September 2013

Poverty in Minnesota: 5 key facts

Craig Helmstetter

The U.S. Census Bureau released its annual poverty estimates this month. While not a perfect measure -- the definition was developed in the mid-1960s when household expenses looked very different -- it is indexed for household size  (the 2012 poverty line is $11,945 for a single-person household and $23,283 for a family of 4) and does give us some good guidance about levels of poverty and who are among our poorest residents.

Minnesota Compass project manager, Craig Helmstetter, highlights 5 key facts and trends about poverty in Minnesota gleaned from the new estimates:

1. Minnesota is one of only two states in the nation to see a drop in poverty rates from 2011 to 2012
On the heels of a long recession recovery, most of the nation has to settle with finding that at least things have not gotten worse: The national poverty rate held steady at 15.9 percent. Here in Minnesota, however, the trend line actually bent a little in the right direction: After three consecutive years of increases, Minnesota’s poverty rate showed a statistically significant decrease from 11.9 percent in 2011 to 11.4 percent in 2012 (and down in Texas from 18.5% to 17.9%). That is about 23,600 fewer Minnesotans in poverty compared to 2011.

While this is good news, there are still nearly 600,000 people living in poverty in our state, and Minnesota’s poverty rate still far exceeds the 8 percent level we saw at the turn of the century.

2. Generally speaking, the younger you are the more likely you are to be in poverty
With a 15 percent poverty rate, children are much more likely to be in poverty than are working age adults (11%) or seniors (age 65+; 8%). A more detailed look at age and poverty shows that nearly 1 in every 5 preschoolers in Minnesota lives in a household whose income is below the poverty line, compared with 1 in 13 in their prime working years (45-64), and only 1 in 16 of those in the early years of traditional retirement (65-74). Young adults (18-24) buck the trend, with the highest rate: 1 in 4.

3. Single-parent households are the most likely type of household to be in poverty

In Minnesota, as elsewhere, single-parent households have much higher rates of poverty than do others. While only 5 percent of married couples with children are in poverty, the rate jumps to 19 percent for households headed by single fathers, and 35 percent for households headed by single mothers.
Note that while state government now officially recognizes same-sex marriages in Minnesota, these households are still mainly categorized as “single parent” households; so poverty rates may actually be slightly higher than represented in the current Census Bureau categories.

4. Full-time, year-round work may not guarantee easy living, but it nearly guarantees an escape from the official poverty line

During the great recession, poverty rates went up as jobs went away. The state’s job recovery from 2010 to 2012, is reflected in our small decline in poverty rates over that same period, as well as an increase in the proportion of adults working.
While there is a very close relationship between jobs and poverty rates – only 2 percent of Minnesotans with full-time, year-round jobs were in poverty according to our analysis of the 2011 ACS census data – it is also important to note that not all jobs are created equal. Those earning the federal minimum wage (which is also Minnesota’s prevailing minimum wage) of $7.25 per hour on a full-time, year-round basis make just over $15,000 on an annual basis – enough to push a single person over the poverty line, but not enough to do so for even a two-person family.

On September 19, the Minnesota Department of Employment and Economic Development released the August jobs numbers, which showed our state finally recovering all jobs lost during the recession. We will have to wait until next year’s census report on poverty numbers to see whether the continued increase in jobs in our state leads to a more dramatic reduction in the state’s poverty rate.

5. Populations of color are faring worse here in Minnesota than they are nationally

Poverty rates are yet another example of the “Minnesota paradox”: as a state we are better off than the rest of the nation, but this relative good fortune does not extend to Minnesota’s populations of color. At 27 percent, the poverty rate among Minnesotans of color is high. Poverty rates are especially high among certain groups including African Americans (38%), American Indians (32%), and Hispanics (26%).

Not only are poverty rates among Minnesota’s populations of color high relative to that of non-Hispanic whites in Minnesota (8%), they are actually high relative to those among their counterparts nationwide. A special comparison that we did of more robust three-year data showed that Minnesota’s poverty rate for Asians ranks among the worst of all states – 43rd of 50, as does our poverty ranking for African Americans (44th) and American Indians (46th).

The latest trends are not without some glimmers of hope, even in terms of Minnesota’s often daunting racial disparities: Poverty rates for American Indians declined significantly from 2011 to 2012.

Note: There are two sources of official poverty rates released by the Census Bureau each year. The Current Population Survey (CPS; released on September 17th this year) and the American Community Survey (ACS; September 19th). They provide very similar state and national estimates (CPS reported poverty rates 15.0% nationally, and 10.0% in Minnesota, compared with the 15.9% and 11.4% respective rates reported by the ACS).  At Minnesota Compass, we typically look to the ACS since it is more robust at the state level, providing demographic comparisons, as well as county-level and city-level data, the latter of which come out in the 3-year and 5-year estimates released later this fall.

 

 

Featured trend

No change in median household income
aging trend

No change in median household income in most major cities

Most of Minnesota's major cities (10,000+ residents) saw no change in median household income between the 2007-2011 and 2012-2016 time periods, according to new five-year estimates from the American Community Survey. But 8 of 97 major cities in Minnesota saw median household income increase and seven major cities saw median household income decline.

See more median income trends.

 

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