Racial disparities grow in Minnesota as poverty increases, household income declines

September 22, 2011

Earlier this month, we learned the distressing (but not surprising) news that poverty is increasing and median household income is declining in Minnesota. The U.S. Census is out with another report showing even worse news. Minnesota has an unfortunate history of racial disparities, with communities of color experiencing worse economic outcomes than their white counterparts. Thursday’s release of the American Community Survey (ACS) reveals that racial disparities in the state continue to grow.

In 2010, 11.6 percent of Minnesotans were living in poverty, up significantly from 9.5 percent in 2007 (just before the last recession). This overall number hides the much deeper levels of poverty within Minnesota’s communities of color. In 2010, 17.8 percent of Asians were living in poverty, as were 24.4 percent of Latinos and 37.2 percent of blacks. Although poverty among white non-Hispanic Minnesotans increased from 7.1 percent in 2007 to 8.4 percent in 2010, poverty among American Indians increased from 30.7 percent to 39.5 percent.

Income disparities also continue to persist in the state. In 2010, the median household income for the Latino, black and American Indian communities fell significantly below the statewide median household income for whites. And those gaps are growing. Among white non-Hispanic households in Minnesota, median income fell by five percent between 2007 and 2010. However, black households experienced a 16 percent drop in median income and American Indian households a 22 percent drop. In 2010, the median household income for both of these communities stood near $27,000, less than half the statewide median of $55,459.

Minnesota tends to come out ahead when we examine national averages, but it is shocking to see how our communities of color are faring compared to other states. The poverty rate among white Minnesotans remains significantly below the national average for whites, while the poverty rate among blacks, Asians and American Indians is significantly higher than the national average for these communities. For example, among blacks and American Indians, Minnesota’s poverty rate is at least ten percentage points higher than the national average.

The persistent disparities between whites and people of color in Minnesota contradict our most deeply held values. Minnesotans believe that hard work should pay off, that people who work full time should be able to support their families, and that everyone who is willing to work should have the opportunity to succeed. The levels of economic inequality we are facing is not simply the inevitable result of a bad economy. The problem has been compounded by poor policy choices that have increased the challenges facing already-struggling families. The new data again put the pressure on state and national leaders to address racial disparities.

-Christina Wessel


Minnesota losing ground on poverty, income and the number of uninsured

September 16, 2011

It seems oddly appropriate (and a little inconvenient) that I was out of town at a conference on the day the U.S. Census Bureau released the latest statistics on poverty, income and health insurance coverage in the United States. It reminded me that for many years, fellow policy wonks from other states have looked at Minnesota with envy as a place that consistently ranks high on almost all of the good stuff, and ranks low on almost all of the bad stuff (although it’s important to acknowledge that these rankings overlook the deep racial inequities that have long plagued our state.)

But Minnesota is starting to lose its great reputation. With the release of the U.S. Census Current Population Survey (CPS) on Tuesday, we can look back and see that 2000-2010 represents a decade of decline for Minnesota. The CPS offers a preliminary look at state-level trends. Our poverty rate and level of uninsured may still be below the national average, and our median income remains above the national average, but we are headed in the wrong direction.

Poverty in Minnesota is on the rise. Over the last decade, the percentage of Minnesotans living in poverty has risen from 6.5 percent to 10.8 percent, according to preliminary statistics from the U.S. Census Bureau. That means one out of every ten Minnesotans is living below the poverty line (a stunning $22,113 for a family of four). With the threshold so low, it’s not surprising that families with incomes above the poverty line still struggle to meet their basic needs. Sadly, many are living with that reality: one out of four Minnesotans is surviving on an income below 200 percent of the poverty line ($44,226 for a family of four).

We are also seeing a dramatic drop in median income in the state. The preliminary data released by the U.S. Census Bureau shows that over the last decade, Minnesota’s median income fell from $65,120 to $54,785, after adjusting for inflation. That’s a drop of more than $10,000. Only Michigan experienced a larger decline in median income over the decade. More definitive state-level data on income will be released September 22 as part of the American Community Survey.

To complete the trifecta, the share of Minnesotans without health insurance has increased 2.1 percentage points over the last decade, hitting 10.2 percent in 2009-2010. How people are getting health coverage is also changing. The share of Minnesotans receiving employer-sponsored health care has fallen by nearly nine percentage points over the last decade. Public health insurance – like Medical Assistance – has picked up much of that slack, thereby preventing an even sharper increase in the number of uninsured Minnesotans.

