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Understanding Poverty in Minnesota Testimony

Dive into the testimony by Tom Stinson and Tom Gillaspy to end poverty in Minnesota by 2020, exploring income, poverty guidelines, statistics, trends, and alternative poverty measures.

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Understanding Poverty in Minnesota Testimony

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  1. Poverty In MinnesotaTestimony to Legislative Commission To End Poverty In Minnesota By 2020 Tom Stinson, State Economist Tom Gillaspy, State Demographer August 2007

  2. Who Are the Poor? The poor are those unable to purchase a minimum adequate market basket of goods and services

  3. 2007 HHS Poverty Guidelines

  4. Earnings Dividends Interest Rent and royalties Trust income Pensions Social Security Unemployment Workers comp SSI Veterans benefits Public assistance Child support Alimony Poverty Status Is Determined by Money Income

  5. What Income Is Excluded? • Non cash benefits – food stamps, housing subsidies, Medicare, Medicaid • Capital gains • Money withdrawn from savings

  6. Other Considerations • Income is measured before taxes • Combined income of all family members • Incomes of non-relatives (roommates) are not counted • The same thresholds apply in all states • No urban-rural or regional differences • Not relative to other’s incomes

  7. Who Is Not Counted In The Poverty Statistics? • People in institutions—nursing homes, prisons • People in group quarters but not institutionalized—college students living in dorms, group homes, shelters • The homeless

  8. How Was the Poverty Line Developed • Poverty line was defined as 3 times the cost of USDA’s economy food plan in 1963 • Since then the poverty line has increased to match the increase in the Consumer Price Index

  9. Selected Inflation Rates 1963-2006

  10. Mississippi 21.3% Louisiana 19.8% Dist of Columbia 19.0% New Mexico 18.5% West Virginia 18.0% New Hampshire 7.5% Maryland 8.2% Connecticut 8.3% New Jersey 8.7% MINNESOTA 9.2% Highest & Lowest Poverty Rate States 2005 ACS

  11. Minnesota Poverty Rate Is Typically Lower Than The Nation CPS poverty rate with 90% confidence interval

  12. Poverty Is Higher Inside The Beltway And In Greater Minnesota

  13. Highest Poverty In Minneapolis & St. PaulGreater Minnesota Also High 2005 ACS

  14. Part Of The Difference Between Minnesota’s Poverty Rate And The Nation Is Difference In Racial And Ethnic Structure 2005 ACS. Mn v US difference for Black /African American and American Indian are not statistically significant at 90% confidence. All other differences are significant

  15. High Poverty For Children & Young AdultsRises Again Over Age 75 2005 ACS

  16. Families With Children Have Higher Poverty Rates; Family Type Also Matters 2005 ACS. Families only. Does not include people living alone. All differences Between Mn and US are statistically significant at 90% confidence

  17. Poverty Declines As Education Increases 2005 ACS. Rates for population age 25 and older. Differences significant at 90% confidence

  18. Not All Poverty Is the Same • Business Cycle • Temporary lay-off • Life cycle • College students • Retirees • Event • Disability

  19. Minnesota Poverty Rate Trends Higher During Economic Downturns CPS poverty rate with 90% confidence interval

  20. Much Poverty Is EpisodicResults of Panel Study of income Dynamics 1996-1999 • A third (34%) of Americans were poor for at least 2 months during the 4 year period • 2% were poor every month of the 4 years • Half (51%) of poverty spells last 4 months or less • 80% of poverty spells last 1 year or less

  21. Some Types of Poverty Are Long Lived • Chronic • Insufficient skill base • Weak local/regional economy • Intergenerational

  22. An Alternative View Based On Characteristics Of The Householder • Circumstances & characteristics of householders say much about poverty of household members • Multiple poverty risk characteristics dramatically increases likelihood of poverty

  23. Eight Characteristics Of Householders Account For Three-Fourths Of Minnesota’s Poor

  24. Poverty Rate of People In Selected Households With Householder Experiencing Multiple Risk Factors 2005 ACS micro data. Each of the above groups comprise more than 5,000 Minnesota households

  25. Alternative Definitions of Poverty • Multiples of the existing poverty line • Adjusting for assets • Adjusting for access to publicly provided goods and services • Basic needs studies

  26. Numbers of Poor & Near Poor Have Changed Little Since 1990 1990 & 2000 Census & 2005 ACS

  27. Highest Poverty Rates In Minneapolis & St. Paul—Greater Minnesota Also Higher 2005 ACS

  28. Highest Poverty Rates Among Minnesota Young Adults But Near Poverty Is High Among Elderly 2005 ACS

  29. And In Conclusion • Minnesota has one of the lowest poverty rates in the nation • Poverty is transient for some; more chronic for others • Our low rate is not quite as good as we might think • Sharp differences in poverty rates exist between groups and regions

  30. A Few Alternative Measures Of Poverty • Current (2003) official US rate 12.5% • Official + capital gains minus income & payroll taxes 12.0% • #2 plus value of non cash benefits 9.7% • Official rate adj for cost of living diff & medical out of pocket expenses 13.2% • Food insecure (2005) 11.0%

  31. Sources Of Income For Minnesotans Below Poverty In 2005 2005 ACS

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