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Poverty rates down in Minnesota
By Marisa Helms
Minnesota Public Radio
August 31, 2001

New data released by the U.S. Census Bureau Friday shows a continuing decline in the poverty rate across the country. The study indicates Minnesota is doing especially well in comparison to other states. Since the data estimates are used to administer federal programs for the poor, some Minnesota poverty experts worry the latest figures could end up hurting Minnesota's most vulnerable populations.

MINNESOTA AND THE COUNTRY ARE SEEING A STEADY, SOME SAY DRAMATIC, decline in the poverty rate. Though the actual number of people living in poverty has increased, the country is doing better overall.

In 1989, 13.1 percent of the country's population was living at or below the poverty threshold, which was defined as a family of four earning $12,674 per year. In 1998, that rate had dropped to 12.7 percent of the population. The actual number of people living in povery in 1998 went up by more than eight percent, but because the country's population increased over that period, the percentage rate went down. The poverty threshold in 1998 was $16,660 per year for a family of four.

Throughout that period, Minnesota's numbers remained better than the national average. The state saw a decrease from a 10.2 percent in 1989 to 8.9 percent in 1998.

The poverty estimates are released every year by the Census Bureau. They're based on 1998 population data, income tax returns, and records from Supplemental Security Income recipients. The estimates are not part of the Census 2000 data.

John Karl Scholtz directs the Institute of Research on Poverty at the University of Wisconsin-Madison. He says the latest poverty data confirms what he already knows - strong public policy, like welfare reform, and a strong economy have contributed to the falling poverty rate.

"When we look across all families, we see a continuing trend of poverty rates falling in the late 1990s. If we look at families with children, poverty rates are falling. If we look at median incomes it looks like median incomes are rising," says Scholtz.

The report also includes information about median income in 1998. The median income for the country is about $39,000 per year. Minnesota's median income is ranked 46th highest in the nation, at $45,000 per year. That's an increase of 46.6 percent from 1989.

Scholtz says other factors contributing to the falling povery rate are welfare reform and the earned income tax credit. The 1990s also saw an increase of entry-level, low-wage jobs, which probably contributed to more economic stability for families.

Children under 18 remain the largest population of Americans living in poverty. The national rate is 18.9 percent. Minnesota's child poverty rate is 12.6 percent. Jim Koppel of the Children's Defense Fund of Minnesota says it's still a problem that more than one in 10 children live below the poverty line.

"Poverty is artificially defined by a national number. We have more people above that number now than we did a year ago. We're moving more people up out of this arbitrary definition of poverty. Are they better off? Are they thriving? Are their families economically stable? That's a whole other question," Koppel says.

From 1989 to 1998, Minnesota saw a nearly three percent drop in the number of residents living at or below the poverty level. Koppel says because the federal government uses this poverty data to determine allocations of federal programs, Minnesota could effectively be penalized. He says federal programs like free and reduced school lunches, and welfare reform block grants, are based on how poorly a state is doing, not how well.

"It tends to help those states, especially southern states, where there's very little good infrastructure investments made by the state," says Koppel. "They tend to benefit from making what I consider poor long-term decisions about their population, and they draw down more federal money because it's based on how bad off you are, not how well off you are."

Koppel says Minnesota's welfare reform program has worked well, and is one of the most responsible programs in the country. Still, he says the state needs to improve the investments it's started to make in its poorest families as they come out of welfare.