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States’ Income and Poverty Gains Even More Widespread in 2015 Than Initially Reported

October 25, 2016

Poverty rates dropped decisively in nearly half the states and fell in the remaining states as well. Median incomes not only definitively grew in 39 states in 2015 — as the Census Bureau reported in September[1] — but also showed strong signs of improvement in the other states taken together, an analysis of the Census’ American Community Survey (ACS) data shows.  The analysis also shows that poverty rates dropped decisively in nearly half the states and fell in the remaining states as well when considered as a group.  The ACS includes a much larger sample size than the Census Bureau’s Current Population Survey and therefore produces substantially more information about state trends, although even its sample size is not always large enough to fully capture trends in smaller states.

Median Incomes Rose Across the Country

The ACS indicates that in 39 states and the District of Columbia, median household incomes grew by a statistically significant — that is, statistically reliable — amount in 2015 (see Table 1).  (All median income findings discussed here are adjusted for inflation.)

In each of the 11 other states,[2] median household income was larger in 2015 than in 2014[3] but the difference was not large enough to be statistically significant.  Most of these states are among the nation’s least populous,[4] so the sample sizes in the ACS are not large enough to identify the year-to-year changes as statistically significant.  For example, median household income ticked up by more than 2 percent in Alaska, Delaware, Mississippi, North Dakota, and West Virginia, but none of these increases passed the statistical significance test. 

This marked the first time in the ACS’s 15-year history that median household incomes rose in all 50 states and the District of Columbia, whether the change was statistically significant or not.

Moreover, even the states where statewide income growth was not statistically significant showed signs of progress as a group.  When the 11 states are combined as if they were one state, we calculate that median income for all of their households together rose roughly 1.4 percent.  Moreover, we calculate that this combined increase is statistically significant, even though each state’s increase is not, because the combination of states has a larger sample size and, thus, more reliable income data, than any one state alone.

Decline in Poverty Was Widespread

The ACS also shows that the poverty rate fell by a statistically significant amount in 23 states in 2015.  In 23 of the other 27 states and the District of Columbia, the poverty rate edged downward but not by enough to be considered significant.[5]

However, the combined poverty rate for these 28 jurisdictions did fall by a statistically significant amount in 2015, from 14.2 percent to 13.9 percent, we calculate.  As with the income estimates, the improvement for the combination of states is significant — even though none of the individual declines is — due to their larger combined sample size.

Progress Likely Continuing in 2016 in Most States

More progress in both incomes and poverty is required to fully recapture the substantial ground lost due to the Great Recession.  And, to be sure, not all areas are gaining to the same degree.  Further, circumstances in some states could have worsened since the 2015 survey. 

Nonetheless, national trends in earnings and employment suggest that economic conditions are still improving in most states.  Further, this pattern of widespread growth is more likely to continue if policymakers continue to pursue policies that keep the nation’s labor market tight as well as policies that provide a special boost to low-wage workers, such as increases in state and local minimum wages[6] and new or expanded state refundable tax credits for working families.[7] 

 

TABLE 1
Median Household Income in 2014 and 2015, in Inflation-Adjusted 2015 Dollars
  2014 2015 Percent change
United States $53,713 $55,775 +3.8
States where increase in median income is statistically significant
Alabama 42,895 44,765 +4.4
Arizona 50,094 51,492 +2.8
California 61,990 64,500 +4.0
Colorado 61,351 63,909 +4.2
Connecticut 70,112 71,346 +1.8
District of Columbia 71,659 75,628 +5.5
Florida 47,496 49,426 +4.1
Georgia 49,360 51,244 +3.8
Hawaii 69,615 73,486 +5.6
Illinois 57,478 59,588 +3.7
Indiana 49,484 50,532 +2.1
Kansas 52,556 53,906 +2.6
Kentucky 43,014 45,215 +5.1
Louisiana 44,601 45,727 +2.5
Maine 49,527 51,494 +4.0
Maryland 74,070 75,847 +2.4
Massachusetts 69,223 70,628 +2.0
Michigan 49,874 51,084 +2.4
Minnesota 61,535 63,488 +3.2
Missouri 48,401 50,238 +3.8
Montana 46,363 49,509 +6.8
Nebraska 52,707 54,996 +4.3
New Hampshire 66,557 70,303 +5.6
New York 58,928 60,850 +3.3
North Carolina 46,585 47,830 +2.7
Ohio 49,340 51,075 +3.5
Oklahoma 47,575 48,568 +2.1
Oregon 51,124 54,148 +5.9
Pennsylvania 53,290 55,702 +4.5
Rhode Island 54,978 58,073 +5.6
South Carolina 45,277 47,238 +4.3
South Dakota 51,012 53,017 +3.9
Tennessee 44,403 47,275 +6.5
Texas 53,105 55,653 +4.8
Utah 60,976 62,912 +3.2
Vermont 54,205 56,990 +5.1
Virginia 64,982 66,262 +2.0
Washington 61,426 64,129 +4.4
Wisconsin 52,709 55,638 +5.6
States where increase is not significant for the state alone (but is significant when states are considered together)
Alaska 71,671 73,355 +2.3
Arkansas 41,302 41,995 +1.7
Delaware 59,746 61,255 +2.5
Idaho 47,890 48,275 +0.8
Iowa 53,771 54,736 +1.8
Mississippi 39,702 40,593 +2.2
Nevada 51,500 52,431 +1.8
New Jersey 71,994 72,222 +0.3
New Mexico 44,837 45,382 +1.2
North Dakota 59,039 60,557 +2.6
West Virginia 41,073 42,019 +2.3

Source: U.S. Census Bureau, 2014 and 2015 American Community Surveys; CBPP estimates for 11 pooled states based on ACS table B19001.

End Notes

[1] Kirby G. Posey, “Household Income: 2015,” American Community Survey Briefs, Census Bureau, September 16, 2016, https://www.census.gov/library/publications/2016/acs/acsbr15-02.html.  The Census Bureau’s poverty report is Alemayehu Bishaw and Brian Glassman, “Poverty: 2014 and 2015,” Census Bureau, September 16, 2016, https://www.census.gov/library/publications/2016/acs/acsbr15-01.html.

[2] Those 11 states are Alaska, Arkansas, Delaware, Idaho, Iowa, Mississippi, Nevada, New Jersey, New Mexico, North Dakota, and West Virginia.

[3] Note that the ACS “2015” data reflects incomes from both 2014 and 2015 due to the lagged timing of the ACS. Throughout the year, the ACS asks different households about their incomes over the previous 12 months, so ACS interviews in the early part of 2015 mostly refer to 2014, while interviews conducted later in the year are more about 2015.

[4] An exception was New Jersey, one of the dozen largest states.  It saw the smallest income gain of any state in 2015 (0.3 percent, not a significant change).

[5] Poverty rates ticked up in Arkansas (up 0.2 percentage points), Idaho (0.3 percentage points), Mississippi (0.5 percentage points), and Nebraska (0.1 percentage point), but none of these changes were statistically significant.

[6] Elise Gould, “Wages grew more for low-wage workers in states that raised their minimum wage in 2015,” Economic Policy Institute, March 2, 2016, http://www.epi.org/publication/wages-grew-more-for-low-wage-workers-in-states-that-raised-their-minimum-wage-in-2015/.

[7] Erica Williams, “States Can Adopt or Expand Earned Income Tax Credits to Build a Stronger Future Economy,” Center on Budget and Policy Priorities, updated January 19, 2016, http://www.cbpp.org/research/state-budget-and-tax/states-can-adopt-or-expand-earned-income-tax-credits-to-build-a