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 bad place.”
While the economy continues to struggle, residents in the wealthiest states continued 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.
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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.
America's Richest States
> Median household income: $66,259
> Population: 1,392,313 (11th lowest)
> Unemployment rate: 5.8% (12th lowest)
> Pct. below poverty line: 11.6% (8th lowest)
Over 16% of people in Hawaii worked in arts and entertainment, recreation, accommodation and food services last year, the second highest percentage in the country. This reflects the state’s strong retirement and tourism economy. The unemployment rate in Hawaii declined only slightly in 2012 from the year before, but remained well below the U.S. rate, at just 5.8%. Over that time, Hawaii was also one of a handful of states to see a meaningful increase in income. Median household income rose by more than $3,000, to $66,259.
> Median household income: $67,276
> Population: 3,590,347 (22nd lowest)
> Unemployment rate: 8.4% (tied-14th highest)
> Pct. below poverty line: 10.7% (4th lowest)
Connecticut’s median household income fell considerably from 2008, when a typical family in the state took in $73,075 annually. This mirrored broader trends in the rest of the U.S., as nationwide median household income fell from over $55,000 in 2008 to $51,371 in 2012. Still, 11.5% of the state’s households earned at least $200,000 in 2012, the most in the U.S. Connecticut also remains one of the states with the worst income inequality in the nation, ahead of only New York.
> Median household income: $67,712
> Population: 731,449 (4th lowest)
> Unemployment rate: 7.0% (22nd lowest)
> Pct. below poverty line: 10.1% (2nd lowest)
In spite of Alaska’s high median household income -- and the nation’s second-lowest poverty rate -- over 20% of the population did not have health insurance last year, more than all but two other states. This could be due in part to the state's high volume of seasonal employees, who are much less likely to have health insurance. Alaska’s oil production also bolsters residents’ income, with most collecting dividend payments from the state’s reinvested oil savings.
2. New Jersey
> Median household income: $69,667
> Population: 8,864,590 (11th highest)
> Unemployment rate: 9.5% (tied-5th highest)
> Pct. below poverty line: 10.8% (5th lowest)
The median household income in New Jersey was just shy of $70,000 in 2012. This was due in part to the large number of especially wealthy households. More than 11% of households had an income of at least $200,000 in 2012, a higher percentage than any other state except Connecticut, and nearly double the national rate. But not all residents were well off in 2012. The state’s unemployment rate for the year was 9.5%, among the highest in the nation. Also, the percentage of households that depended on food stamps rose from 8.0% in 2011 to 9.3% last year. This mirrored a nationwide trend: The number of American households on food stamps rose to from 13.0% to 13.6% between 2011 and 2012.
> Median household income: $71,122
> Population: 5,884,563 (19th highest)
> Unemployment rate: 6.8% (17th lowest)
> Pct. below poverty line: 10.3% (3rd lowest)
Maryland was the only state in the country with a median household income to exceed $70,000 in both 2011 and 2012. Also, nearly 11% of households in Maryland earned $200,000 or more last year, the third-highest percentage in the nation and close to double the national rate of 5.9%. People in Maryland were more likely to be employed and to hold good jobs. Just 6.8% of the workforce was unemployed in 2012, compared to 8.1% nationwide. Conversely, 15.5% of the workforce, the highest percentage in the nation, were employed in professional, scientific and management occupations, which are generally high skill and high pay.
America's Poorest States
> Median household income: $41,724
> Population: 4,380,415 (25th lowest)
> Unemployment rate: 8.2% (tied-17th highest)
> Pct. below poverty line: 19.4% (5th highest)
Kentucky is, by many measures, one of the most poverty-stricken states in the nation. The state’s 19.4% poverty rate in 2012 was worse than all but four states. Additionally, more than 18.0% of residents received food stamps in 2012, higher than all but two states and up from 17.4% the year before. Among the more positive developments for the state, the unemployment rate fell from 9.5% to 8.2%. But recently, concerns have risen over the state’s coal jobs. Demand for coal has declined due to low natural gas prices, as well as tougher emission controls.
> Median household income: $41,574
> Population: 4,822,023 (23rd highest)
> Unemployment rate: 7.3% (tied-22nd highest)
> Pct. below poverty line: 19.0% (7th highest)
After falling by 1.4 percentage points, the unemployment rate in Alabama was just 7.3%, well below the national rate in 2012. Despite this improvement, families in the state still did not make very much money last year, with 6.7% of households earning less than $10,000. Only Mississippi and New Mexico had higher percentages living on so little. About one in six households relied on food stamps in 2012, making Alabama among the 10 states most dependent on these benefits. Despite the high level of poverty, only 13.3% of Alabama residents lacked health insurance last year, better than the national rate.
3. West Virginia
> Median household income: $40,196
> Population: 1,855,413 (13th lowest)
> Unemployment rate: 7.3% (tied-22nd highest)
> Pct. below poverty line: 17.8% (13th highest)
While incomes declined across the country from 2008 to 2012, West Virginia’s median household income was effectively unchanged. Unfortunately, the state’s median income was still the third lowest in the U.S. The state had a high proportion of people employed in low-earning jobs, including retail, agriculture, forestry and fishing. Compared with other states with low median incomes, though, few people in West Virginia went without health care. Just 14.4% of the state’s population lacked health insurance, better than more than half of all states.
> Median household income: $40,112
> Population: 2,949,131 (19th lowest)
> Unemployment rate: 7.3% (tied-22nd highest)
> Pct. below poverty line: 19.8% (4th highest)
Arkansas was one of just three states, along with Mississippi and West Virginia, with a median household income $10,000 below the U.S. median. The state’s poverty rate, at nearly 20%, was also among the highest in the country. Despite these problems, unemployment dropped from 7.9% in 2011 to 7.3% last year. Arkansas was also one of the nation’s worst states for food insecurity, according to the U.S. Department of Agriculture. Between 2010 and 2012, an estimated 19.8% of households had little or very little secure access to food, above the 14.7% figure for all U.S. households.
> Median household income: $37,095
> Population: 2,984,926 (20th lowest)
> Unemployment rate: 9.2% (6th highest)
> Pct. below poverty line: 24.2% (the highest)
In Mississippi, about one in five households depended on food stamps last year, second only to Oregon. The state’s poverty rate was 24.2%, the highest in the nation by more than three percentage points. Like many of America’s poorest states, the median household income in Mississippi has declined considerably since 2008, when it was just over $40,000. Fewer households earned over $200,000 last year, proportionally, than any other state except West Virginia. In addition to poverty, income inequality was also extremely severe in Mississippi, ranking behind only New York and Connecticut.
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