1. society
2. work
3. unemployment

WIDENING INEQUALITY IN MINNESOTA:
A COUNTY-BY-COUNTY ANALYSIS
By Tom Legg &
Ngoc (Jenny) Nguyen
WIDENING INEQUALITY IN MINNESOTA:
A COUNTY-BY-COUNTY ANALYSIS
Published May 2015 by Growth & Justice
WRITTEN BY:
Tom Legg is retired from the finance faculty at the University of Minnesota’s Carlson
School of Management. He has returned in retirement to his roots in northern
Minnesota. He has a B.S. from UMD and a Ph.D. in Applied Economics from the
University of Minnesota.
Ngoc (Jenny) Nguyen was a research assistant and student at the Carlson School of
Management while working on this report. She is currently a graduate student in the
Department of Applied Economics at the University of Minnesota.
ACKNOWLEDGEMENTS FROM TOM LEGG:
I wish to thank Jay Coggins and Dane Smith, my co-authors on the August 2013
inequality report, for assistance in writing the introduction and conclusions. Thanks
also to Jennifer Weddell at Growth & Justice for excellent editing.
DESIGNED BY:
Mark Tundel
Communications Manager, Growth & Justice
Growth & Justice is a nonprofit research and advocacy organization that develops
innovative public policy proposals based on independent research and civic
engagement. We believe when Minnesota makes smart investments in practical
solutions it leads to broader prosperity for all.
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FOREWORD
INTRODUCTION AND SUMMARY
MEDIAN HOUSEHOLD INCOME IN MINNESOTA COUNTIES
POVERTY IN MINNESOTA COUNTIES
OVERALL INEQUALITY: THE GINI COEFFICIENT IN MINNESOTA COUNTIES
CONCLUSION
This research by Growth & Justice Policy Fellow Tom Legg, with assistance from University
of Minnesota graduate student Ngoc (Jenny) Nguyen, provides important factual context for
understanding the widening economic inequality in Minnesota, particularly as it varies across the
Twin Cities urban core, its suburbs and exurbs, and rural and Greater Minnesota. Understanding
these regional disparities is critical, for policymakers and for all Minnesotans concerned about the
immediate and long-term damage that growing disparity might do to our state.
Legg’s work builds on an August 2013 Growth & Justice report (Widening Economic Inequality in
Minnesota: Causes, Effects, and a Proposal for Estimating Its Impact in Policymaking) which showed
that Minnesota is indeed suffering from growing inequality that tracks with national trends.
That report examined how inequality had worsened in Minnesota over time and how our level of
inequality compared to other states.
This new report explores how inequality differs across the state, county-by-county.
While it’s well-known that Twin Cities area income levels are higher than in Greater Minnesota, this
report shows that poverty and inequality are highest in the two urban core counties of Hennepin
and Ramsey, and in the most rural counties of northern and southern Minnesota. In contrast, many
outer suburban and exurban counties enjoy high income levels, low rates of poverty and relatively
low measures of inequality.
This research challenges the notion that the inequality divide in Minnesota is essentially between
the Twin Cities metropolitan area and Greater Minnesota. Rather, the inequality divide is better
understood as a chasm between relatively a prosperous suburban/exurban ring, and the spaces
within and outside that ring.
Growth & Justice is committed to maintaining a strong focus in our research and advocacy work
on reducing economic inequality. By shining a light on patterns of disparity, we can advance better
solutions that foster economic growth while investing in human potential and eliminating racial
and other disparities. We are convinced that equity is the superior growth model for Minnesota and
all its residents.
Dane Smith
President, Growth & Justice
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GROWTH & JUSTICE
A COUNTY-BY-COUNTY ANALYSIS
INTRODUCTION AND SUMMARY
The gap between rich and poor in Minnesota and the United States is wide and growing. The share
of all income going to the richest one percent, at 22.5% in 2012, is higher than it has been since
the Roaring Twenties1. Wealth inequality is much higher still. The richest one percent own more
than 40% of the nation’s wealth2. The issue of economic inequality has become more prominent in
recent years, with President Obama recently calling it the defining issue of our time. Conservative
politicians have joined with their more liberal counterparts in acknowledging the increase in
inequality.
In a 2013 report, we explained the data behind inequality in Minnesota and the United States,
telling the story of how it has dramatically increased. That report demonstrated that inequality
had indeed worsened in Minnesota in recent decades, though still ranking among the less unequal
and more prosperous states. This report updates that status, showing Minnesota’s 2012 median
household income at 21% higher than the U.S median, and Minnesota’s 2012 poverty rate at 11.4%
compared to 15.4% for the United States.
Minnesotans might, with some justification, look upon these figures with a certain complacency.
We must be doing something right. But the story of inequality in Minnesota is quite a bit more
complicated than the headline statistics suggest. Income and inequality vary widely within the
state, by county and region, in ways that give cause for concern. In this report, we explore these
differences within the state.
