Real incomes are falling further and faster in Minnesota than nationally
Last week I submitted an op-ed to two of the state’s major opinion platforms correcting some of the egregiously false statements made recently about Minnesota’s economy. Both declined to run it, citing the upcoming election. The post below is an expansion of part of that op-ed.
Even so, there have been repeated attempts to paint a picture which is at odds with these facts.
On October 20, DFL Chair Ken Martin tweeted:
These numbers, as I’ve noted previously, take no account whatsoever for inflation which was 14.3% over this period so that, even using Martin’s numbers, Americans’ average wage and salary income has actually fallen in real terms by $3,572 since President Biden took office.
BEA data for Personal Income illustrate how inflation is hitting Minnesotan incomes. As I noted recently, in the second quarter of 2022, the most recent for which we have data, Personal Income in Minnesota rose by 5.4% at an annualized rate, which was lower than in 28 other states. But if we, unlike Mr. Martin, adjust that for inflation and population, we see that Personal Income in Minnesota actually fell for a fifth successive quarter.
Personal Income includes income derived from three sources, which can be categorized as wages, capital (such as dividends), and transfers (like Social Security). If we strip this last category out to look at sustainable Personal Income, the picture darkens. As Figure 1 shows, per capita Personal Income from sustainable sources began falling in real terms in the United States in the fourth quarter of 2021 but in the second quarter of 2021 in Minnesota. While sustainable per capita Personal Income for the United States is now 0.4% lower, in real terms, than it was on the eve of the pandemic in the fourth quarter of 2019, in Minnesota it is now 1.8% lower. As Figure 2 shows, that is worse than in another 35 out of 51 jurisdictions.
Figure 1: Change in real, per capita Personal Income from labor and capital, 2019:Q4 = 100
Figure 2: Change in real, per capita Personal Income from labor and capital, 2019:Q4 to 2022:Q2
Inflation is ravaging living standards across the United States, but Minnesotans are being hit especially hard. The economy is the number one issue for Minnesotans right now because they are living with the grim reality of falling incomes. “Its the economy, stupid,” as a wise man once said.