You might think that times have been very tough, and surely every state is facing the same bad outcomes over the last decade. That’s not the case. Many states have managed to hold their ground in the face of two recessions, and a few states have even managed to show improvement (North Dakota and West Virginia saw an increase in median income, and Massachusetts reduced its percentage of uninsured). 

The economic turmoil that has contributed to the increase in poverty and fall in median income may be beyond our ability to influence, but Minnesota’s policymakers can make better choices to reduce poverty, build the middle class and improve the state’s economic future.

-Christina Wessel

Health and human services budget asks vulnerable Minnesotans to pay a price

July 22, 2011

Many of Minnesota’s most vulnerable populations, including the elderly, those with disabilities, and low-income families with children, are being asked to help balance the state’s budget through $1 billion in cuts to health and human services in the final budget approved by Governor Dayton and the Legislature. This is an eight percent cut in FY 2012-13 compared to base funding, which means a reduction from current levels of service.

While some of the most troubling proposals, including those that would have caused more than 100,000 Minnesotans to lose their current health care coverage, did not make it into the final legislation, the health and human services bill still contains provisions that will increase barriers for low-income families trying to work, for the elderly and people with disabilities who want to stay in their homes, and for Minnesotans trying to access health care.

As a result of the final budget, working parents and other low-income Minnesotans will face challenges in building a more secure economic future. For example:

  • Access to quality, affordable child care will become more difficult for working parents. In the budget, provider reimbursement rates are reduced, flexibility for families is limited, and grants supporting system improvements and parental information are cut. The budget agreement also captures $5 million in child care assistance funds that were not spent in calendar year 2010 and transfers them back to the general fund. These resources could have been used to help 500 additional families in 2012.
  • Low-income individuals will find it more difficult to obtain post-secondary education, purchase a home or start a new business. The decision to eliminate Family Assets for Independent in Minnesota (FAIM) means they will lose both the state and federal match on their savings.
  • Funds intended to support families seeking to stabilize their lives, find employment and become self-sufficient are instead used to help balance the state’s budget, including $20 million from the Minnesota Family Investment Program (MFIP) Consolidated Fund and $38 million in federal funds for Temporary Assistance for Needy Families (TANF).

The final budget will also make it harder for people with disabilities and the elderly to access the services they need to remain independent. For example:

  • There will be additional limits on the number of individuals who can enroll in waiver programs that enable the elderly and people with disabilities to access community-based care and avoid entering an institution. Cuts to these waiver programs total $64 million in FY 2012-13.
  • People with disabilities who rely on a relative to provide their care may find it harder to get the assistance they need. The bill cuts payments to these Personal Care Attendants by 20 percent, creating financial challenges for these families. This cut particularly raises concerns for people with disabilities in rural areas, where relative caregivers are often the only option.
  • Some funding cuts do not fall on individuals directly, but will reduce funding for the institutions and community-based providers they rely on. These decisions could hurt the financial stability of these providers, raising concerns about whether some of them will be able to continue to serve their community. For example, there are more than $70 million in cuts to various payment rates for a variety of community-based providers and continuing care facilities that serve the elderly and individuals with disabilities. And, although nursing homes are exempt from most immediate payment rate cuts (a few will even get a small rate increase), the bill eliminates a scheduled $133 million increase in reimbursement rates in FY 2014-15. This planned “rebasing” would have re-evaluated the state’s current reimbursement rate to bring it in line with the cost of providing care.

There is some positive news: the final budget keeps intact Medical Assistance for extremely low-income adults, a health care reform that was approved by Governor Dayton in January. This preserves access to health care for tens of thousands of vulnerable Minnesotans. However, other changes in health care programs will increase the barriers to accessing health care for some individuals. For example:

  • Approximately 7,200 adults without children who are between 200 and 250 percent of poverty (that’s an income between $21,780 and $27,225 for a single adult), will lose their health insurance under MinnesotaCare and be given a subsidy to buy coverage in the private market. It remains to be seen whether affordable coverage options exist in the current insurance market. The bill seeks federal permission to expand this Healthy Minnesota Contribution Program to include parents on MinnesotaCare.
  • Access to health care, particularly in rural areas, could become more challenging. Hospitals face the loss of an anticipated $106 million increase in reimbursement rates in FY 2012-13 and another $491 million in FY 2014-15. As with nursing homes, the bill cuts a planned re-evaluation of payment rates intended to increase the rate to better represent the cost of providing care.
  • Children and adults facing mental health issues will find some funding to counties for mental health services has dried up. The bill cuts Children and Community Services Act grants by 17 percent. The act is renamed the Vulnerable Children and Adults Act and the remaining funds will be used for child protection and to protect vulnerable adults. It will no longer fund mental health services for adults and children.

