State and local policymakers take note: The uneven nature of the economic recovery in the Twin Cities metro area isn’t helping the region make progress on troubling disparities between the haves and have-nots.
Incomes have begun to recover for middle- and high-income households in the 13-county metropolitan statistical area. But poverty grew worse during the recession and didn’t decline significantly during the recovery, according to the Metropolitan Council’s analysis of the Census Bureau’s 2012 American Community Survey.
First, the positives:
• Median household incomes rose from $64,675 to $66,282 — the first such increase since the recession took hold in 2008.
• Among the nation’s 25 largest metro areas, the Twin Cities was one of two with improved median household incomes.
• A typical high-income household — those at the 80th percentile — saw incomes rise from $119,810 to $121,335.
• The employment rate increased for civilians between the ages of 16 and 64 — from 74.9 percent to 76.4 percent — while the unemployment rate (among those working or seeking a job) fell from 6.5 percent to 5.5 percent. That gave the Twin Cities the best employment rate and second-lowest unemployment rate of the 25 largest U.S. metro areas in 2012.
Now the negatives:
• A typical low-income household — at the 20th percentile — saw slight improvement, from $28,067 in 2011 to $28,809 in 2012, but incomes for those households were still down 13.5 percent from 2007.
• Across income levels, household earnings were lower in 2012 than in 2007, but the decline was more pronounced for low-income households.
• Poverty worsened during the recession, growing from 8.4 percent of residents in 2007 to 11 percent in 2011. But with the recovery underway, the rate still stood at 10.7 percent in 2012.
A deeper look at the numbers is even more revealing, and distressing.
The survey does not measure educational achievement or health, but we already know that the metro area suffers some of the nation’s largest disparities in those areas, especially between people of color and whites.
Why? In large part because of higher unemployment and lower household incomes.
Nearly 80 percent of white, non-Hispanic adults were employed in 2012, but only 58.7 percent of black or African-American adults and 51.3 percent of American Indian adults were working. The Twin Cities has one of the lowest overall poverty rates among the 25 largest metro areas, but one of the largest gaps between whites and people of color.
The survey also confirms that an increasing percentage of Twin Cities residents are renters — 31 percent in 2012 vs. 26 percent in 2005. That increase is especially significant because renters are more likely to be cost-burdened — meaning that 30 percent or more of their monthly incomes cover housing costs. Nearly half of renters (46 percent) faced a housing cost burden in 2012, while homeowners benefited from lower housing values and refinanced mortgages at historically low interest rates, leaving about a quarter (24 percent) in the cost-burdened category in 2012.
Overall, the survey results are less surprising than disappointing. Despite countless studies, recommendations and programs, the gaps that still plagued the Twin Cities in 2012 are not new and will take years to reverse.
A deeper and sustained economic recovery would help. So would an even greater focus on using the state’s public and private-sector resources to identify potential remedies. “We understand the problem fairly well; I’m not sure we know the solution,” said Todd Graham, a research analyst for the Metropolitan Council.
The status quo is not acceptable. Although the Twin Cities area continues to outpace its peers in overall economic performance, disparities in employment and household income pose a significant threat to the future health of the region.