August 29, 2007

Incoherent Indicators

Carroll Andrew Morse

Poverty appears to be down, both in the United States as a whole, and in Rhode Island in particular. According to the annual figures released this week by the Census Bureau, the national poverty rate fell from 12.6% to 12.3% and the Rhode Island poverty rate fell from to 12.1% to 10.5% between 2005 and 2006. The good news is that Rhode Island has ended its four-year streak of poverty levels greater than 90% of the national rate. The bad news is that Rhode Island's relative poverty rate still hasn't dropped below the level it was at just before the beginning of welfare reform in 1996…

Year US Poverty
RI Poverty
RI Rate as Pct
of US Rate
1993 15.1% 11.2% 74.2%
1994 14.5% 10.3% 71.0%
1995 13.8% 10.6% 76.8%
1996 13.7% 11.0% 80.3%
1997 13.3% 12.7% 95.5%
1998 12.7% 11.6% 91.3%
1999 11.9% 10.0% 84.0%
2000 11.3% 10.2% 90.3%
2001 11.7% 9.6% 82.1%
2002 12.1% 11.0% 90.9%
2003 12.5% 11.5% 92.0%
2004 12.7% 11.5% 90.6%
2005 12.6% 12.1% 96.0%
2006 12.3% 10.5% 85.0%

(Interestingly, there was a corresponding spike in the Massachusetts poverty rate, from 10.1% to 12.0% while the RI rate was dropping. Maybe we should ask Jon Keller for his thoughts on this).

A second piece of bad news is that Rhode Island's one-year decline in poverty rate was accompanied by a one-year decline in median income -- the second largest decline observed in the data…

StateMedian Income,
Change from
1.Delaware$52,833 -$1,574
2. Rhode Island$51,814-$1,068
3. Maine $43,439 -$700
4. Iowa $44,491 -$495
5. Missouri$42,841 -$469
6. Colorado$52,015-$260
7. Michigan$47,182-$251
8. Ohio$44,532-$235
9. North Dakota$41,919 -$168
10. Georgia$46,832-$118
11. Wyoming$47,423-$90

The other 39 states saw their median incomes increase between 2005 and 2006. (Kansas, incidentally, had a median income increase [+$1,133] that was larger than RI's decline, showing that there's really nothing the matter with Kansas -- nor with the 14 states that did better than Kansas in the rankings!)

For both of these metrics, there is a danger of inferring too much from single-year numbers, but a simultaneous, dramatic drop in both poverty rate and median income suggests something unusual. Whether the strangeness is methodological or a real effect is yet to be determined.

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You can't get very much from changes in median income. Over the next two decades or so you can expect it to trend downward regardless of policy as the baby boomers begin to retire and consequently, the median worker becomes progressively less experienced. If you were to compare each states median age with the list of changes to median income (which I haven't done) you'll probably see a correlation. I would expect there to be a lot of noise, but the trend should still show up.

Posted by: Mario at August 29, 2007 3:30 PM

Oh, and Rhode Island is one of the older states, so we would be harder hit.

Posted by: Mario at August 29, 2007 3:35 PM

Choco rations are going up from 15 grams to 17 grams per month. Doubleplusgood!!

Posted by: PDM at August 29, 2007 6:20 PM


There appears to be a minor correlation between median age and income change, but it's far from determinative. For example...

  1. According to 2005 census data, we are #13 in median age. Only 4 of the 12 states older than us showed income decreases.
  2. Members of our regional cohort, Connecticut and Massachusetts, are about the same age as we are, and managed not to show a huge decline in median income.
  3. Georgia and Colorado, top-10 youngest states, showed income declines.
Whatever the combination of causes, being #2 on a list of income decreases is not a good place to be, and RI needs to get away from the philosophy that things will be getting forever worse here because of forces beyond anyone's control.


Was your comment your personal contribution to the general pool of incoherence?

Posted by: Andrew at August 30, 2007 12:29 PM
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