In some areas, the impact of the budget decisions are harder to predict. For example:

  • The agreement eliminates the MinnesotaCare provider tax beginning in 2020. This tax on health care services is one of the major funding sources for the Health Care Access Fund (HCAF), which in turn funds MinnesotaCare and other health-related grants and services. This significant source of health care funding (projected to raise more than $1 billion in revenue in FY 2012-13) would be eliminated without any specific plan for how to continue funding these important public health functions.
  • There are about $400 million in general fund savings from managed care reforms, including rate reductions, efforts to reduce hospital admissions/re-admissions and emergency room usage, and competitive bidding. The estimated savings associated with these reforms grows to $540 million in FY 2014-15. Unfortunately, it isn’t clear how these savings goals will be achieved, or what will happen if the actual savings falls short of what is anticipated.

We couldn’t possibly touch on all the important changes included in the health and human services budget in this blog. We will be releasing a more comprehensive analysis of the budget agreement in the coming days.

In the meantime, for more information on how Minnesotans will be impacted by the health and human services budget, check out analysis by the Affirmative Options Coalition, National Alliance on Mental Illness of Minnesota, Child Care WORKS and the Arc of Minnesota

-Christina Wessel

Cuts-only approach jeopardizes financial security of low-income households

May 16, 2011

Today, Way Sixteen of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize the financial security of low-income households.

Proposed Cut: The Health & Human Services Conference Committee has proposed to eliminate state funding for the Family Assets for Independence in Minnesota (FAIM) initiative, resulting in the loss of federal matching dollars.

Consequence: Ginga was struggling to make ends meet when she connected to FAIM to improve her financial security – allowing her to build savings and buy a home in Duluth. She explains, “This was more than a savings program for me. It was a chance to succeed as a single mom and along with all the classes and tax help, gave me the skills and confidence to take control of my finances and plan for the future like I would never have thought possible.”

FAIM helps low-income working Minnesotans achieve greater economic security by increasing their savings, assets and financial knowledge. Participants earn a three-to-one match on their savings for a home purchase, secondary education or small business start-up. Over the past decade, nearly 3,000 Minnesota participants completed 12 hours of intensive financial education, giving them tools to leave poverty permanently. They earned and deposited over $2.5 million into local savings accounts. Without FAIM, local economies will suffer from lower home ownership, fewer college degrees attained, and reduced small business start-ups. Low-income families will miss the opportunity to enhance their financial literacy and stability.

The Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing the financial security of low-income households. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

  • For more information about the impact of proposed cuts to FAIM, contact Pam Johnson with the Minnesota Community Action Partnership at 651-645-7425 x 2.
  • For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
  •  Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

-Leah Gardner

Cuts-only approach jeopardizes opportunities for families to secure stable housing

May 6, 2011

Today, Way Ten of the 20 Ways in 20 Days Campaign looks at how a cuts-only approach to meeting Minnesota’s needs will jeopardize the opportunity for families to secure stable housing.

Proposed Cut: Under current budget proposals, funding for the Housing Trust Fund is reduced from $21.1 million to as little as $16.6 million.

Consequence: Brandy came into supportive housing seven months pregnant with her first child. She was fleeing abuse from the baby’s father and had been homeless off and on her whole life. Later, a rental subsidy from the state’s Housing Trust Fund provided the foundation Brandy needed. She got help for previously undiagnosed depression, enrolled her son in preschool and signed up for job training. Without her rental subsidy, Brandy and her son will not be able to afford housing and will fall back into homelessness and further from the goal of the better future Brandy is willing to work hard to attain.

Families with children make up most of the over 1,600 Minnesota households that receive assistance through the state’s Housing Trust Fund– and all have long histories of homelessness. This support provides a stable place where kids have a better chance to grow into healthy, well-educated and productive adults. With the proposed reductions, as many as 930 families will lose the opportunity for stable housing and the foundation for a brighter future.

The Solution: Let’s protect Minnesota’s communities, residents and quality of life. We cannot afford to take a cuts-only approach to meeting our state’s needs, jeopardizing the opportunity for families to secure stable housing. Minnesotans know we need a balanced approach, one that includes raising revenues based on ability to pay, in order to maintain critical state services that support Minnesotans in tough times and invest in our future.