Minnesota’s richest county is Scott, where median income stands at $84,571. That figure places
Scott County at 37th highest in median income of the more than 3,100 counties in the U.S.
Minnesota’s poorest county is Wadena, where median income is $35,767. Wadena ranks 2,586th in
the country, well within the poorest 20% of counties.
Meanwhile, inequality is very high within some of our counties where average incomes are high
to moderate. The Gini coefficient is a century-old statistical measure that represents the level of
disparity across the entire income spectrum. It ranges from zero (perfect equality) to one (perfect
inequality). A high Gini reflects high inequality. Hennepin County’s Gini is above 0.48, which is
above (more unequal than) the U.S. Gini of 0.46. Sherburne County, in the growing exurban area
between the Twin Cities and St. Cloud, has a coefficient of only 0.35. That places it among the 30
most equal counties in the U.S.
A closer look at Minnesota, county-by-county across the state, reveals an intriguing picture of
dramatically differing economic disparities. The data also indicate that some parts of our state
suffered more from the Great Recession than others, and are generally recovering more slowly.
When one looks at the entire state, comparing all 87 counties to one another, a persistent pattern
emerges. Economic inequality is high where income is low, and inequality is low where income is
high. This is the same pattern that emerged from our analysis of state-level data in our 2013 report.
1 World Top Incomes Database at www.parisschoolofeconomics.eu/en/research/the-world-top-incomes-database/
2 Saez, E. and G. Zucman, Wealth Inequality in the United States Since 1913, National Bureau of Economic Research
Working Paper 20625, October 2014
GROWTH & JUSTICE
3
WIDENING INEQUALITY IN MINNESOTA
Figures 1 and 2 provide a preliminary indication of this relationship. The highest median incomes
(Figure 1) are in the counties that comprise the exurban and suburban ring around the Twin Cities
metropolitan area. No Minnesota counties inside or outside that ring have a median income as high
as the median income in the poorest suburban county.
The counties with the lowest median incomes are concentrated in northern Minnesota, and the
highest inequality, as measured by Gini coefficients, is also concentrated in northern Minnesota.
Several of the suburban ring counties are among the least unequal, and all of the suburban counties
are less unequal than Minnesota as a whole. As we will see, poverty rates, like inequality, are lowest
in the suburban ring and generally highest in northern Minnesota.
FIGURE 1: 2012 MEDIAN INCOME BY COUNTY
FIGURE 2: 2012 GINI COEFFICIENT BY COUNTY
> $69,915
< 0.37955
$45,860 - $48,820
0.41070 - 0.42327
$51,120 - $69,915
$48,820 - $51,120
< $45,860
0.37955 - 0.39878
0.39878 - 0.41070
> 0.42327
In this report we will examine county level data on household incomes, poverty rates, and overall
inequality (Gini coefficients). Our most affluent counties, comprising the suburban/exurban ring
around Hennepin and Ramsey counties, are also among the most equal and exhibit relatively low
poverty. We will examine that relationship more closely.
We will also consider the changes in Minnesota counties over the last 20 years. Minnesota has,
as our 2013 report showed, seen increases in poverty and overall inequality both absolutely and
relative to other states. Minnesota median income has rebounded since 2010 but remains below
that of 1999-2004. We will see how Minnesota counties have fared over that same period.
We will consider county median income, poverty, and inequality across counties and over time,
beginning with the individual measures. What patterns emerge? How do the absolute measures
compare?
4
Once we have considered the individual measures we will turn to the overall story reflected in the
data. How does income relate to poverty and inequality within the state? Are rural areas keeping up
with metropolitan areas? And how are suburban areas faring relative to urban areas? We will also
look at how these relationships have changed over the last several years.
GROWTH & JUSTICE
A COUNTY-BY-COUNTY ANALYSIS
We rely throughout on data for Minnesota counties provided by the U.S. Census Bureau. We have
utilized data for 1995, 1999, 2004, 2009, and the five-year compilation (2008-2012) from the
American Community Survey (ACS). The 1995 and 2004 data are drawn from the Small Area
Income and Poverty Estimates (SAIPE) reflecting modeled estimates developed by the Census
Bureau. The 1999 data is from the 2000 census. The 2010 census data for 2009 is used only for
state-level data, as insufficient data was gathered to provide income, poverty and inequality
estimates by county. The Census Bureau now gathers information annually through the ACS;
however, only five-year compilations provide sufficient data to develop estimates for all counties.
We refer to the 2008-2012 compilation as 2012 estimates.
GROWTH & JUSTICE
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WIDENING INEQUALITY IN MINNESOTA
MEDIAN HOUSEHOLD INCOME IN MINNESOTA COUNTIES
Minnesota median household income has been on a roller coaster for more than 20 years.
Household income rose dramatically (by 35%) from 1990 to $72,3353 in 2000, the highest ever.
