EPI’s recently released The State of Working America, 12th edition, explains in detail how the past 10 years have been a “lost decade” of income growth for the bulk of American families. How has this played out at the state level? Last week’s release of the American Community Survey (ACS) provides excellent data with which to see these trends by state.
According to the ACS, from 2000 to 2011, real median household income—i.e., adjusted for inflation—declined in 41 out of 50 states across the U.S. Figure A illustrates this change. The dark blue bars represent 2011 median household income values. The grey sections show what household income was in each state in 2000. (The light blue sections are the rare instances of median income growth.)
As the figure shows, household incomes rose in only a handful of states in the west-north-central region where the shale gas boom has been driving growth, and in the region surrounding Washington, D.C (which some attribute, in part, to growth in the lobbying industry). Of the 41 states where household incomes fell, 13 states had declines greater than 10 percent, with Michigan (-18.9 percent), Georgia (-14.7 percent), and Mississippi (-13.7 percent) experiencing the largest declines.
As The State of Working America points out, not all of these declines can be attributed to the Great Recession. The table below compares real median household incomes in each state from 2000 to 2011, and over the historically weak business cycle from 2000 to 2007. According to the ACS, from 2000 to 2007, the growth in median household income across the U.S. was a meager 1.6 percent. Furthermore, of the 21 states with the largest household income declines over the full decade, 14 states (denoted in blue) had already fallen by 2007, before the recession began.
The future for state economies will, of course, be affected in large part by national policy decisions. But there are steps that state policymakers can make to protect their states from another lost decade. Strengthening state minimum wages, protecting the rights of workers to organize, improving state retirement systems, and making long-needed public investments that both encourage future growth and create good-paying jobs would improve economic conditions for middle– and working-class households, and help to ensure that future economic gains are shared by all.