Closing the Gap: Employer Strategies for the West South Central's Rising Cost of Living

America’s West South Central division—including Arkansas, Louisiana, Oklahoma, and Texas—spans sprawling Gulf Coast metros and vast rural stretches, and over the last six years has been one of the country's fastest-growing divisions. In this post, we examine how costs and wages have shifted across the division since 2021, and what those trends mean for families and the employers navigating them.

Six years of cost growth in the West South Central Division

The West South Central is one of the country’s most affordable divisions and as a result, is home to several of the nation’s hottest domestic migration destinations, including Kaufman and Rockwall counties outside Dallas, Texas. At $24.40 per hour, the 2026 family-sustaining wage for a household of two working adults and two children is the second-lowest after the East South Central division, and well below the national average.

However, costs have been increasing in the division over the last six years. Between 2021 and 2026, the cost of supporting a family grew across all four states. On average, counties saw annual budgets increase by more than $17,700 for a family of four, a 21.1% increase. That growth was also uneven across states: Oklahoma counties averaged nearly 30% living wage growth over six years, while Texas counties averaged closer to 18%.

Housing costs have driven family budget growth

The biggest driver of living wage growth in the division since 2021 has been housing, up 36% and adding almost $4,500 a year to family budgets across the division. After years of sharp increases, however, rental costs are beginning to plateau, growing just 1.7% between 2025 and 2026.

In contrast, childcare costs have climbed steadily, up 23.5% since 2021 and adding an average of $3,648 a year to family budgets. For a family of four in the West South Central, childcare costs average $19,159 annually, more than the cost of rental housing in many of the division's counties. Health care—including both employee premium contributions and out-of-pocket expenses—is another emerging pressure, largely flat through 2022 before accelerating sharply, and up 25.1% over six years.

The local patterns behind cost growth

But what's driving cost burdens for working families is a deeply local story. In a previous post, we identified six cost pressure typologies across all 3,144 U.S. counties, and three stand out in the West South Central division.

Nearly two-thirds of counties fall into the Steady Cost Growth typology, in which housing, childcare, and healthcare all climbed together with no single pressure dominating. About a quarter of counties have absorbed outsized childcare increases over several years. And 9% of counties—concentrated in the division's major metros and their suburbs—reached peak housing costs between 2022 and 2023 that are now stabilizing.

What this means for local employers

These typologies point to different pressures and strategies for closing the gap. To better understand where those pressures land, we turn to the division's major metros.

In fast-growing metros like Dallas-Fort Worth (DFW) and Fayetteville—two of the nation's top domestic migration destinations over the last decade—the cost of supporting a family grew far faster than wages. Between 2021 and 2025, the family-sustaining cost of living grew 22% in DFW, compared to median wage growth of just 13%. In Fayetteville, the gap was even wider: family-sustaining cost of living surged 32% compared to median wage growth of 23%. Houston follows a similar pattern, with the cost of living outpacing wage growth by nearly 9 percentage points. Both an increase in cash compensation and targeted benefits—like childcare subsidies and expanded healthcare premium contributions—can be a cost-effective strategy to improve worker financial stability in markets where costs are growing faster than wages. 

In markets like Oklahoma City, Tulsa, San Antonio, New Orleans, and Little Rock, the story is different. Wages have grown more in step with costs—and in some cases, outpaced them—but the wage base itself is low, and less than half of workers earn a family-sustaining living wage. For employers operating across these markets, wage competitiveness is the primary lever. 

Austin sits in a category of its own, with the highest median wage in the division at $27.38 an hour and the closest to clearing its local living wage threshold. Costs have outpaced wages modestly, but the gap is narrow enough that targeted benefits—particularly childcare and housing assistance in select industries—can close the gap for workers who are already close to the threshold. 

Costs are cooling, but the gap remains

Across the West South Central, costs have largely cooled in the last year, and in some counties in Texas and Louisiana, living wages actually declined slightly between 2025 and 2026. But five years of cumulative growth means wages across the division haven't fully caught up to local costs, even if they are cooling. For employers, understanding whether your market is a cost-pressure story or a wage-floor story is increasingly the difference between a compensation strategy that works and one that doesn't.

Explore our data or connect with our team to factor our location-specific Wage Index database into your compensation planning, support workforce stability, and help address risks before they grow.