24/7 Wall St.: America's richest states

Michael B. Sauter, Alexander E.M. Hess and Thomas C. Frohlich | 24/7 Wall St.

Last year, household income remained effectively unchanged, according to data released this week by the U.S. Census Bureau. This is despite the fact that the U.S. added nearly 2.2 million jobs in 2012.

"The big story is that everything was stagnant over the year" said Economic Policy Institute's Elise Gould. "We're stagnant, and continue to be in a bad place."

While the economy continues to struggle, residents in the wealthiest states continue to make far more than in the poorest. In 2012, Maryland remained the richest state in the country, with a median household income of $71,221. Mississippi was again the poorest, with an income of $37,095 — nearly half that of Maryland's.

Despite the addition of jobs nationwide, median incomes remained stagnant in most states and were still generally below their 2008 levels, adjusted for inflation. Sheldon Danziger, president of the Russell Sage Foundation, explained that this has been the nature of the recovery. "We have an economy that continues to grow, with most of the gains going to the economic elite. I don't see any bright prospects for the median worker, much less the poor."

States with lower median incomes generally had much higher rates of poverty than the national rate. All of the 10 states with the lowest median income in 2012 also had among the highest poverty rates in the country. While 15.9% of Americans fell below the poverty line in 2012, nearly one in four Mississippians did.

Employment is one of the biggest factors affecting income. In some states with lower unemployment, a higher share of the households had steady income, which bolsters the state's median. In many of the highest-income states, like New Hampshire, Minnesota and Hawaii, unemployment in 2012 was less than 6%, compared to a national rate of 8.1%.

Elise Gould, Director of Health Policy for Economic Policy Institute, explained that unemployment rates can have a significant effect on a state's household income. "When we're talking about average families and poor families, the vast majority of income comes from wages. So it's about jobs." Gould cautioned, however, that unemployment rates do not tell the full story.

Unemployment rates, for example, ignore those people who have given up looking for work or accept part-time work. According to the Bureau of Labor Statistics, while 8.1% of American workers were unemployed in 2012, 14.7% were underemployed, meaning they wanted to work full time but could not. This was an increase from roughly 10% in 2008.

The types of jobs available in each state also affect income. A review of Census Bureau industry composition data shows that people in most of the states with a higher median income were often more likely to be employed in information, finance, professional and other positions that tend to pay higher salaries. Maryland, the wealthiest state in the country, had the highest percentage of workers in professional, scientific and management positions.

At the same time, many of the low-income states had smaller percentages of these professional occupations and higher rates of employment in retail, manufacturing and transportation. The high proportion of manufacturing jobs in low-income states might be surprising, but, explained Danziger, the makeup of the manufacturing industry in the country has changed.

"There's a difference between unionized auto company workers and non-unionized parts suppliers," Danziger said. "Even when manufacturers haven't cut wages, they are adopting labor-saving technological change."

To identify the states with the highest and lowest median household income, 24/7 Wall St. reviewed state data on income from the U.S. Census Bureau's 2012 American Community Survey (ACS). Based on Census treatment, median household income for all years is adjusted for inflation. We also reviewed unemployment data provided by the Bureau of Labor Statistics for 2012, as well as 2012 ACS data on health insurance coverage, employment and poverty.

These are America's richest and poorest states.

1. Maryland

> Median household income: $71,122

> Population: 5,884,563 (19th highest)

> Unemployment rate: 6.8% (17th lowest)

> Pct. below poverty line: 10.3% (3rd lowest)

Maryland was the only state in the country with a median household income to exceed $70,000 in both 2011 and 2012. Also, nearly 11% of households in Maryland earned $200,000 or more last year, the third-highest percentage in the nation and close to double the national rate of 5.9%. People in Maryland were more likely to be employed and to hold good jobs. Just 6.8% of the workforce was unemployed in 2012, compared to 8.1% nationwide. Conversely, 15.5% of the workforce, the highest percentage in the nation, were employed in professional, scientific and management occupations, which are generally high skill and high pay.

2. New Jersey

> Median household income: $69,667

> Population: 8,864,590 (11th highest)

> Unemployment rate: 9.5% (tied-5th highest)

> Pct. below poverty line: 10.8% (5th lowest)

The median household income in New Jersey was just shy of $70,000 in 2012. This was due in part to the large number of especially wealthy households. More than 11% of households had an income of at least $200,000 in 2012, a higher percentage than any other state except Connecticut, and nearly double the national rate. But not all residents were well off in 2012. The state's unemployment rate for the year was 9.5%, among the highest in the nation. Also, the percentage of households that depended on food stamps rose from 8.0% in 2011 to 9.3% last year. This mirrored a nationwide trend: The number of American households on food stamps rose to from 13.0% to 13.6% between 2011 and 2012.

3. Alaska

> Median household income: $67,712

> Population: 731,449 (4th lowest)

> Unemployment rate: 7.0% (22nd lowest)

> Pct. below poverty line: 10.1% (2nd lowest)

In spite of Alaska's high median household income — and the nation's second-lowest poverty rate — over 20% of the population did not have health insurance last year, more than all but two other states. This could be due in part to the state's high volume of seasonal employees, who are much less likely to have health insurance. Alaska's oil production also bolsters residents' income, with most collecting dividend payments from the state's reinvested oil savings.

4. Connecticut

> Median household income: $67,276

> Population: 3,590,347 (22nd lowest)

> Unemployment rate: 8.4% (tied-14th highest)

> Pct. below poverty line: 10.7% (4th lowest)

Connecticut's median household income fell considerably from 2008, when a typical family in the state took in $73,075 annually. This mirrored broader trends in the rest of the U.S., as nationwide median household income fell from over $55,000 in 2008 to $51,371 in 2012. Still, 11.5% of the state's households earned at least $200,000 in 2012, the most in the U.S. Connecticut also remains one of the states with the worst income inequality in the nation, ahead of only New York.

5. Hawaii

> Median household income: $66,259

> Population: 1,392,313 (11th lowest)

> Unemployment rate: 5.8% (12th lowest)

> Pct. below poverty line: 11.6% (8th lowest)

Over 16% of people in Hawaii worked in arts and entertainment, recreation, accommodation and food services last year, the second highest percentage in the country. This reflects the state's strong retirement and tourism economy. The unemployment rate in Hawaii declined only slightly in 2012 from the year before, but remained well below the U.S. rate, at just 5.8%. Over that time, Hawaii was also one of a handful of states to see a meaningful increase in income. Median household income rose by more than $3,000, to $66,259.

MORE: See how the rest of the states ranked from richest to poorest

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