Running a small business it is never easy, especially during inflationary periods. In 2023, when the average the inflation rate was 4.1%35% of small businesses reported downsizing as a result of rising costs, according to a survey of 1,000 small business owners conducted by OnePoll on behalf of Melio.

At the beginning of 2024, 22 states and 38 counties and cities raised minimum wagesaffecting 10 million workers across the country, for American Institute for Economic Research – and a lot small businesses who have them on the payroll.

Connected: Here's what millions of small businesses have in common, according to a new survey

Where to do small business owners should they pay their employees more? Small business lending company OnDeck decided to learn more about it by analyzing US Census Bureau data on businesses with fewer than 500 employees.

According to research, Massachusetts, California AND New York are the top three states where small business owners can expect to pay their employees the most, with average annual wages of $72,151, $67,237 and $66,924, respectively.

On the other end of the spectrum, small business owners pay their employees the lowest median annual wage in Mississippi — $39,310, according to the data.

Connected: Poll Asks Small Business Owners What They Really Care About in the 2024 Election – The Results Were Surprising

Check out the infographic below to see the full rankings compiled from OnDeck's research:

^{Image Credit: Courtesy of OnDeck}