Income up; fewer of us in poverty

Incomes are rising and poverty rates falling for the first time this decade, the federal government reported Tuesday.

With inflation factored out, the Census Bureau reported, the nation's median household income rose to $48,200 between 2005 and 2006, the second increase in a row. And in a first since the turn of the century, the rate of poverty declined, from 12.6 percent to 12.3 percent.

News of rising numbers of Americans without health insurance tempered the positive figures. In 2006, 47 million Americans did not have medical coverage, up from 44.8 million in 2005, the government reported Tuesday.

Still, for the nation, the income and poverty numbers are good news that has been long in arriving, some experts said.

Since the 2001 recession, the economy has moved ahead while leaving low-income Americans behind, said Colleen Heflin, a specialist in poverty and welfare with the University of Missouri. That, she added, "is finally starting to turn around."

Minnesota remains among the nation's most affluent states. Its overall rate of poverty is eighth lowest among the states, while its rate of child poverty, 12.2 percent, is ninth lowest. It boasts the 10th highest median household income.

But there are also signs of stagnation. Year over year, between 2005 and 2006, Minnesota was not among the 15 states with meaningful increases in incomes. And it wasn't among the 16 states seeing a meaningful decline in its rate of family poverty. Rates of health insurance coverage in the state remain among the nation's highest, but are drifting slightly lower.

The Minnesota Budget Project, an arm of the Minnesota Council of Nonprofits, expressed disappointment over the income and poverty numbers. Neither is "as good as would be expected five years into an economic recovery," the group said Tuesday after analyzing the new numbers.

Nationally, experts pointed to an improving economy as key to both the rise in incomes and the easing of poverty.

"We're looking at a situation where unemployment was down, and it was down for single mothers, who make up a substantial portion of the people in poverty," said Douglas Besharov, a resident scholar at the American Enterprise Institute, a nonpartisan research institute in Washington. "We need a good economy. That's not all we need, but we should not complain when it helps lower poverty."

President Bush issued a statement saying that "all Americans benefit" when government keeps "taxes low, spending in check, and our economy open -- conditions that empower businesses to create new jobs."

He conceded, though, that the growing number of people without health insurance presents a challenge, and several Democrats running for president said the insurance numbers point to weaknesses in the nation's health care system.

Tuesday's numbers also documented a rapid rise in poverty in Twin Cities suburbs.

Only Bloomington, Plymouth and Brooklyn Park, among Twin Cities suburbs, were large enough to be included in this year's data from the Census Bureau's American Community Survey. But among the three, those cities have seen a 67 percent increase in people in poverty since the 2000 Census.

Paycheck away from a crisis

That's a much faster increase than in the two central cities, which saw a rise of 28 percent, though the numbers in the three suburbs (a current total of just over 14,000 people in poverty) are much smaller than the combined total for Minneapolis and St. Paul (nearly 135,000).

Amid a crisis in mortgage foreclosures, said Mark Peterson, president of Lutheran Social Service of Minnesota, "It's more apparent than ever that more and more people are one paycheck away from a financial crisis that will tumble them into poverty."

State Demographer Tom Gillaspy saw no significant shifts in the numbers released Tuesday. Minnesotans, he said, are maintaining the impressive national ranking they achieved during the 1990s, when they neared or entered the top 10 states in most key measures of income. In the 1980s, the state had been in the upper half of states.

"Family incomes and household incomes are both up," he said, "while there's no statistically significant change in poverty, in child poverty, or in the rate of people not having health insurance. At this point I see no dramatic shifts."

Advocacy groups emphasized, however, that they would like to see more progress amid economic recovery.

Adjusted for inflation, the Council of Nonprofits reported, "incomes in Minnesota are less than what they were during the recession. Minnesota households had a median income of $54,023 in 2006. However, this is still significantly less than in 2001, when the median income was $56,753 [measured in 2006 dollars]."

It's not as clear, though, Gillaspy said, what all goes into the income and poverty trends. Immigrant and refugee arrivals, for instance, remain strong in Minnesota, potentially bringing down the income figures and raising the poverty numbers. And all the figures released Tuesday are based on sampling of large populations and contain "rather substantial margins of error," Gillaspy said.

Nationally, the number of people without health insurance coverage rose from 15.3 percent in 2005 to 15.8 percent in 2006, the government said.

The poverty level is the official measure used to decide eligibility for federal health, housing, nutrition and child care benefits. It differs by family size and makeup. For a family of four with two children, for example, the poverty level is $20,444.

State Sen. John Marty, a DFLer chairing a new bipartisan legislative commission aimed at finding ways to end poverty by the year 2020, said he's been struck so far by how inadequate the official poverty benchmark is in defining people who are having difficulty making ends meet.

"A generation ago, retail clerks or delivery truck drivers, these were basic jobs but supported families. They weren't 'bad' jobs. You earned enough to pay your way. Now, families making two incomes are not making ends meet."

The Associated Press contributed to this report. David Peterson • 612-673-4440

David Peterson • dapeterson@startribune.com