Minnesotans stayed among the nation’s top earners last year, with wage growth that outpaced inflation.
New annual data that the U.S. Census Bureau released Thursday more broadly depicted a state that is wealthier and pays more equitably than most.
But the bureau’s American Community Survey also showed that Minnesota is starting to feel more effects from the accelerating retirement of baby boomers, which has caused stagnation in the state’s workforce for two years. And the flow of immigrants remained lower than it was in the middle of the decade, another constraint on the state’s job base.
“We need it to be going in the other direction from a workforce perspective,” said state demographer Susan Brower as she examined the voluminous release.
The size of the state’s workforce has held steady at just under 3 million for about a year, and the pace of job growth has slowed to around 10,000 a year, down from 50,000 annually at the start of this decade.
The new Census Bureau data, produced from a survey of more than 2 million households, provides the nation’s most regular look at state-level income and population trends. It’s also an annual check on income inequality, a condition that shapes broader growth and consumption.
Even so, the survey concentrates on just one of the forces that shapes how people perceive economic health and doesn’t look at costs.
Nationally, an index that measures inequality grew, or worsened, from 0.482 in 2017 to 0.485 last year. The index is a scale of 0 to 1, with a score of “0” indicating perfect equality, and a score of 1 indicating perfect inequality, where one household has all the income.
In Minnesota, this index worsened from 0.452 in 2017 to 0.454 last year. But that was still more equitable than all but 14 other states.
The median amount Minnesota workers earned rose 2.5%, adjusted for inflation, to $39,100 in 2018, ranking the state 11th. For the nation as a whole, median individual earnings rose 2.9% to $35,300.
Household income, which accounts for other sources of income besides wages, grew at a slower rate in 2018 than in recent years both statewide and nationally.
That’s a reflection of changes in the sizes of households and in amounts of nonwage income.
For instance, stock investments experienced small gains last year. Meanwhile, the ongoing upswing in the economic cycle, which passed the 10-year mark in July, has likely pushed more people out of multiperson households into apartments and homes of their own.
“That makes for smaller households,” Brower said. “There’s all kinds of dynamics around household formation.”
Minnesota’s median household income, adjusted for inflation, rose 0.9% to $70,315 last year. Nationally, median household income was up 0.7% to $61,937.
The state ranked 15th in household income last year, highest of any state in the Midwest and third-highest of any noncoastal state after Colorado and Utah.
The slower pace of growth affected all racial and ethnic groups in the state, but it was especially pronounced among white non-Hispanic households.
That group is particularly dominant among the baby boomers who are heading into retirement, where income drops off quickly.
Even so, the new data also shows that the share of people ages 65 and older has been creeping up in recent years. It was at 19% in 2018, up from 17% five years earlier, and above the national rate of 18%.
The percentage of working women in Minnesota, already one of the highest rates in the U.S., rose even more in that time with 86% of women ages 25 to 44 in the labor force compared to 78% nationally.
Income inequality in Minnesota is flat and has been essentially unchanged most of the decade, even as the political discussion about the issue and media attention has grown.
Of the Democratic candidates running for president, Sens. Bernie Sanders and Elizabeth Warren propose a tax on the wealthiest Americans to reduce wealth disparities.
In the latest data, Puerto Rico, the District of Columbia and New York state ranked at the top in income inequality, while Utah, Alaska and Iowa ranked as the most equitable.
A big factor in the increase in inequality has to do with two large population groups on either end of the economic spectrum, according to Sean Snaith, an economist at the University of Central Florida.
On one side, at the peak of their earnings, are baby boomers who are nearing retirement, if they haven’t already retired. On the other side are millennials and Gen Zers, who are in the early stages of their work life and have lower salaries, Snaith said.
“I would say probably the biggest factor is demographics,” he said. “A wealth tax isn’t going to fix demographics.”
The Associated Press contributed to this report.