Income inequality threatens Minnesota’s future


Income inequalities between Minnesota’s richest and poorest families continue to widen and endanger the state’s future, according to a recent national report.

Pulling Apart: A State-by-State Analysis of Income Trends by the Center on Budget and Policy Priorities and the Economic Policy Institute found a significant increase in income inequality in the nation and in Minnesota from the late 1990s to the mid-2000s, when the earnings of high-income households grew while low- and middle-income households’ earnings fell.

This growing income inequality contradicts some of our country’s most deeply held values, according to a Minnesota Budget Project issue brief that provides more detail on the Minnesota situation. Americans believe that hard work should pay off, that people who work full time should be able to support their households, and that everyone should have the opportunity to succeed.

Some of the most disturbing findings:

  • The income gap has grown so wide that by the late 2000s, the richest 20 percent of Minnesota households had average incomes seven times larger than the poorest 20 percent and 2.5 times as large as the middle 20 percent;
  • The richest five percent of households have average incomes 11 times greater than the poorest 20 percent;
  • The poorest 20 percent of households in the state experienced an $800 decrease in their incomes over the business cycle when adjusted for inflation, while the richest 20 percent saw an almost $10,000 increase. The difference in income between the richest and poorest households in the state grew by almost $11,000 in that same time.

Fortunately, Minnesota can take action to narrow the gap. The experience of the past 30 years demonstrates that economic growth alone does not reduce income inequality. States can take action to decrease income inequality or alleviate some of its devastating impacts. These include:

  • Policies that improve job quality, such as increasing the state minimum wage and focusing on job quality in economic development;
  • Tax policies that ensure that all Minnesotans pay their fair share;
  • Policies that support low-wage workers, including child care assistance, health care, and access to higher education and skills training.

By investing the right resources in the right places, Minnesota can work to mitigate this trend and ensure that everyone has a chance to succeed. It’s the right thing to do for all of us.