The Minnesota Reformer reports:
The U.S. Census Bureau released new data last week showing that in 2023 the median household income rose significantly for the first time since 2019. In inflation-adjusted terms, the 2023 household earnings of $80,610 are now roughly back to where they were prior to the pandemic, and above the level they were at in 2021, when former President Donald Trump left office.
This sounds rather wonderful, but I was a little curious as to why the Minnesota Reformer didn’t mention the numbers for Minnesota, so I had a look for myself.
As Figure 1 shows, in 2023 the real median household income in Minnesota fell significantly: while the increase for the United States was $3,070 (4.0%), the fall in our state was $3,640 (3.9%). This was the third out of four years since 2019 when Minnesota’s median household income has fallen in real terms. In inflation-adjusted terms, Minnesota’s 2023 household earnings of $90,340 are now $5,910 (6.1%) below where they were prior to the pandemic, and when Governor Tim Walz took office.
Figure 1: Real Median Household Income
I’ve written before about Minnesota’s declining “premium” in terms of higher GDP per capita than the national average. Figure 2 shows a similar phenomenon when we look at real median household income: Minnesota’s advantage over the national average of real median household income in 2014 of $17,050 (25.3%) was down to $9,730 (12.1%) in 2023.
Figure 2: Minnesota’s ‘premium’ in real median household income over the United States, $2012
We often like to compare ourselves to our neighbors, so what do we see when we do that for this data? Table 1 shows that the decline of real median household income in Minnesota in 2023 was not only a worse outcome than the United States generally but of three of four neighboring states, each of which — Wisconsin, Iowa, and South Dakota — recorded growth. That leap of 17.0% in South Dakota’s number might raise an eyebrow or two but, if we look back over the period since 2019, we see a similar story: the decline of real median household income in Minnesota of 6.1% since 2019 is not only greater than that of the United States generally but worse than three of four neighboring states, each of which – Wisconsin, Iowa, and South Dakota, again – recorded growth, with South Dakota’s number standing out.
Table 1: Growth in real median household income
The only state we do better than is North Dakota. As I’ve written elsewhere, our neighbors there have taken an economic beating from the Biden/Harris administration’s war on American energy production.
Numbers for GDP or GDP per capita are important, but can often strike people as a little abstract. Median household income, by contrast, is a little more immediate: each of us has some idea of what our household income is and how we relate to this median. It is an important number to watch.