Cost of Living Differences

The true purchasing power of $23 an hour is heavily influenced by the geographic cost of living. Expenses such as housing, transportation, and groceries vary significantly across different regions of the United States. What might be considered a comfortable income in a lower-cost-of-living area could be insufficient in a high-cost urban center.

Housing costs are often the largest expense, with rents and home prices showing substantial disparities between metropolitan, suburban, and rural areas. A one-bedroom apartment in a major city can cost several times more than a similar dwelling in a smaller town or rural setting. This dramatic difference directly impacts the portion of income available for other necessities.

Transportation expenses also fluctuate based on location, with reliance on public transit or personal vehicles affecting costs. Densely populated urban areas may offer extensive public transportation networks, potentially reducing the need for car ownership and associated costs like fuel, insurance, and maintenance. In contrast, suburban and rural areas often necessitate a personal vehicle, incurring higher transportation burdens. The price of groceries and other daily essentials can also be higher in certain regions. These localized variations mean that a salary providing a comfortable lifestyle in one area might only cover basic necessities in another, making geographic location a primary determinant of financial well-being.

Factors Affecting Net Income

Several deductions reduce an individual’s gross pay to their net, or take-home, pay. Federal income tax is a significant deduction, with the amount withheld depending on factors such as income level, filing status, and claimed allowances. The federal income tax system is progressive, meaning higher incomes are subject to higher tax rates.

Social Security and Medicare taxes, collectively known as Federal Insurance Contributions Act (FICA) taxes, are also withheld from earnings. For 2025, employees contribute 6.2% of their wages to Social Security and 1.45% to Medicare. This results in a combined employee FICA tax rate of 7.65%.

State and local income taxes further reduce net pay, varying significantly by jurisdiction. Beyond mandatory taxes, employer-sponsored benefits like health insurance premiums and contributions to retirement plans, such as 401(k) or 403(b) accounts, also reduce take-home pay. While these deductions lower the immediate cash available, they provide valuable benefits and contribute to long-term financial security.

Managing Expenses and Setting Financial Goals

Effectively managing expenses and setting financial goals are crucial for anyone earning $23 an hour. Creating a detailed budget is a fundamental step, outlining all sources of net income and categorizing typical expenses. This includes fixed costs like housing and utilities, as well as variable expenses such as food, transportation, and personal spending.

A budget helps identify areas where spending can be adjusted to align with financial realities and objectives. For individuals earning $23 an hour, prioritizing essential expenses is important, especially in higher cost-of-living areas. Financial goals at this income level often include building an emergency fund, which typically aims for three to six months of living expenses, and addressing high-interest debt. Modest savings for future aspirations, such as a down payment on a vehicle or further education, can also be pursued with careful planning.