The United States added more than 2.3 million jobs in 2013, the most in any year since 2005. Despite this, income levels and poverty rates did not improve in most of the United States last year, according to recently released figures from the Census Bureau’s American Community Survey.
While many American households continue to struggle to make ends meet, those in the richest states continued to earn far more than households in the poorest states. Maryland was the wealthiest state in the U.S. again last year, with a median income of $72,483. Mississippi, in turn, was yet again America’s poorest state, with a median income of just $37,963.
States with relatively low median incomes typically had poverty rates that were much higher than the national rate. In fact, all but one of the nation’s 10 poorest states also had among the 10 highest poverty rates. Mississippi, the nation’s poorest state, had a poverty rate of 24% last year, the highest in the nation. By comparison, when surveyed, 15.8% of Americans said they lived below the poverty line at some point in the last 12 months.
One of the most important determinants of income is employment because most Americans rely on their jobs as their largest source of income. Several states with high incomes also had low unemployment rates. These include Hawaii, Minnesota, and New Hampshire, all of which had unemployment rates that were at least two percentage points below the national unemployment rate of 7.4% in 2013. But this was not the case in all high income states. California, for instance, had an unemployment rate of 8.9% last year, among the highest in the country.
A strong labor force matters, David Cooper, economic analyst at the Economic Policy Institute, told 24/7 Wall St. When the labor market improves, “that tends to disproportionately help low income folks,” Cooper said. “When there’s less unemployment, when employers are maybe having to raise wages in order to attract new workers.”
Still, unemployment rates do not tell the full story. In fact, by some measures, the job market remains distressed. The total number of jobs only surpassed pre-recession levels this year. Also, the percentage of Americans in the workforce — either working or looking for work — has fallen considerably since the recession.
The types of jobs available in a state also play a major role in determining income levels. For example, low-paying manufacturing jobs as well as jobs in the retail sector were generally more common in states with low median incomes. In the nation’s richest states, by contrast, high-paying jobs in the financial, information, and professional services sectors were more common.
Cooper added that “there are good jobs and bad jobs,” and that clearly some industries pay better than others. “Obviously, things like the sciences, and information technology, health care. Those tend to be sectors that pay better,” he noted. One major reason for this, Cooper said, is the educational background need for such jobs. Residents in the nation’s richest states
Although wealthy states tend to have lower poverty rates, they don’t necessarily have the most equitable distribution of income. In fact, the distribution of incomes was especially imbalanced in a number of the wealthiest states. California, Connecticut, and Massachusetts, all among the states with the highest incomes, were each among the states with the most top-heavy income distributions.
The states with the lowest incomes, however, also did not perform especially well in income equality. Notably, Louisiana, which had a median household income more than $6,000 below the U.S. median, was also the third-worst state for income inequality.
To identify the richest and poorest states with the highest and lowest median household income, 24/7 Wall St. reviewed state data on income from the U.S. Census Bureau’s 2013 American Community Survey (ACS). Median household income for all years is adjusted for inflation. Data on health insurance coverage, employment by industry, food stamp recipiency, poverty, and income inequality also came from the 2013 ACS. Income inequality is measured by the Gini coefficient, which is scaled from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality. We also reviewed annual average unemployment data from the Bureau of Labor Statistics (BLS) for 2012 and 2013.
These are America’s richest and poorest states.
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