  • For more information on how proposed cuts would hurt families working to escape homelessness, contact Patrick Ness with the Minnesota Coalition for the Homeless at 612-804-5912.
  • For more information about the 20 Ways in 20 Days Campaign or Invest in Minnesota, contact Leah Gardner at 651-757-3063.
  • Download the PDF version of this story to spread the word about the impact of proposed budget cuts.

-Leah Gardner

New study highlights unequal distribution of health in the Twin Cities

October 7, 2010

Our recent analysis of new Census data highlighted how racial disparities continue to persist in Minnesota, and today a new report examines the issue more closely here in the Twin Cities. The new study – commissioned by the Blue Cross and Blue Shield of Minnesota Foundation and conducted by Wilder Research – examines the connections between health outcomes, neighborhood incomes, and race.

Here’s how Blue Cross Foundation and Wilder Research describe some of the key findings:

  • An increase of $10,000 in an area’s median income is associated with a full year gain in life expectancy.
  • Life expectancy varies greatly by race in the Twin Cities, ranging from a high of 83 years for Asians to a low of 61.5 years for American Indians. Overall life expectancy is 80.6 years.
  • Children born into the highest income/lowest poverty areas can expect to live 8 years longer than those born into the lowest income/highest poverty areas.

The Minnesota Budget Project was one of several groups asked to respond to the report’s findings, and reflect on what can be done to reduce health inequities.

The disparities existing today in health outcomes and income should be a concern for all in our region. Income inequality, with persistent disparities between whites and people of color, contradicts our most deeply held values. Minnesotans believe that hard work should pay off, that people who work full time should be able to support their families, and that everyone who is willing to work should have the opportunity to succeed. Gaps like those in the Twin Cities today make people distant from each other. That distance undermines our sense of shared destiny. It weakens trust in our public institutions.

The economic future and quality of life in the Twin Cities depend on everyone having access to opportunity. That means quality jobs, a good education and all the things that make for a healthy life. Deep economic and racial disparities that exist today in incomes and health outcomes are an obstacle to this goal.

That’s how our response paper begins…be sure to check out the full report, our response and more.

-Nan Madden

Minnesota: Poverty up, median income down, racial disparities persist

September 28, 2010

The Census released results from the 2009 American Community Survey on Tuesday morning – and the numbers do not look good for Minnesota (read our press release).

Poverty increased. The overall percentage of Minnesotans living in poverty rose to 11 percent in 2009, a significant increase from pre-recession levels. Some people in Minnesota saw a particularly strong increase in poverty between 2007 and 2009, including Latinos (four percentage point increase), children (two percentage point increase) and white non-Hispanics (one percentage point increase). Remember, in 2009, a family of three would have had to earn less than $18,300 to be considered living in poverty.

Median household income fell. Demonstrating that the effects of the recession were felt by most families, Minnesota’s median household income fell by two percent between 2008 and 2009, after adjusting for inflation. Although it dropped by about $1,000 to $55,616, Minnesota’s median household income remained higher than the national level ($50,221).

The racial disparities are stunning. Even though non-Hispanic whites experienced a significant increase in poverty and a significant decline in median household income, Minnesota’s communities of color are the ones who are really being left behind. Demonstrating the impact of the historic lack of access to educational and employment opportunities, Blacks, American Indian and Latino communities experienced much lower median household incomes and much higher rates of poverty in 2009.

The numbers are dramatic – 35 percent of Blacks and American Indians in Minnesota fell below the poverty line in 2009. Latinos (26 percent) and Asians (17 percent) also had a significantly higher poverty rate than non-Hispanic whites (eight percent).

In 2009, the median income for Black ($26,930), American Indian ($33,930) and Latino ($38,751) households in Minnesota was also significantly lower than the median income in non-Hispanic white households ($57,979). While non-Hispanic white households had a median income well above the national median in 2009, Black households in Minnesota fell below the median income for their counterparts nationally.

Where do we go from here? In a recession, the pressure builds as the need for public services increases while state revenues are falling. We know that the state continues to face large budget shortfalls, but reducing or eliminating state services to balance the budget will not help us move forward from this recession. Continuing cuts in services means more job losses, a greater strain on remaining public services and higher poverty. It leads to a cycle where families can’t get help when they need it most.

But we can help our communities recover from the recession, and that means raising revenues to help balance the budget and maintain investments in education, health care and job training. We also need to be building a strong economy where we can reverse the disparities in our state and give everyone the opportunity to succeed.

-Christina Wessel

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