Last year, household income remained effectively unchanged, according to data released this week by the U.S. Census Bureau. This is despite the fact that the U.S. added nearly 2.2 million jobs in 2012.
“The big story is that everything was stagnant over the year” said Economic Policy Institute’s Elise Gould. “We’re stagnant, and continue to be in a bad place.”
While the economy continues to struggle, residents in the wealthiest states continue to make far more than in the poorest. In 2012, Maryland remained the richest state in the country, with a median household income of $71,221. Mississippi was again the poorest, with an income of $37,095 — nearly half that of Maryland’s.
Despite the addition of jobs nationwide, median incomes remained stagnant in most states and were still generally below their 2008 levels, adjusted for inflation. Sheldon Danziger, president of the Russell Sage Foundation, explained that this has been the nature of the recovery. “We have an economy that continues to grow, with most of the gains going to the economic elite. I don’t see any bright prospects for the median worker, much less the poor.”
States with lower median incomes generally had much higher rates of poverty than the national rate. All of the 10 states with the lowest median income in 2012 also had among the highest poverty rates in the country. While 15.9% of Americans fell below the poverty line in 2012, nearly one in four Mississippians did.
Employment is one of the biggest factors affecting income. In some states with lower unemployment, a higher share of the households had steady income, which bolsters the state’s median. In many of the highest-income states, like New Hampshire, Minnesota and Hawaii, unemployment in 2012 was less than 6%, compared to a national rate of 8.1%.
Elise Gould, Director of Health Policy for Economic Policy Institute, explained that unemployment rates can have a significant effect on a state’s household income. “When we’re talking about average families and poor families, the vast majority of income comes from wages. So it’s about jobs.” Gould cautioned, however, that unemployment rates do not tell the full story.
Unemployment rates, for example, ignore those people who have given up looking for work or accept part-time work. According to the Bureau of Labor Statistics, while 8.1% of American workers were unemployed in 2012, 14.7% were underemployed, meaning they wanted to work full time but could not. This was an increase from roughly 10% in 2008.
The types of jobs available in each state also affect income. A review of Census Bureau industry composition data shows that people in most of the states with a higher median income were often more likely to be employed in information, finance, professional and other positions that tend to pay higher salaries. Maryland, the wealthiest state in the country, had the highest percentage of workers in professional, scientific and management positions.
At the same time, many of the low-income states had smaller percentages of these professional occupations and higher rates of employment in retail, manufacturing and transportation. The high proportion of manufacturing jobs in low-income states might be surprising, but, explained Danziger, the makeup of the manufacturing industry in the country has changed.
“There’s a difference between unionized auto company workers and non-unionized parts suppliers,” Danziger said. “Even when manufacturers haven’t cut wages, they are adopting labor-saving technological change.”
To identify the states with the highest and lowest median household income, 24/7 Wall St. reviewed state data on income from the U.S. Census Bureau’s 2012 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 for 2012, as well as 2012 ACS data on health insurance coverage, employment and poverty.