Sep. 20, 2012 at 7:48 AM ET
Median household income in the United States declined for the second straight year, according to data released from the U.S. Census Bureau today. Income was $50,502 in 2011, more than 8 percent below the 2007 pre-recession peak.
While the trend is generally down, some states fared far better than others. Median income ranged from $36,919 in Mississippi to $70,004 in Maryland, positions both states have held since before the recession. Based on the 2011 Census Bureau American Community Survey, 24/7 Wall St. identified the states with the highest and lowest median household income.
Between 2010 and 2011, Vermont was the only state where median income increased. Income fell in 18 states and remained statistically unchanged in 31. In Hawaii, which remained one of the wealthiest states in the country, median income decreased by more than $3,000 between 2010 and 2011 alone.
Not surprisingly, poverty rates continued to be high. The percentage of Americans living below the poverty line increased in 17 states between 2010 and 2011, the third consecutive increase for 10 of these states. Of the states with the lowest income, eight had among the 10-highest poverty rates. Mississippi had the highest poverty rate in the country, at 22.6 percent of residents, compared with the national rate of 15.9 percent.
The poorest states in the country are almost entirely found in the South, with the exception of New Mexico. The wealthiest states can be found all across the country, including three in New England, four in the Mid-Atlantic, and two outside the contiguous 48 states.
Of course, not all residents of the wealthiest states earn as much as the median. According to the Census Bureau’s Gini Coefficient, which measures income inequality, there was a significant increase in the divide between the rich and poor in 20 states. The measure remained unchanged in the rest.
Though income inequality affects rich and poor states alike, the poorest states struggle with it most. Inequality was high in only three rich states: California, Massachusetts and Connecticut. Meanwhile, with the exception of West Virginia, all of the poorest states had among the highest income inequality scores, with six in the top 15.
In an interview with 24/7 Wall St., Brookings Institution fellow Elizabeth Kneebone explained that income inequality at a state level is often influenced by differences between the state’s high- and low-income cities and between urban and rural areas. “These are metropolitan economies that drive a lot of these [state] trends.” This was especially the case in California, where the Bay Area’s wealthy suburbs have incomes fueled by the tech industry and the low-income areas in other parts of the states are agricultural-based economies.
At least one positive development involves health insurance coverage, which increased in 37 states. While the poorest states improved, coverage remained relatively low. Three of the poorest states were among the 10 with the lowest coverage. In New Mexico, nearly 20 percent were not insured in 2011, much higher than the 15.1 percent national average. In the wealthiest states, coverage was among the highest, with four states having greater than 90 percent insured.
While most of the states with the lowest incomes suffer from weak economies, unemployment was not a significant problem. Only two states were among the worst 10 for unemployment in 2011. In fact, five of the worst-off states had unemployment rates lower than the national rate of 8.9 percent last year. In Oklahoma, one of the poorest states, unemployment was 6.2 percent. In the states with the highest median incomes, the results were similarly varied.
According to Kneebone, it is not a surprise that unemployment and income appear unrelated. "Earnings for middle and lower-wage workers have fallen or stagnated over time," Kneebone explained. "So you can have a situation where jobs are being created ... but the types of jobs matter. If those are jobs that pay low wages, even if you’re working full time, that might not be enough to lift you above the poverty line.”
To identify the states with the highest and lowest median household income, 24/7 Wall St. reviewed state data on income, poverty, and health insurance from the U.S. Census Bureau’s 2011 American Community Survey (ACS). Based on Census treatment, median household income for all years is adjusted for inflation. We also reviewed unemployment data provided by the Bureau of Labor Statistics and additional 2011 ACS data on individual cities. Because the cost of living has a direct bearing income, 24/7 Wall St. considered cost of living data for Q4 2011 from the Council for Community and Economic Research.
The Richest States
Maryland, which has had the highest median income of all states since 2006, was the only state in the country to have a median income above $70,000 in 2011. The state’s 10.1 percent was well below the national rate of 15.9 percent. Furthermore, a sizable portion of the population is earning well above the median income. Maryland is one of three states, along with New Jersey and Connecticut, where more than 10 percent of families earned more than $200,000 in 2011. Across the U.S., only 5.6 percent of families made more than $200,000 in 2011.
In 2011, Alaska moved ahead of New Jersey to take the spot of the state with the second-highest median household income in the country. The state benefits from its vast natural resources, particularly oil, natural gas, and timber. Since 1957, the state has collected nearly $100 billion in taxes from oil and gas companies, and Alaska oil production has accounted for more than 13 percent of total U.S. production. Most residents reap the benefits from these payments. Income inequality in the state is the second-lowest in the country. Just 3 percent of Alaskan families earned less than $10,000 per year compared to the 5.1 percent nationwide. Meanwhile, despite the state’s high median income, just 5 percent of families earned more than $200,000 per year.
3. New Jersey
In New Jersey, 10.9 percent of families earned more than $200,000 last year and just 10.4 percent of residents lived below the poverty line, fewer than all states except for New Hampshire. Still, there were areas in the state where poverty was more widespread. In Newark, 31.6 percent of residents lived below the poverty line, while Paterson’s poverty rate was 28.9 percent. In contrast to the state as a whole, families in Newark were more than 16 times more likely to earn less than $10,000 than over $200,000 a year. Similarly, in Paterson, 16.2 percent of families earned under $10,000 per year, while just 1.4 percent earned more than $200,000 annually.
The Poorest States
The median income of the poorest state in the country, Mississippi, was just slightly less than 53 percent of the median income of Maryland, the richest state. Mississippi’s median income--like many states-- fell each year between 2008 and 2011, dropping $2,677 during that time. Not only did Mississippi have the highest poverty rate in the country, but 7.8 percent of Mississippi families made less than $10,000 in 2011, which was also the lowest rate in the country. While unemployment declined in most states between 2010 and 2011, Mississippi’s actually rose 0.2 percentage points, one of only two states to see an increase in unemployment.
2. West Virginia
West Virginia’s median income of $38,482 was well off the median income of $40,093 in 2007. The state’s unemployment rate of 8 percent was well below the 8.9 percent nationwide. But, like Kentucky, a softening mining sector in 2012 could weaken West Virginia’s economy. The proportion of West Virginia residents without health insurance grew 4.9 percent, the third-largest increase in the U.S. Fortunately for cash-strapped residents, although the state’s overall cost of living is in the middle of the pack compared to all other states, the cost of groceries is the third lowest in the country.
While the national median household income fell to $50,502 in 2011, Arkansas was just one of three states where median income remained below $40,000 for the year. Despite an unemployment rate of 8 percent in 2011, nearly one percentage point below the national rate, the 19.5 percent of families lived below the poverty line, one of the nation’s highest rates. Poverty was slightly less of a problem in Little Rock, the state’s largest city, which had a 16.4 percent poverty rate and a median income of $40,976. Despite having the third-lowest cost of health care nationwide at the end of 2011, 17.1 percent of residents lived without health insurance last year--well above the national figure of 15.1 percent.