About This Graph

This graph displays the percentage of the state’s population, including children and seniors, that are living in poverty.

About Income & Equity

In this section we are measuring incomes at the family level and are looking at total family income, which determines the economic resources available to that family.

Because a state's economic performance should be assessed not only on how many jobs it produces, and for whom, but on the level of earnings in those jobs, we explore earnings in detail in this section. Higher earnings (as well as higher employment) imply that individuals and families have access to more economic resources, which, in addition to helping them, is beneficial to state finances, with higher tax revenue and less dependency on public support.

The section also explores the poverty rate and measures the fraction of families below some predetermined level of income needed to satisfy a given level of needs.

The data are from March Current Population Survey (CPS) Annual Demographic files. All individual- or family-level data in the CPS are used with population weights. The United States' average is calculated as unweighted averages over all states in each region. CPS March data are combined with Housing and Urban Development (HUD) Fair Market Rent (FMR) data to calculate the alternative poverty line. All poverty rates are defined at the family level. (Unlike the Census definition, families can consist of a single individual.) The poverty rate is calculated as the percentage of families in the CPS that are living below the nationally defined poverty thresholds, as indicated in the CPS March data.

The alternative poverty rate is based on a poverty threshold that varies by state according to housing costs (Citro and Michael, 1995). The alternative poverty threshold is created by scaling the national poverty thresholds defined by the Census Bureau by a housing index that is equal to 1 if the housing costs in the state are equal to the national average. The housing index is calculated using the HUD FMR data from 1990-2010. The HUD calculates a separate FMR for each rural and urban entity in the state. For each state, we calculated the mean FMR for rural and urban areas separately using the HUD data. Using the CPS March Data, we calculated rural and urban population shares for each state, such that the percentage of the population living in rural areas plus the percentage of the population living in the urban areas is equal to the total population in the state. We calculate the overall state FMR as

FMR_s,y = (rural FMR)_s,yx(rural population share)_s,y + (urban FMR)_s,yx(urban population share)_s,y

for each state s and year y. We then calculate the national average FMR for each year by averaging all the state FMRs. The housing index for each state is equal to

(FMR_s,y)/(national average FMR_y).

According to (Citro and Michael, 1995), about 44 percent of the poverty budget is devoted to housing; we therefore downscale the housing index accordingly:

(adjusted index_s,y) = (index_s,y - 1)x0.44 + 1.

Finally, we multiplied the nationally defined poverty thresholds for each family in the CPS March Sample by the corresponding state index to create the new alternative poverty threshold. The alternative poverty rate is calculated as the percentage of families with family income below the alternative poverty threshold.

Each bar in the figure represents a percentage point change in the poverty rate for each state. The change in poverty is equal to (Poverty Rate₂₀₁₁ – Poverty Rate₁₉₉₀). The states are ordered from largest decrease to largest increase in poverty, with California highlighted in red.