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

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]