From 2000 to 2010, Minnesota median income then dropped 24% to $55,099. From 2010 to 2012,
Minnesota median income rose 12.2%, even while U.S. median household income continued to
fall. Perhaps surprisingly, Minnesota’s median income rose faster than that of any other state in
the 1990s, dropped proportionally more than that of any state from 2000 to 2010, and again rose
fastest from 2010 to 2012. Although Minnesota’s household income has been more volatile than
that of other states, it also has exceeded the national median in all those years. In 2012, it climbed
back to 9th highest in the nation. Table 1 provides median household income for selected years.
TABLE 1: MINNESOTA MEDIAN HOUSEHOLD INCOME IN 2012 DOLLARS
YEAR
MN MEDIAN INCOME
AS A % OF 2012
NOTE
1990
1999
2000
2010
2012
$53,586
$64,819
$72,335
$55,099
$61,795
87%
105%
117%
89%
all time high
recent low
How variable are median
household incomes across
Minnesota? Which areas
are improving, and which
are struggling? Have these
relationships changed?
First, we compare median
incomes by county in 1999
and 2012 with two maps of
the state. Later, we will look
more carefully at the results for some specific counties. Figure 1 (repeated here to ease comparison
with Figure 3) depicts 2012 median household income by county. Figure 3 does the same for 1999
in 2012 dollars. Note that the median income ranges are the same on each map.
FIGURE 3: 1999 MEDIAN INCOME BY COUNTY
FIGURE 1: 2012 MEDIAN INCOME BY COUNTY
> $69,915
> $69,915
$45,860 - $48,820
$45,860 - $48,820
$51,120 - $69,915
$48,820 - $51,120
< $45,860
6
3 All past incomes are adjusted to 2012 dollars using the consumer price index.
GROWTH & JUSTICE
$51,120 - $69,915
$48,820 - $51,120
< $45,860
A COUNTY-BY-COUNTY ANALYSIS
A comparison of median incomes in 1999 and 2012 is striking. Median household income in most
counties declined from 1999 to 2012. Three of ten counties with median income above $70,000 in
1999 dropped below $70,000 by 2012. In 2012, only suburban and exurban Twin Cities counties
were in the highest income category. No urban core or rural counties were in the highest income
category by 2012. The counties with median incomes above $50,000 became concentrated
around the Twin Cities from 1999 to 2012, though two western agricultural counties increased
their median income levels during that span. Fifteen widely dispersed rural counties had median
incomes below $46,000 in 1999. By 2012, 19 counties, representing a wider swath of Greater
Minnesota, had median incomes below $46,000.
Before considering poverty and income inequality across the state, it is useful to take a closer look
at the most and least prosperous counties. Table 2 shows the highest and lowest median income by
county over time.
TABLE 2: RANGE OF MEDIAN INCOMES IN MINNESOTA (2012 DOLLARS)
Year
1995
1999
2004
2009
2012
MEDIAN INCOME
Highest Lowest
$89,446
$91,792
$92,471
$90,057
$84,571
$35,191
$41,413
$36,036
$36,218
$35,767
Difference
Highest/Lowest
$54,255
$50,379
$56,435
$53,839
$48,804
254%
222%
257%
249%
236%
% OF MN MEDIAN INCOME
Highest
Lowest
158%
142%
136%
150%
137%
62%
64%
53%
60%
58%
Scott County, in the southwestern Twin Cities metro area, was highest in all years shown except
1995. Washington County, in the east metro area adjacent to the Wisconsin border, had the highest
median income in 1995. Mahnomen County, a rural northern county, had the lowest median income
in all reported years except 2012. Wadena, also northern and rural, had the lowest median income
in 2012. Table 2 vividly demonstrates the glaring inequality in the geographical distribution of
Minnesota’s prosperity. The highest county median income has been roughly $50,000 higher than—
and more than twice as high as—that of the poorest county since at least 1995.
Tables 3 and 4 provide another
comparison of top and bottom
median income counties. Table
3 lists the ten counties with the
highest and lowest median incomes
in 1999. Table 4 does the same for
2012.
The nine counties with the highest
incomes in 1999 (Table 3) are
all urban, suburban, or exurban
counties. The top five are suburban
counties of the seven county Twin
Cities metropolitan area. The next
three are exurban counties just
outside the seven-county area.
TABLE 3: 1999 MEDIAN INCOME BY COUNTY (2012 DOLLARS)
HIGHEST INCOMES
MEDIAN
LOWEST INCOMES
MEDIAN
Scott
Washington
Carver
Dakota
Anoka
Sherburne
Wright
Chisago
Hennepin
Olmsted
$91,792
$91,369
$90,315
$85,248
$79,586
$78,566
$74,337
$71,673
$71,258
$70,714
Mahnomen
Clearwater
Traverse
Wadena
Big Stone
Aitkin
Lincoln
Pipestone
Cottonwood
Red Lake
$41,413
$42,053
$42,191
$42,238
$42,334
$42,910
$43,555
$43,971
$44,018
$44,168
GROWTH & JUSTICE
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WIDENING INEQUALITY IN MINNESOTA
Hennepin County includes Minneapolis as well as some of the more affluent inner-ring suburbs.
