America’s Richest (and Poorest) States
The United States added more than 2.3 million jobs in 2013, the most in any year since 2005. Despite this, income levels and poverty rates did not improve in most of the United States last year, according to recently released figures from the Census Bureau’s American Community Survey.
While many American households continue to struggle to make ends meet, those in the richest states continued to earn far more than households in the poorest states. Maryland was the wealthiest state in the U.S. again last year, with a median income of $72,483. Mississippi, in turn, was yet again America’s poorest state, with a median income of just $37,963.
ALSO READ: America's 50 Best Cities to Live
States with relatively low median incomes typically had poverty rates that were much higher than the national rate. In fact, all but one of the nation’s 10 poorest states also had among the 10 highest poverty rates. Mississippi, the nation’s poorest state, had a poverty rate of 24% last year, the highest in the nation. By comparison, when surveyed, 15.8% of Americans said they lived below the poverty line at some point in the last 12 months.
One of the most important determinants of income is employment because most Americans rely on their jobs as their largest source of income. Several states with high incomes also had low unemployment rates. These include Hawaii, Minnesota, and New Hampshire, all of which had unemployment rates that were at least two percentage points below the national unemployment rate of 7.4% in 2013. But this was not the case in all high income states. California, for instance, had an unemployment rate of 8.9% last year, among the highest in the country.
A strong labor force matters, David Cooper, economic analyst at the Economic Policy Institute, told 24/7 Wall St. When the labor market improves, “that tends to disproportionately help low income folks,” Cooper said. “When there’s less unemployment, when employers are maybe having to raise wages in order to attract new workers.”
Still, unemployment rates do not tell the full story. In fact, by some measures, the job market remains distressed. The total number of jobs only surpassed pre-recession levels this year. Also, the percentage of Americans in the workforce -- either working or looking for work -- has fallen considerably since the recession.
The types of jobs available in a state also play a major role in determining income levels. For example, low-paying manufacturing jobs as well as jobs in the retail sector were generally more common in states with low median incomes. In the nation’s richest states, by contrast, high-paying jobs in the financial, information, and professional services sectors were more common.
Cooper added that “there are good jobs and bad jobs,” and that clearly some industries pay better than others. “Obviously, things like the sciences, and information technology, health care. Those tend to be sectors that pay better,” he noted. One major reason for this, Cooper said, is the educational background need for such jobs. Residents in the nation’s richest states
ALSO READ: The Most Educated Countries in the World
Although wealthy states tend to have lower poverty rates, they don't necessarily have the most equitable distribution of income. In fact, the distribution of incomes was especially imbalanced in a number of the wealthiest states. California, Connecticut, and Massachusetts, all among the states with the highest incomes, were each among the states with the most top-heavy income distributions.
The states with the lowest incomes, however, also did not perform especially well in income equality. Notably, Louisiana, which had a median household income more than $6,000 below the U.S. median, was also the third-worst state for income inequality.
To identify the richest and poorest 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 2013 American Community Survey (ACS). Median household income for all years is adjusted for inflation. Data on health insurance coverage, employment by industry, food stamp recipiency, poverty, and income inequality also came from the 2013 ACS. Income inequality is measured by the Gini coefficient, which is scaled from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality. We also reviewed annual average unemployment data from the Bureau of Labor Statistics (BLS) for 2012 and 2013.
These are America’s richest and poorest states.
The Richest States in America
5. Connecticut
> Median household income: $67,098
> Population: 3,596,080 (22nd smallest)
> Unemployment rate: 7.8% (38)
> Pct. Below poverty line: 10.7% (4th lowest)
Connecticut is both one of the richest and most unequal states. The state is often depicted in the media as the poster child for America’s growing inequality. Connecticut’s Gini coefficient of 0.499 was the second most highest in the nation. A typical household earned roughly $67,000 last year and nearly one in 10 earned more than $200,000 in 2013, second only to New Jersey. Yet, unlike many of the richest states, the unemployment rate in Connecticut was above the U.S. rate and only changed slightly from the year prior. Connecticut is also home to a disproportionate amount of financiers. Roughly 9% of employed workers were categorized as working in finance, insurance or real estate by the Census Bureau, the second highest among all states.
ALSO READ: Companies That Control the World's Food
4. Hawaii
> Median household income: $68,020
> Population: 1,404,054 (11th smallest)
> Unemployment rate: 4.8% (8th lowest)
> Pct. Below poverty line: 10.8% (5th lowest)
In addition to paradisal scenery and tropical weather, Hawaii residents are also among the nation’s wealthiest. A typical household earned more than $68,000 last year, considerably higher than the national household median income of $52,250. High incomes, as well as Hawaii’s own requirements for employers to provide workers with health coverage, have made health insurance more accessible in the state. Only 6.7% of residents did not have health insurance in 2013, less than half the national proportion of 14.5%. The cost of living in Hawaii, however, was higher than in every other state last year, most because many goods need to be shipped from the mainland.
3. New Jersey
> Median household income: $70,165
> Population: 8,899,339 (11th largest)
> Unemployment rate: 8.2% (10th highest)
> Pct. Below poverty line: 11.4% (8th lowest)
Offering easy commuting access to New York from the northern part of the state and to Philadelphia from the south, New Jersey households had the third highest median income in the country last year at $70,165. Additionally, nearly 10% of households had incomes of $200,000 or more , the highest rate in the country. In the midst of high incomes, however, there is also poverty. More than 11% of New Jersey residents lived in poverty in 2013, an increase from the year before. The portion of residents without health insurance also rose 0.5 percentage points between 2012 and 2013, one of the larger increases in the nation.
