Census: Incomes on the rise, but many still struggle to get ahead

New data from the Census released today show the nation’s economic recovery is boosting incomes and reducing hardship, including in Minnesota. The median household income in Minnesota rose to $65,599 in 2016, and the share of Minnesotans living in poverty held fairly steady at 9.9 percent. Minnesota’s median household income now stands almost $8,000 above the national figure and the share of Minnesotans living in poverty is well below the national figure of 14 percent.

This year’s income gain puts the income of a typical Minnesota family at its highest since 2007. In that year, the Great Recession began dragging the median household income down, reaching a low point of an inflation-adjusted $60,780 in 2011.

Minnesota has tended to outperform the nation because of economic factors and because of policies enacted by Minnesota policymakers that contribute to a more equitable state economy. Examples of such policies include increasing the state minimum wage and expanding tax credits that boost the incomes of low-income families, and expanded access to affordable health insurance and child care. As part of the 2016 budget process, Minnesota policymakers spent time researching policy options with an explicit focus on closing racial disparities.

These data also remind us that economic growth by itself does not guarantee broad prosperity, and economic opportunity is not yet available to all. Minnesotans of color aren’t sharing in our state’s economic gains to the same degree as white Minnesotans.

 2016 Median Household Income 2016 Poverty Rate
All Minnesotans$65,5999.9%
Asian Minnesotans$70,85316.0%
White, non-Hispanic Minnesotans$68,6877.0%
Latino Minnesotans$45,94618.1%
American Indian/Alaskan Native Minnesotans$37,03431.6%
Black/African American Minnesotans$33,43629.8%

Source: American Community Survey

The Census data demonstrate that economic gains did not accrue equally in all communities in Minnesota. Communities of color continue to face structural hurdles to getting ahead. They are less likely to have access to affordable child care, affordable housing, or transportation options that would enable them to get to good jobs. Some of these barriers have long historical roots; policies such as redlining limited where people of color could live, and inadequate investment in their communities created further barriers.

These structural and historical factors are reflected in the Census numbers on income and poverty in Minnesota’s communities of color. The median household incomes of Black, Hispanic or Latino, and American Indian households are significantly lower than that of their white neighbors. In fact, the median household income for Black Minnesotans remains about half of the median income of white Minnesotans. And, while Asian Minnesotans’ median household income is comparable to that of white Minnesotans, the poverty rate for Asian Minnesotans is more than twice as high as that of white Minnesotans.

Racial disparities are also reflected in the poverty rate. While 9.9 percent of all Minnesotans had incomes below the federal poverty line in 2016, the rate was much higher in communities of color. Overall, around 530,000 Minnesotans struggled to make ends meet on poverty-level incomes, which is currently $24,600 for a family of four.

These data remind us that policy choices matter. We learned earlier this week that, in part thanks to the Affordable Care Act, a higher share of Minnesotans had health insurance than ever before. When people earning lower wages can boost their incomes as a result of federal investments like the Earned Income Tax Credit, they are more likely to succeed at school, at work, and in building a secure future for themselves and their families.

Unfortunately, federal policymakers have created budget plans that would put the country in reverse, increasing poverty and hardship. Budget proposals by the U.S. House of Representatives and President Donald Trump would deeply cut federal investments that reduce the number of Minnesotans who go to bed hungry, forego needed medical treatment, or are unable to build the skills they need to get ahead.

Instead of investing in job training, affordable child care, and other proven solutions that expand opportunities, these budgets would make trillions of dollars in funding cuts and at the same time enact huge tax cuts that would largely benefit those households and companies who are already doing well. And the large cuts in funding to states and local governments would undermine Minnesota’s ability to enact the policies that will truly make ours a state where economic security is within reach for us all.

The data reflect both the progress we’ve made and the distance we have yet to travel. In recognition of both, federal policymakers should re-focus their efforts on building on the investments we’ve already made.

-Ben Horowitz and Clark Goldenrod

About Clark Goldenrod

Clark Goldenrod is the Minnesota Budget Project's policy analyst.
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