The tenth highest on the list, Olmsted County, includes the city of Rochester and was the only
high-income county not in the greater Twin Cities area. The only Twin Cities metropolitan county
not listed in the top ten is Ramsey County, which includes the city of St. Paul and its inner ring
suburbs. Ramsey County’s 1999 median household income was $63,000, about $2,000 less than the
Minnesota median.
The ten counties with the lowest median incomes in 1999 are all rural counties, none of which has
a city with more than 10,000 people. Four are agricultural counties that border South Dakota, while
another, Cottonwood County, is in the southwestern part of the state, 30 miles north of the Iowa
border. The remaining five counties in the lowest income list are scattered across the northern half
of Minnesota.
By 2012 (see Table 4), after two recessions and the slow recovery of 2009-12, median incomes in
Minnesota’s richest and poorest counties had deteriorated. Scott County, top-ranked in both 1999
and 2012, saw
TABLE 4: 2012 MEDIAN INCOME BY COUNTY
an 8% decline.
Wadena County,
HIGHEST INCOMES
MEDIAN
LOWEST INCOMES
MEDIAN
which fell from
Scott
$84,571
Wadena
$35,767
fourth lowest in
1999 to lowest
Carver
$83,275
Mahnomen
$39,442
in 2012, saw a
Washington
$80,747
Koochiching
$40,167
15% decline. In
Dakota
$73,288
Aitkin
$41,191
2012, Wadena
County had a
Sherburne
$72,041
Clearwater
$41,896
median income
Wright
$70,930
Lake of the Woods
$41,979
about $1,000
Anoka
$69,916
Cottonwood
$43,225
lower than that
Dodge
$66,959
Faribault
$43,835
of Mississippi,
the poorest state
Olmsted
$66,667
Freeborn
$43,962
in the nation.
Chisago
$66,592
Cass
$43,992
Freeborn County,
a southern border
county containing Albert Lea, suffered a 13.7% decline in median income from 1999 to 2012,
dropping from 47th to 79th (of 87 counties) in the state. Koochiching County, a northern border
county including International Falls, suffered the largest reduction in median income from 1999 to
2012, declining 20% to move from 53rd to 85th in the state.
Nine of the top ten counties in 2012 were also in the 1999 top ten. Dodge County, adjacent to Olmsted
County in the Rochester metropolitan area, moved into the top ten, while Hennepin County dropped
out. Five of the poorest 10 counties in 1999 remained on that list in 2012. While the list of poorest
counties may continue to change over time, the common thread remains the same: they are all rural.
In agricultural areas, fluctuations in crop and commodity prices can cause short-term swings in
incomes and geographical shifts in rankings. Small median income changes in the poorer counties
can result in larger changes in rankings, as rural county median incomes fall in a narrow range.
8
GROWTH & JUSTICE
A COUNTY-BY-COUNTY ANALYSIS
The Twin Cities metropolitan counties are the most heavily populated and growing, while the
poorer rural counties have declining populations, both as a percent of the state’s total and in actual
numbers. About half of all Minnesotans lived in the ten highest median income counties in 1999,
while just 1.7% lived in the ten counties with the lowest median incomes. As might be expected, the
population in 1999’s top ten counties grew from 1999 to 2012 by 14.6% in aggregate, while 1999’s
poorest counties lost a combined total of about 2.3% of their population.4
Between 1999 and 2012, Hennepin County was replaced in the top ten by Dodge County. As a result,
the top ten median-income list is now dominated by high growth suburban and exurban areas.
While only 31% of Minnesotans reside in the top ten counties as of 2012, those same counties’
populations grew by 22% from 1999 to 2012.
The proportion of Minnesotans living in the ten poorest counties in 2012 is 2.7% of the state’s
population, an increase of more than 50% over the 1.7% in 1999. This reflects a change in the
county demographics of the poorest counties. In 1999, seven had populations below 10,000,
with none higher than 16,000. In 2012, only three of the poorest counties had fewer than 10,000
people, while two counties on the list had more than 28,000 people. The additions to this list
include counties with regional hubs such as Albert Lea (Freeborn County) and International Falls
(Koochiching County). The poorest areas of Minnesota now include more than farms and forests.
In summary, 76% of Minnesota counties (66 of 87) experienced declining median household
incomes from the boom peak year of 1999 to 2012. More troubling, though, is that in the early years
of the economic recovery, from 2010 to 2012, 58 counties (67%) continued to experience declining
median incomes, even as the state median income grew by 12.2%.
Twenty-one counties did experience increases in median income from 1999 to 2012. These were
primarily agricultural counties in the western part of the state. As stated earlier, agricultural
income is generally dependent upon commodity prices and is more volatile than income from other
sources. Hence, changes in median income in agricultural counties are less indicative of long-term
trends than in non-agricultural areas.
