Household incomes stabilize, but still below 2000 levels

September 19, 2013
Roofers work on new homes in Las Vegas, Nevada, a state hard-hit by the great recession (REUTERS/Steve Marcus)
Roofers work on new homes in Las Vegas, Nevada, a state hard-hit by the great recession (REUTERS/Steve Marcus)

For the first time since 2007, the median household income didn’t fall last year, according to new data released Thursday by the Census Bureau. But that slim bit of good news highlights just how much the Great Recession cost the average family, as the median household income remains far below 2000 levels.

Since the turn of the century, the median household income has fallen by 6.6 percent, from $55,030 in 2000 to $51,371 in 2012. Thirty-five states have seen a statistically significant decrease in their median household income, the new Census figures show.

Household median income, 2012:

(Source: Census Bureau)

The average household in Michigan saw its income drop by a whopping 19.1 percent, from $57,963 a year in 2000 to $46,859 a year in 2012. In Mississippi, the median income plunged from $43,664 in 2000 to $37,095 in 2012, a 15 percent decrease. Household incomes fell by at least 10 percent in Georgia, Indiana, Tennessee, Nevada, Ohio, Florida, North Carolina and South Carolina.

Most of the decreases came after the recession began in December 2007, the Census data show. Michigan and Mississippi saw significant drops in their income levels before the recession began, but the national median household income peaked in 2007 at $56,048. Since that peak, the median income has plummeted 8.7 percent.

The declines are “a devastating reflection on the depth of the nation’s economic challenges, not just in recovering from the crisis but in locating a broad-based growth model,” said Mark Muro, a senior fellow and policy director of the Brookings Institution’s Metropolitan Policy Program.

Household median income change, 2000-2012:

(Source: Census Bureau)

The winning and losing states, Muro said, reflect economies that have both succeeded and faltered in the last decade.

A booming energy industry bolstered by the robust Bakken oil field has given North Dakota the opportunity to defy the national trend. The median household income there grew from $45,812 in 2000 to $53,585 in 2012, a 17 percent increase. The growth of the energy industry in North Dakota has meant a much lower unemployment rate than the national average; the Bureau of Labor Statistics pegged the state’s unemployment rate at just 3 percent in July, less than half the national rate.

South Dakota and Montana, two states that share in the residuals of North Dakota’s oil boom, both bucked the national trend of declining incomes. The median household income in South Dakota grew by 4.1 percent between 2000 and 2012, while Montana’s grew by 1.8 percent.

And Washington, D.C. is seeing its fortunes improve as well. The median household in the District of Columbia made $66,583 in 2012, 23 percent more than the $53,995 income in 2000. The Census Bureau reported that the Washington area, which includes suburbs and exurban areas in Maryland, Virginia and West Virginia, had the highest median income of any metropolitan area in the nation, at $88,233. That, said Muro, reflects the booming national security industry that began to grow rapidly in the Washington area after the Sept. 11, 2001 terrorist attacks.

The growing security industry has put Maryland in relatively strong shape. Median household incomes in the Baltimore-Towson area stood at $66,970 last year, making it the fourth-wealthiest metropolitan area in the nation. Statewide, Maryland’s median household income of $71,122 was the highest in the nation.

By contrast, states that relied heavily on the construction boom of the 1990s tended to suffer the worst declines. Nevada, Florida and Georgia all saw median incomes decline by double digits. Michigan’s steep decline came amid a decade in which both Chrysler and General Motors declared bankruptcy and laid off hundreds of thousands of workers.

The Midatlantic and the Northeast retain the nation’s highest household median income. Seven of the 10 highest-paid states are on the Atlantic seaboard, along with the District of Columbia.

Meanwhile, 10 of the 11 states with the lowest median household income are in the South. Mississippi’s median household income is the lowest in the nation, at just $37,095. The median incomes in West Virginia and Arkansas are both below $41,000. Among the poorest states, only New Mexico isn’t in the South; there, residents earned a median household income of $42,558, 4.8 percent lower than the 2000 figure.

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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