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Inequality is Highest Where Income is Lowest

Whenever the rising tide of inequality is decried, there doubtless will be plenty of respondents who express a firm and abiding disbelief in the numbers. Many theories have been advanced to explain this resistance to accept this evidence. One likely possibility is that a great many Americans, and a great many Minnesotans, live in places where income is high and inequality is low. The importance of this empirical fact can hardly be overstated: inequality tends to be highest where income is lowest.

Minnesota’s suburban metro counties, for instance, rank at or near the top of the list with respect to median income. They rank at or near the bottom of the list with respect to the Gini coefficient and the poverty rate. People who live in these counties may have little or no first-hand experience with inequality or with widespread poverty.

It should not be surprising that inequality varies across the landscape. Aggregate numbers, whether for all of the US or all of Minnesota, mask important variability within the relevant population. And the pattern is consistent. Many of the lowest income states are to be found in the south, where inequality and poverty rates both tend to be high.

Median household income has risen little over the last 30 years, and has actually fallen since 2000. Minnesota compares favorably to the US as a whole but the advantage is slipping. Our median household income remains higher and our inequality and poverty rates are lower than average, but much of that favorable relative standing has disappeared since 2000. Our income is declining and inequality is rising absolutely and relative to other states. Over the last 10 years, we have fallen from 9th lowest Gini to 13th. Our poverty rate has worsened, from the 3rd lowest to the 11th lowest.

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