In 1999, counties with median incomes greater than $70,000 included suburban and exurban
counties as well as one urban county and one Greater Minnesota county. By 2012, counties with
median incomes greater than $70,000 were limited to the suburban and exurban ring of the
Twin Cities.
In 1999, counties with median incomes below $46,000 were scattered throughout the state. By
2012, a larger proportion of our poorest counties were in northern Minnesota and increasingly
included regional population centers. The effects of the Great Recession in these not predominantly
agricultural areas are likely to be persistent. Only two of the ten poorest counties saw increases in
median income from 2010 to 2012, and then the total increase was less than 2%.
POVERTY IN MINNESOTA COUNTIES
The poverty rates in the United States and in Minnesota were lower in 1999 than in 1995. But by
2012, poverty rates in both the country and the state had risen higher than they had been in both
1995 and 1999. The last decade has not gone well for those living in poverty.
4 An implication of these population patterns is that most county medians fall below the State median income. The
County with a 2012 median closest to the State median is ranked 13th of 87.
GROWTH & JUSTICE
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WIDENING INEQUALITY IN MINNESOTA
What do we mean by poverty? Each year, the Census Bureau publishes income thresholds based
on household size and makeup. A household with income that falls below the threshold is one that
lives in poverty. For example, an individual under age 65 living alone has a 2013 poverty threshold
of $12,119. For a household with two adults and two children, the 2013 threshold is $23,624.
Table 5 provides poverty rates for
the U.S. and Minnesota, as well as
Minnesota’s rank among the states for
selected years. Roughly one in eight
Americans lived in poverty in 1999 and
2004. After the Great Recession that
proportion grew to nearly one in six.
TABLE 5: POVERTY RATES - U.S. & MINNESOTA
(SELECTED YEARS)
Year
1995
1999
2004
2010
2012
POVERTY RATE (%)
United States Minnesota
13.8
12.4
12.7
15.3
15.9
8.7
7.9
8.1
11.5
11.4
Minnesota’s poverty rates are lower
than the overall national rate in all
the reported years. At the same time,
however, Minnesota’s enviably low
ranking among the states fell from 2nd
to 10th lowest between 2004 and 2010.
By 2012, our rank improved to 7th
among the states, primarily because our
poverty rate stabilized while the national poverty rate continued to climb.
Rank Among States
3
3
2
10
7
A lower rank means lower poverty
Source: U.S. Census Bureau
It is tempting to think of these percentages as relatively small and comparatively very close—but a
one percentage point reduction in the state poverty rate translates to 54,000 people moving out of
poverty. Had we maintained our 2004 poverty rate, 178,000 Minnesotans now in poverty would be
better off.
As with median income, we will examine poverty within Minnesota using county level data from the
Census Bureau. Maps will illustrate patterns and changes since 1999. Figure 4 depicts 1999 poverty
rates by county, and Figure 5 does the same for 2012. (Note that the poverty rate ranges are the
same for each map.)
FIGURE 4: 1999 POVERTY RATE BY COUNTY
< 7.1
< 7.1
11.5 - 14.0
11.5 - 14.0
7.1 - 9.8
9.8 - 11.5
> 14.0
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GROWTH & JUSTICE
FIGURE 5: 2012 POVERTY RATE BY COUNTY
7.1 - 9.8
9.8 - 11.5
> 14.0
A COUNTY-BY-COUNTY ANALYSIS
In 1999, the lowest poverty rates were concentrated in 20 counties surrounding the Twin Cities.
Three Greater Minnesota counties also had poverty rates below 7.1%. Only four counties, all in the
northwest/north central area of the state, had poverty rates greater than 14%.
In some cases, neighboring counties have starkly different poverty rates. For example, Hubbard
County, with a 1999 poverty rate of 9.7%, adjoins three counties with poverty rates greater than
14%. One of these three, Beltrami County, had a 1999 poverty rate of 17.6%. Roseau County, which
also borders Beltrami County to the north, fell into the lowest category with a poverty rate of 6.6%.
By 2012, the statewide poverty rate had risen to 11.4% from 7.9%. Figure 5, the 2012 map, looks
dramatically different from that of 1999. By 2012, only eight counties had poverty rates below
7.1%, compared to 23 counties in 1999. The three low-poverty counties unconnected from the
Twin Cities metro area in 1999 were replaced by two different Greater Minnesota counties. The
other six lowest-poverty counties in 2012 make up the first ring of counties surrounding Hennepin
and Ramsey counties. This suburban/exurban ring, which has the highest median incomes, also has
the lowest poverty rates.
Minnesota went from four counties with high poverty rates (greater than 14%) in 1999 to having
16 high-poverty counties by 2012. Benton County, one of three counties that surround the St. Cloud
metropolitan area in central Minnesota, saw its 1999 poverty rate of 7.1% rise to 14.6% in 2012.
