Sobering numbers after six years of economic recovery: Poverty rate is up, median household income is down

When the 2001 economic recession hit, Minnesota had a 7.8 percent poverty rate. After six years of economic recovery, the poverty rate is even higher: 9.5 percent.

In 2001, Minnesota’s median household income for non-elderly families was $58,363 (in 2007 dollars). After the six-year economic recovery, the state’s household median income had dropped to $55,802 in 2007, according to a review by the Minnesota Budget Project, a program of the Minnesota Council of Nonprofits. Minnesota’s numbers reflect national trends.

Katherine Blauvelt, policy analyst for the Budget Project, called the trends unprecedented since government began tracking this data in the 1940s. Citizens have never been worse off — as measured by poverty rates and median income — at the end of a multi-year economic recovery than they were at the beginning.

It means that the gains from the economic recovery weren’t equally shared, that they went more to the already affluent. “The middle of the pack isn’t doing well,” Blauvelt said. “And neither are the people who are struggling just to make ends meet.”

The Budget Project analyzed data released Tuesday by the U.S. Census Bureau in its 2007 American Community Survey. The numbers are based on a sample. It is not as accurate as the once-every-10-year census. Even so, Minnesota’s increased poverty rate and decreased median family income from 2001-2007 are statistically significant.

The big question for me is whether this kind of data will be the big wake-up call that nonprofits and other social service advocates hope for, or whether these reports are a one-day headline and collect dust on the library shelves (or live in electronic obscurity on the Internet.)

My money is on the dust bunnies.

It’s fair to note that Minnesota still fares well compared with many other states. For instance, we ranked in the bottom 20 percent of states for child poverty and in the upper 20 percent in median family income.

Still, the numbers are sobering, particularly since the state faces a large deficit in the next biennium. Minnesota has a nearly $2 billion budget hole, if you count inflation, according to the Budget Project.

“Minnesota policy makers who will soon face tough decisions about how to balance the state’s budget can’t afford to ignore these numbers,” Blauvelt said. “Our economy doesn’t necessarily help everyone. So the question is, what can communities and the state legislators and governor do to address this?”

Avalanche of numbers
Every year the census pumps out these survey numbers and people scramble to their calculators to make sense of them.

I love numbers. I have a degree in physics (unused). I actually enjoy writing about pensions and property taxes. But the American Community Survey has a lot of data that leaves me scratching my head. The survey includes data on family income, median family income, aggregate family income, nonfamily household income, median nonfamily household income, aggregate nonfamily household income, per-capita income, aggregate income, poverty by age, poverty by race, rankings by state and the list goes on.

There is a little something for everybody. There’s good news (Minnesota’s above-average rankings in many areas) and worrisome news.

Mark Peterson, president and chief executive officer of Lutheran Social Services of Minnesota, said the 2007 data only reflect what his organization already sees for service demand.

“In another 10 days we are going to be opening up 48 units of affordable family housing in the West Phillips neighborhood of Minneapolis,” he said. “When we let the community know that we were open for inquiries, we had over 1,000 for 48 units. I think the number was 1,039.”

LSS also does consumer credit counseling work, which grew by 25 percent in the last year, reaching approximately 12,000 people, he said. It’s planning for another 25 percent increase in the coming year.

“It could grow faster than that if we could bring staff on faster,” Peterson said.

Health insurance data analyzed by the Budget Project doesn’t look great but in the world of statistics, the change is unclear. In 2006-2007 (a two-year average) 8.8 percent of Minnesotans were uninsured. That’s up from 2000-2001, when 7.5 percent of Minnesotans lacked insurance. However, given the margin of error in the surveys, the change isn’t considered statistically significant. The state’s survey shows 7.2 percent of Minnesotans were uninsured in 2007.

What about the children?
The Children’s Defense Fund of Minnesota also cranked out its analysis of the new census data.

It said 11.6 percent of Minnesota children lived in poverty in 2007compared to 8.6 percent in 2000.

The CDF analysis noted the counties with particularly high child poverty rates, such as St. Louis County (20.1 percent); Ramsey County (19.3 percent) and Hennepin County (14.3 percent).

In the coming weeks, expect more analysis looking at the racial disparities in poverty and income.

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