2. Alaska
> Median household income: $72,237
> Population: 735,132 (4th smallest)
> Unemployment rate: 6.5% (18th lowest)
> Pct. Below poverty line: 9.3% (2nd lowest)
While Alaskans were among the nation’s wealthiest as of last year, 18.5% of state residents didn't have health insurance last year, one of the highest rates in the nation. Every other wealthy state, by contrast, had exceptionally low proportions of residents without health insurance. It remains to be seen whether the Affordable Care Act will improve health coverage in the state. Otherwise, Alaskans seem to be very well off. Fewer than one in 10 residents lived below the poverty line last year, lower than in every state except for New Hampshire. Income is also distributed relatively evenly across the state’s 735,132 residents. The state's Gini coefficient was the lowest in the country last year.
ALSO READ: America's Best Companies to Work For
1. Maryland
> Median household income: $72,483
> Population: 5,928,814 (19th largest)
> Unemployment rate: 6.6% (22nd lowest)
> Pct. Below poverty line: 10.1% (3rd lowest)
Maryland is the wealthiest state in the nation. The median household income was $72,483 in 2013, more than $20,000 higher than the national median income of $52,250. Additionally, few states had a higher proportion of high income households than Maryland, where 8.9% earned $200,000 or more in 2013. The state also had among the lowest poverty rates in the nation last year at just over 10% of the population. But despite their relative affluence, Maryland households have not been immune to the struggles most Americans have faced in recent years. From 2009 to 2013, the state’s poverty rate and the percentage of households on foodstamps rose, while the inflation-adjusted median household income fell.
The Poorest States in America
5. Kentucky
> Median household income: $43,399
> Population: 4,395,295 (25th largest)
> Unemployment rate: 8.3% (7th lowest)
> Pct. Below poverty line: 18.8% (6th highest)
The typical Kentucky household earned just $43,399 last year, roughly $10,000 below the national median. Additionally, 18.8% of Kentucky residents lived in poverty last year, a rate that has remained unchanged since 2009. Like many of the poorest states, home values in the state were quite low. The median value of a home in Kentucky was $120,900 as of 2013, the sixth lowest value in the country. Kentucky’s unemployment rate was 8.3% in 2013, well above the national rate of 7.4%. This was also unchanged from 2012, making Kentucky one of a small minority of states where the unemployment rate did not improve.
4. Alabama
> Median household income: $42,849
> Population: 4,833,722 (23rd largest)
> Unemployment rate: 6.5% (18th lowest)
> Pct. Below poverty line: 18.7% (7th highest)
Alabama was one of just a few states where more than 10% of the population reported a household income of less than $10,000 last year. Additionally, the state’s median income -- already low -- dropped significantly between 2009 and 2013, from $44,000 to $42,840. However, relative to residents in other poor states, Alabama had a relatively low percentage of residents without health coverage at just 13.6%. By comparison, 14.5% of Americans nationwide lacked health insurance last year. However, Alabama is one of the 24 states that elected not to expand Medicaid under the Affordable Care Act due largely to concerns about costs being shifted from the federal government to the states in the long-run.
ALSO READ: States With the Most Big Spenders
3. West Virginia
> Median household income: $41,253
> Population: 1,854,304 (38th largest)
> Unemployment rate: 6.5% (18th lowest)
> Pct. Below poverty line: 18.5% (10th highest)
Unlike some states with low median incomes, relatively few West Virginia residents worked in manufacturing. Instead, these residents mostly found employment in agriculture or mining, as nearly 5.4% of workers were employed in those industries as of 2013, well above the national average. While the state's unemployment rate decreased 0.7 percentage points between 2012 and 2013 to 6.5% -- notably better than the U.S. rate last year -- median household income remained low and unchanged. Low incomes also likely affect the housing market of the state. The median home value was only $103,200 in 2013, lower than all but one other state
2. Arkansas
> Median household income: $40,511
> Population: 2,959,373 (19th smallest)
> Unemployment rate: 7.5% (18th highest)
> Pct. Below poverty line: 19.7% (4th highest)
The typical Arkansas household earned $40,511 last year, well below the national median of $52,250. Like in many of the poorest states, the state's poverty was also a major problem. Arkansas had the fourth highest poverty rate in the country last year, at 19.7%. The state’s unemployment rate remained unchanged between 2012 and 2013, a major indication of a weak job market. Low incomes and a weak job market may contribute to low real estate values as well. Statewide, homes were valued relatively low, at just under $110,000, or more than $60,000 below the national benchmark. Additionally, nearly one in five homes were valued at less than $50,000, the third highest rate in the country.
1. Mississippi
> Median household income: $37,963
> Population: 2,991,207 (20th smallest)
> Unemployment rate: 8.6% (6th highest)
> Pct. Below poverty line: 24.0% (the highest)
Mississippi, the poorest state in the nation, had a median household income of just $37,963 last year. In fact, no other state had a median income of less than $40,000 in 2013, and Mississippi’s median income was barely half that of top-ranked states Maryland and Alaska. Further, no state had a higher poverty rate than Mississippi, where more than 24% of people lived below the poverty line. The next-closest state, New Mexico, had a poverty rate more than two percentage points lower than Mississippi. Other problems the state faced were a high jobless rate and a high proportion of households on food stamps. Last year, 8.6% of workers were unemployed, the sixth highest rate nationally, while 19.4% of households relied on food stamps, the second highest rate.
ALSO READ: States Where It's Hardest to Find Full-Time Work
Click here to see the full list from 24/7 Wall St.
Related Articles