By 2012, most of northern Minnesota fell into the two highest poverty brackets, with rates of more
than 11.5%. The counties in the northern half of the state, which have the lowest median incomes,
also have some of the highest poverty rates.
Table 6 shows the dramatic differences between the counties with the highest poverty rates and
those with the lowest. In all years reported, the county with the lowest poverty rate was a Twin
Cities metro area suburban county. In all years reported, either Mahnomen or Beltrami counties in
the northwestern part of the state had the highest poverty rate. Beltrami County, with a population
of about 45,000, includes the city of Bemidji. Mahnomen County is a rural county with a population
of 5,500.
The range of poverty rates across the counties is large, and nearly doubled between 2004 and
2012. Each year, the poverty rate in the poorest county is between 4 and 6 times larger than that
of the county with the lowest rate. As shown earlier, the highest median income by county was
consistently about 2.5 times larger than the lowest ranked county’s median income.
TABLE 6: RANGE OF POVERTY RATES IN MINNESOTA COUNTIES
RATE
Year Highest Lowest Difference Highest/Lowest
1995
1999
2004
2009
2012
18.9
17.6
15.8
20.9
27.2
3.5
2.9
3.9
4.8
5.2
15.4
14.7
11.9
16.1
22
540%
607%
405%
435%
523%
GROWTH & JUSTICE
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WIDENING INEQUALITY IN MINNESOTA
We might wish to look beyond the extremes. Tables 7 and 8 list the ten counties with the lowest and
highest poverty rates in 1999 and 2012.
The counties with the lowest poverty
rates in 1999 are all suburban/exurban
counties near the Twin Cities. No Greater
Minnesota counties are on that list. In
fact, eight of the ten were also on the list
of the counties with the highest median
income in 1999. Hennepin County, the
urban county with high median income in
1999, had a poverty rate of 8.3% that year.
The counties with highest poverty rates
are all in northwestern or north central
Minnesota with two exceptions, Blue Earth
in the south and Stevens, which is west of
the Twin Cities.
Perhaps surprisingly, in 2012 only six of the
ten counties with the lowest poverty rates
are in the Twin Cities area. Four exurban
counties were replaced by agricultural
counties. Three of these new inclusions
actually reduced their poverty rates from
1999 to 2012. This may reflect the fact that
the agricultural economy was very strong
in 2012.
The big change in the list of counties with
the highest poverty rates is the addition
of St. Louis and Ramsey counties. St. Louis
County, which includes Duluth and much
of the Iron Range and is home to 200,000
people, saw an increase of 4 percentage
points in its poverty rate between 1999 and
2012. Ramsey County, which includes St.
Paul and has a population of about 500,000,
saw an increase of 6.2% percentage
points. About 32,000 people in St. Louis
County and 84,000 people in Ramsey
County were living in poverty in 2012.
TABLE 7: 1999 POVERTY RATES BY COUNTY
LOWEST POVERTY
County
Rate
Washington
Scott
Carver
Dakota
Anoka
Sherburne
Wright
McLeod
Chisago
Goodhue
2.9
3.4
3.5
3.6
4.2
4.4
4.7
4.8
5.1
5.7
HIGHEST POVERTY
County
Rate
Beltrami
Mahnomen
Clearwater
Wadena
Stevens
Cass
Clay
Todd
Blue Earth
Becker
TABLE 8: 2012 POVERTY RATES BY COUNTY
LOWEST POVERTY
County
Rate
Carver
Scott
Washington
Wright
Dakota
Wilkin
Anoka
Lac qui Parle
Dodge
Lincoln
5.2
5.2
5.6
6.1
6.4
7
7.1
7.1
7.3
7.4
17.6
16.7
15.1
14.1
13.6
13.6
13.2
12.9
12.9
12.2
HIGHEST POVERTY
County
Rate
Mahnomen
Beltrami
Blue Earth
Wadena
Lake of the Woods
Nobles
Ramsey
Cass
St. Louis
Todd
27.2
20.7
19.4
18.4
17.7
17.2
16.8
16.5
16.1
15.9
Tables 7 and 8 clearly illustrate the large
increase in poverty in Minnesota from 1999 to 2012. In 1999, nine counties had lower poverty rates
than the lowest rate in 2012 (Carver County). Five of the counties on the 2012 high poverty list had
poverty rates in excess of the highest rate in 1999 (Beltrami County).
12
Koochiching County (International Falls) has the unfortunate distinction of suffering the largest
1999-2012 decline in median income, falling by 20%. By 2012, that county’s median income was 3rd
lowest of the 87 counties. However, its poverty rate remained constant at 12% from 1999 to 2012.
GROWTH & JUSTICE
A COUNTY-BY-COUNTY ANALYSIS
Given the state’s overall increase in poverty over this time period, holding the poverty rate constant
improved Koochiching’s relative ranking among counties from 76th to 51st. While the poverty
rate focuses on those at the very bottom of the income ladder, the median income identifies the
household in the middle of the income distribution. In Koochiching County, a worsening economy
has unfortunately hurt those in the economic middle dramatically; however, relatively few were
pushed into poverty.
