Minnesotans above average household incomes stem in large part from their Midwestern work ethic

Last week, I noted that median household income in Minnesota has grown more slowly than nationally in six of the last seven years. Nevertheless, it remains above national average.

One driver of higher median household incomes is more people in each household working and earning income. Data confirms this. Using Census Bureau data for 2021, we find a statistically significant, positive relationship between the share of households in each state and the District of Columbia with three or more workers and median household income. Indeed, 42.3% of the variation in median household incomes across these 51 jurisdictions can be explained by the share of households in them with three or more workers.

As Table 1 shows, only eleven jurisdictions have a lower share of households with no workers than Minnesota and our state ranks 5th for the number of households with two workers and 9th for the number of households with three or more workers. Minnesota owes a good chunk of that ‘premium’ on median household income to the work ethic of its people.

Figure 1: Households by number of workers

What causes this relatively higher propensity to work in Minnesota? I don’t know, beyond the “ethics” and “norms” that prevail here. Looking at the states with similar rankings on the share of households with two workers, we see that the only two ranking higher than Minnesota are our neighbors in the Dakotas, while Iowa ranks 5th and Wisconsin 10th. These states have very different state economic policies yet very similar work ethics, as demonstrated by the number of employees per household. Economic outcomes are driven by more than just state government policy.