Income erodes, poverty gains in Minnesota

The state got a head start on economic woes, and things may not improve until later next year, the state economist said.

By WARREN WOLFE, Star Tribune

Last update: August 26, 2008 - 11:54 PM

Print this story

More from www.startribune.com

Minnesotans' median income dropped substantially last year, and more people were living in poverty, the Census Bureau reported Tuesday.

The results reflect the downturn in Minnesota's economy that began two years ago, while the national figures were still improving, said state economist Tom Stinson.

"It's not a surprise," he said. "But the census report does reflect the reality that Minnesota hit the wall in job formation early in 2006 and pretty much stayed there. We probably won't begin to recover until next year."

Even though the report shows Minnesota was declining while national measures were improving, the state remained among the highest in income and lowest in poverty.

Using two-year averages, the report said Minnesota's median income dropped from $59,583 in 2004-2005 to $57,932 in 2006-2007.

That compares with $49,901 nationally, putting Minnesota eighth-highest.

There were about 482,000 Minnesotans in poverty last year, up 60,000 from 2006. The poverty rate rose from 8.2 percent to 9.3 percent.

That dropped Minnesota from fifth-lowest in 2006 to ninth-lowest last year, still well below the national rate of 12.4 percent. The poverty guideline in 2007 was $13,690 for a family of two, or $20,650 for four.

"Our hope is that next year's report won't show any worsening of the situation in Minnesota," Stinson said. "This quarter is probably the strongest of the year, and it will probably be next spring -- my crystal ball's a little cloudy here -- that we begin to see improvement nationally and in Minnesota."

The Legislature responded to recent economic problems with budget cuts "that made it hard for low- to moderate-income workers to make ends meet," said Katherine Blauvelt, policy analyst with the Minnesota Council of Nonprofits. She urged lawmakers to find different solutions as they face another deficit next year.

There was a bright spot in Tuesday's census report.

The number of Minnesotans without health insurance dropped by about 42,000 people to 433,000, from 9.2 percent of the population to 8.3 percent.

With the national rate at 15.3 percent, Minnesota ranked fourth-lowest in the percentage of uninsured.

The state conducts its own health-insurance survey using a far larger sample than the Census Bureau, said Julie Sonier, the department's health economics program director.

That survey for 2007, made public in April, indicated that about 372,000 Minnesotans, or 7.2 percent, lack health insurance.

Warren Wolfe • 612-673-7253