Census data: More work to do to address racial disparities

According to the latest Census data, Minnesota families brought home bigger paychecks in 2015 than they did in 2014. Minnesota’s $63,488 median household income is considerably higher than the $61,558 reported in 2014, and has returned to pre-recession levels more quickly than the nation as a whole. The big racial disparities in income that have characterized our Census data in the past remain – strong evidence that there’s still a lot of work to do.

The income data demonstrate how far the economy has come since the floor dropped out during the Great Recession that began in 2007. The gains in 2015 mean that Minnesota’s inflation-adjusted median household income is now back to roughly where it was when the recession began, and represents a big improvement from 2011, when it had dipped to $60,016. Our progress exceeds a larger, national trend. The median household income in America increased from $53,723 to $55,755 — an impressive jump, but one that falls well short of the $58,003 reported in 2007.

The Census data also show that fewer Minnesota families are struggling to meet their basic needs when compared to 2014, although more did so in 2015 than in 2007. In 2015, the poverty rate in Minnesota fell from 11.5 percent to 10.2 percent. That’s the third lowest poverty rate in the nation. But more families are still struggling compared to 2007, when Minnesota’s poverty rate was 9.5 percent. For a family of four, the poverty line was set at about $24,000 in 2015. America saw its poverty rate fall from 15.5 percent to 14.7 percent.

The numbers on income and poverty look very different in Minnesota’s communities of color. While the estimated median incomes of Asian, black, Native American and Hispanic or Latino households in Minnesota all rose, the increases were not statistically significant. In other words, while the Census estimated that these median household incomes were higher, the methodology used could not say with certainty that any real change occurred.

Statistical issues aside, the data prove that many communities are still excluded from the state’s overall economic success. For example, while Asian Minnesotans’ median household income is about $5,000 higher than the median household income of white Minnesotans, the poverty rate for Asian Minnesotans is more than twice as high as that of white Minnesotans. And the median household income for black Minnesotans remains less than half that of their white neighbors. The median household incomes for most racial and ethnic categories in Minnesota included in the Census are now statistically indistinguishable from where they were in 2007 although black Minnesotans’ inflation-adjusted median household income remains lower than it was in 2007 by about $4,000.

2016-acs-chart

Source: American Community Survey.

The data make it clear that policymakers can and must do more to ensure that all Minnesotans can share in the state’s prosperity. Poverty rates may be low for some groups, but about 550,000 Minnesotans overall — roughly 360,000 of them white or Asian — still struggle to pay for child care, cover their health insurance premiums, write their rent checks and keep food on the table. Despite working hard, many families’ paychecks simply don’t stretch far enough to make ends meet, and there are not enough jobs that provide important benefits like paid sick leave.

Additionally, the clear racial disparities in the data — and the long-term, systemic reasons they exist — cry out for a continued spotlight on racial equity during Minnesota’s legislative process. Policymakers took a first step last year by discussing and enacting policies that moved toward addressing our racial disparities; this is an important conversation that must continue.

We know that policy can make a difference because history and research show that the safety net works. When states and the federal government invest in policies that boost the incomes of working families, make affordable child care available, broaden access to health insurance and support workers on the job, families do better as a result. That’s why one alternative measure of how many households struggle to meet their basic needs — the national Supplemental Poverty Measure — has decreased from an estimated 26 percent in 1967 to 16 percent in 2014. The Supplemental Poverty Measure considers the impact of important policies on family income, like the federal Earned Income Tax Credit or Minnesota’s own Working Family Credit.

Minnesota should continue building on the track record of successful state and federal policies until the opportunity to find shared prosperity is available in every corner of the state.

-Ben Horowitz

About Ben Horowitz

Ben Horowitz is the Minnesota Budget Project's policy advocate.
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