Minnesota, like the rest of the country, has seen a dramatic increase in poverty rates since 1999.
Poverty has increased in almost all parts of the state. Differences in poverty rates between high and
low poverty areas are stark and not converging. The lowest poverty rates are concentrated in the
Twin Cities suburbs and exurbs, and most of northern Minnesota experiences poverty rates greater
than the statewide rate of 11.4%. Two counties containing major cities now have poverty rates of
more than 16%. Minnesota may, as a whole, look good relative to the nation, but the details are
much more sobering.
OVERALL INEQUALITY: THE GINI COEFFICIENT IN MINNESOTA COUNTIES
Our third indicator is the Gini coefficient,
which measures inequality across an entire
range of incomes. The Gini would be 0.0 if all
household incomes were exactly equal, and
would be 1.0 if all income went to a single
household5. A higher Gini indicates higher
inequality. Since the late 1970s, income
inequality has been growing throughout the
U.S. Minnesota has experienced the same
trend. As with poverty and median income,
Minnesota’s Ginis consistently look better
than U.S. Ginis. Table 9 demonstrates this.
TABLE 9: GINI COEFFICIENTS - U.S. & MINNESOTA
(SELECTED YEARS)
Year
1979
1989
1999
2009
2012
GINI COEFFICIENT
United States
Minnesota
0.42
0.45
0.46
0.47
0.47
0.39
0.42
0.42
0.44
0.44
To put a bit more perspective on these
numbers, state-level Ginis in 2012 ranged
from 0.41 (Alaska) to 0.51 (New York).
Minnesota, at 0.44, was 16th most equal among the states in 2012. The World Bank recently
estimated national Ginis for Norway at 0.26, Canada at 0.33, and Brazil at 0.55. (The World Bank
estimate of the U.S. Gini, 0.41, differs from recent Census Bureau estimates due to source data used.)
Income in the U.S. is substantially more unequally distributed than that in most other high-income
countries, but generally more equally distributed than in many middle-income economies like
Brazil. Income in Minnesota is more equally distributed than it is in most states, though our
inequality is substantially higher than it is in our neighbor, Canada.
5 Relatively small changes or differences in Gini indicate relatively large differences in inequality. For example, from 1979
to 2009, the U.S. Gini increased from 0.42 to 0.47. During that same period, the share of income going to the top 1%
roughly doubled from 10% to 20%, while the poverty rate rose from 12% to 14%.
GROWTH & JUSTICE
13
WIDENING INEQUALITY IN MINNESOTA
Figure 6 and Figure 2 (repeated here from page 4) and Figure 6 map county Gini coefficients in
1999 and 2012. Again, both maps use the same data ranges.
FIGURE 6: 1999 GINI COEFFICIENT BY COUNTY
FIGURE 2: 2012 GINI COEFFICIENT BY COUNTY
< 0.37955
< 0.37955
0.41070 - 0.42327
0.41070 - 0.42327
0.37955 - 0.39878
0.39878 - 0.41070
> 0.42327
0.37955 - 0.39878
0.39878 - 0.41070
> 0.42327
In 1999, 18 Minnesota counties, including all but one of the suburban counties, several exurban
counties, and a smattering of rural counties had Gini coefficients below 0.38. Counties with the
highest income inequality (Gini higher than 0.42) included the two Twin Cities urban counties and
15 Greater Minnesota counties. Between 1999 and 2012, 61 of 87 (70%) of counties saw increases
in overall income inequality.
By 2012, only ten counties were in the lowest Gini category, including two suburban counties, four
exurban counties, and four Greater Minnesota counties. The areas with the highest Ginis in 2012
include 14 counties in northern Minnesota, five rural western counties, the two urban Twin Cities
counties, and ten counties in southern Minnesota. These 31 counties all have Ginis over 0.42. In
2012, Minneapolis, St. Paul, Rochester, and Duluth were all in counties with Gini coefficients in the
highest (most unequal) category.
Sherburne County, an exurban county between the Twin Cities and St. Cloud, has the lowest 2012
Gini at 0.36. This is comparable to Canada’s national Gini of 0.33.
Our least equal county is Hennepin with a Gini of 0.48. Ramsey, Stevens, and Koochiching counties
follow Hennepin closely with Ginis of 0.46 or more. These counties have inequality comparable to
states with the highest Gini coefficients, most common in the southern U.S.
Income inequality is increasing throughout Minnesota. The range across counties is wide. The
counties with the least inequality have Ginis comparable to Canada and continental Europe, while
other counties experience inequality levels similar to states in the Deep South.
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GROWTH & JUSTICE
A COUNTY-BY-COUNTY ANALYSIS
CONCLUSION
Minnesota enjoys higher median household income, lower poverty, and lower overall inequality
than the country as a whole, and is recovering its relative advantage held prior to the Great
Recession. While relative position among the states fell in all three measures from 1999 to 2012, as
shown in our 2013 report, since 2010 our relative position has risen (median income and poverty)
or held constant (Gini).
