Minnesota household income continues to decline, putting more families in need

Lingering pandemic-related issues are still influencing Minnesotans' finances, causing household income to fall and poverty to rise.

Recent data from the American Community Survey show the traditional poverty rate stayed relatively flat in Minnesota, with 9.6% of the population living below the federal poverty threshold, a slight increase from 2021.

But household income in Minnesota fell 2% to $82,338, after adjusting for inflation, according to a Star Tribune analysis of the data.

Falling from a decade high of 11.9% in 2011, the state's poverty rate hit 9% in 2019. The past few years, there's been a noticeable uptick, said Susan Brower, Minnesota's state demographer who directs the state's Demographic Center.

The end of federal stimulus checks, employment disruptions, declining incomes and the rise in costs for housing and goods have combined to cause Minnesota's recent rise in poverty.

"It appears that inflation grew so fast, that when we're looking at the trend, the real median income declined because of increases in inflation and income not keeping pace," she said.

Prior to the pandemic, Open Cupboard, a food shelf in Oakdale, supported an average of 420 families per week. During the pandemic, that figure increased to more than 4,000 families a week as people struggled with unemployment and lost income from restrictions and business closures, enforced temporarily to curb the spread of the virus.

Employment numbers have since improved, and the economy has rebounded, but the number of families turning to the food shelf for groceries hasn't declined, executive director Jessica Francis said.

As median household incomes continue to fall in Minnesota, families are having to stretch their budgets, and the one area where there is some wiggle room is groceries, Francis said.

"Folks have gotten their jobs back, but they might still have a financial hole that it took them some time to dig out of," Francis said. "There's a host of people that are making just enough so they can maybe pay their rent or their car payment, but there's not enough left at the end of the month for their groceries."

Since 2019, median household income in the state has been flat or dropped after seven consecutive years of increases between 2012-19, data shows. The median household income for African American or Black households and those that identify as multiracial have stayed flat but fell for all other ethnic groups, including Hispanic households, where incomes fell 8%.

Earnings for full-time, year-round working men in Minnesota have fallen but remained flat for women, according to the survey.

The price increases are pushing more people toward Open Cupboard, Francis said, as the nonprofit nears a record 6 million pounds of food served in a single year. The majority comes via grocery rescue, meaning food at the end of its shelf life at grocery stores.

Catholic Charities Twin Cities, which offers emergency shelter and other services to children and families experiencing a housing crises across the Twin Cities, is also experiencing rise in demand for services.

"Every day, families at risk of losing their housing call our diversion helplines, and our shelters are consistently full," said Wendy Underwood, the organization's chief public engagement officer. "We know that it is increasingly difficult to find affordable housing once you're staying in shelter, meaning more and more families are being shut out of our housing system."

For certain demographics, the poverty rate has been nearly twice the state's overall rate. In 2022, the poverty rate for African American or Black households in Minnesota was 24.7%, and for American Indian or Alaska natives, 30.1%.

When looking at the supplemental poverty measure (SPM) — an additional metric the Census Bureau released which takes into accounts major government benefits like Social Security and child tax credits, along with costs of living and geographical differences in those costs — the most current three-year SPM average for Minnesota is 5.5%. The previous three-year period (2017-19) was 6.5%.

Antipoverty programs expanded at the height of the pandemic kept millions of people from destitution, according to the Economic Policy Institute.

While Minnesota's median income drop is statistically significant, it's still above the U.S. median household income of $74,755, which fell by 0.8%.

Open Cupboard is planning to open a second food center in Maplewood in the next couple of months to support families in the east metro. It has served families from 150 ZIP codes this year, Francis said.

"We're hoping that we can serve even more people by opening up directly in that community where there's a high need," she said.