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Census: Wages flat as Minn. unemployment drops, racial disparities remain

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Unemployment drops while wages stagnate
Between 2010 and 2014 unemployment dropped to less than 5 percent in Minnesota, but the median income stayed almost unchanged.
MPR News Graphic

Typical wages in Minnesota and across the country remain flat despite a low unemployment rate and economy that's largely recovered from the recession, according to new data released by the U.S. Census Bureau Thursday. The numbers point to continued income equality in the state and nation, largely based on race. 

The median household income in Minnesota was $61,481 in 2014. That's just $30 more than the 2013 numbers and only slightly up from the 2010 household income. Meanwhile, the state's unemployment rate dropped rapidly from 8.3 percent in 2010 to 4.7 percent last year, according to the latest American Community Survey numbers.

Improved employment rates without an increase in wages has been characteristic of this economy's recovery, said Steve Hine, director of the Labor Market Information Office at the Minnesota Department of Employment and Economic Development.

"We'd expect to see tightening labor market conditions translate into more rapidly growing wage rates than we've seen," Hine said. "Why that is happening is an outstanding question, both in it being important and not being answered at this point."

While median household incomes in the state have been stagnant since the end of the recession, the mean, or average, income has risen, which Hine said would be a consequence of higher incomes at the top end of the scale. 

The new figures show that slightly more Minnesotans are earning more than $200,000 while the share of households pulling in more modest incomes has remained mostly flat.

"That sounds like a reflection of the overall growth in income inequality that we've seen again as a longer term trajectory for incomes here both in the U.S. and the state," said Craig Helmstetter, senior research manager at Wilder Research in St. Paul. 

African-American median income lags
The median household income for African-American households is less than half the state median income for all Minnesotans.
MPR News Graphic

Wealthy continue to gain, others remain stagnant

Minnesota also continues to struggle with racial income disparities. The median household income for whites and Asians in Minnesota is twice that of African-American households. American Indian households also had less income, with median earnings of $32,764.

Median household incomes for whites in the state rose almost $7,000 between 2010 and 2014 while household income for black or African-American residents rose just over $150.

The median household income for African-Americans in Minnesota dropped by almost $4,000 between 2013 and 2014, according to the Census data.  

"There remains to be a lot of individuals in our economy that are not experiencing the kind of improvement that even these kinds of overall figures would suggest," Hine said.

The poverty rate for African-Americans has increased by 5 percent in Minnesota, or about 20,000 people. The new data shows that about 113,000 black Minnesotans now live below the poverty line. 

The median household income for African-American households nationwide was about $8,000 more than it was in Minnesota last year. While the income of African-American households in Minnesota has fluctuated up and down in recent years, African-American households nationwide have seen their incomes tick up slowly since 2011. 

Another Census analysis of poverty data released this week found that the trend toward income inequality has persisted since 1999, the year that household income peaked before the 2001 recession. Incomes during that period have increased for the top 10 percent of households while declining for much of the rest of the population, according to the Income and Poverty in the United States report based on Current Population Reports.

Job numbers recover but pay doesn't

The flat median household incomes may have to do with the mix of jobs in the economy following the recession, Helmstetter said.

"The longer-term trend is away from some jobs that are higher paying yet lower skilled jobs like manufacturing sector jobs," Wilder's Helmstetter said. "As those get replaced by service level jobs, they don't pay as high a wage."

Minnesota State Demographer Susan Brower said it's hard to say why household income has remained so stagnant for much of the population. But she said it could be due to changes in household members, work hours or employment conditions.

"Because there are a lot of moving pieces that underlie that number, and they're moving in all states not just in Minnesota, we'd need to do some more analysis to be able to say just what's producing that stability," Brower said. 

More recent state data shows that there has been some improvement in wage rates as a series of minimum wage increases kicked in over the last year at the lower rungs of the pay scale, Hine said. The Minnesota Legislature increased the minimum wage from $6.15 an hour for large employers; it's scheduled to rise to $9.50 an hour by 2016 and will be tied to inflation.