Within Minnesota, however, these measures vary greatly. Four general regions emerge: the urban
core of the Twin Cities, including most of Ramsey and much of Hennepin counties; the relatively
prosperous ring of Twin Cities suburbs and exurbs; northern Minnesota; and the primarily
agricultural counties in the west and south. The first and last group are a mixed bag. The suburbs
and the northern counties are worlds apart. The counties of Greater Minnesota’s largest cities share
characteristics with the urban core.
Counties of the suburban and exurban Twin Cities metro area have consistently produced the
highest incomes, the lowest poverty, and some of the lowest inequality in Minnesota. Even after
the recession reduced median incomes in top counties by 8% to 10%, three counties have median
incomes greater than $80,000. Those same suburban and exurban counties have the lowest poverty
rates (5% to 7%). Most of these counties enjoy overall inequality well below that experienced by
most Americans in their communities. The Twin Cities suburbs have some of the highest incomes,
lowest poverty, and lowest inequality in the nation. Most of the residents of these communities are
relatively affluent and see little evidence of either poverty or extremely high income and wealth in
their communities
Much of northern Minnesota, by contrast, is struggling. Only two counties have median incomes
above $50,000, and just barely. Most are in the mid-$40,000 range, well below the national median.
Poverty rates are often shockingly high. Two northern counties have poverty rates above 20%. St.
Louis County, home to the city of Duluth and often thought to be a relatively prosperous area of
living wage jobs, has a poverty rate greater than 16%, a median income of $46,000 that continued
to decline from 2010 to 2012, and a Gini coefficient greater than 79 other Minnesota counties. The
fortunes of Koochiching County have already been noted. These are the stories of the north-central
and northeastern regions of the state.
Hennepin County includes a typical urban core in Minneapolis and some high-income suburbs
and exurbs to the west. Ramsey County includes an adjacent urban core in St. Paul and older, firstring suburbs to the north. These counties are home to roughly 1.7 million people, or 31% of the
5.4 million state residents. Hennepin County has the 11th highest median income, thanks to its
prosperous suburbs. Ramsey County’s median income is near the state median. In short, these
counties have higher incomes than those outside the metro area, but lower than the suburban
counties. In terms of poverty and inequality, these two counties look more like northern Minnesota
than like their adjacent suburbs and exurban areas. Hennepin County has a poverty rate of 12.6%,
which is held down by its prosperous suburbs. Ramsey County’s poverty rate is one of the highest
in the state, at 16.8%. Hennepin County has the highest inequality measure, while Ramsey County
has the 4th highest.
In land area, the largest region includes the L-shaped southern and western counties, an area in
which farming and agribusiness dominates. The data from 1999 and 2012 shows that poverty
and inequality generally rose and incomes generally fell in this broad region, yet on each measure,
we can identify counties that improved on one or more measures, both absolutely and relatively
speaking. This area has numerous examples of dramatic changes in some counties from 1999 to
2012, a possible result of the small populations of many of these counties.
GROWTH & JUSTICE
15
WIDENING INEQUALITY IN MINNESOTA
No section of the state is doing as well as it was at the end of the last century. Median incomes are
lower. Poverty rates are higher. Even in better economic times like 1999, some parts of Minnesota
were not doing well, and many of those areas are now doing far worse than they were in 1999.
It is no longer seriously disputed that income and wealth inequality in the U.S. has been rising
dramatically since 1980 after falling just as dramatically from the 1930s through the 1970s. Income
and wealth inequality in the U.S. is now similar to that of the Gilded Age in the late 19th and early
20th centuries.
The economist Thomas Piketty, among others, has argued that the drop in inequality during the 20th
century was a result of policies developed as a response to the Great Depression and World War
II. These policies that reduced inequality included progressive income and inheritance taxation,
encouragement of collective bargaining, development of a social safety net, and more support for
K-12 and higher education.
Policies that encourage economic growth can lead to increased wages and reduce or slow increases
in poverty. The slow but steady economic recovery since 2009 appears to be having that effect on
median income and poverty, if not on overall inequality.
But restoring historic levels of household real incomes, reducing inequality, and reducing
poverty substantially will require more than economic growth. It will require a sustained public
commitment to investing in education, economic security, human and workforce development, and
transportation and infrastructure.
Documenting the substantial differences in inequality and poverty within Minnesota will help
policymakers understand where they need to focus attention and resources for the benefit of the
whole state. Consensus for reducing inequality in Minnesota is broad and comes from all corners
of the state, geographically and politically. State policymakers and political leaders have expressed
concern about rising inequality, particularly in regard to educational and workforce disparities that
correlate strongly to poverty and race. Common sense suggests that policies that reverse inequality
trends across all regions of the state will have a net benefit for all Minnesotans, moving us toward a
broader and more inclusive prosperity.
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