The signs of an improving New Jersey economy are evident in the rising incomes of some residents last year, but that good news is tempered by a continuing large wage disparity, according to the U.S. Census Bureau.
According to 2016 American Community Survey data released today, the median household income in the state rose by nearly 4 percent in inflation-adjusted dollars to $76,126 last year. That’s 4.8 percent higher than the 2012 income adjusted for inflation. New Jersey’s median income ranked third in the nation, behind Maryland and Alaska.
At the same time, the proportion of people living below the federal poverty limit — $20,160 for a family of three — inched down to 10.4 percent, a drop of less than 1 percentage point that is considered statistically insignificant. Seven states had lower poverty rates.
Meanwhile, income disparity remains high. In fact, New Jersey ranked 43rd among states for income equality, meaning it is among the worst in the nation, said Demelza Baer, senior counsel and director of the Economic Mobility Initiative at the New Jersey Institute for Social Justice. She also noted that the gender wage gap widened over the prior year.
The census’ measure of income inequality, known as the Gini coefficient, actually declined in 2016, indicating a slight improvement in the gap between the poorest and the wealthiest. The coefficient in 2016 measured 0.4813, compared with 0.4832 in 2015. The closer the number is to 0, the better, with 0 indicating total equality and 1 a representation of the least equal society.
Part of the story
Several social-justice activists also cautioned that the latest federal data tells only part of the story, with too many New Jerseyans continuing to struggle to survive in this high-cost state.
“New Jersey’s economy as a whole is slowly coming along in its lagging crawl out of the Great Recession,” said Jon Whiten, vice president of New Jersey Policy Perspective, a progressive think tank. “But for too many New Jersey families, economic opportunity remains out of reach.”
“While household incomes are up and the number of New Jerseyans living in poverty is dropping,” Whiten continued, “both of these key measures of wellbeing are worse than they were prior to the recession. And having so many residents lacking basic economic security is a huge drag on New Jersey’s economy and quality of life.”
The inflation-adjusted median household income in New Jersey in 2008, at the start of the Great Recession, was $76,712 — $586 more than last year.
And while the poverty rate has been dropping since it peaked at 11.4 percent in 2013, it is still about 2 points higher than in 2007, the low point of the past decade, when just 8.6 percent of New Jerseyans were considered poor.
A more complete picture
The official federal poverty measure is a misnomer in New Jersey, given the high cost of living. By one alternative yardstick, known as the supplemental poverty measure, the percentage of people in poverty rose slightly in the state, from 15.1 percent to 15.3 percent, according to data the census released on Tuesday. The supplemental measure factors in both higher housing costs and such benefits as food assistance and is a three-year average — the 2016 data covers 2014 through 2016 — to try to paint a more complete picture of poverty. New Jersey was one of 14 states where this measure rose in 2016, and now has the ninth-highest supplemental poverty rate in the nation.
“We still have so far to go,” said Baer. “The poverty rate is really an inadequate measure in general, but particularly in New Jersey. Low income people in New Jersey have the worst of both worlds: Housing costs are so high … There are still a lot of low-wage jobs.”
Another way to determine how many New Jerseyans are having difficulty making ends meet is by looking at those whose incomes are 200 percent of the federal limit, or a little more than $40,000 for a family of three last year. Almost a quarter of residents fall into this category, and while that’s fewer than in 2015, there are 300,000 more people living at that income level than in 2007.
The United Way offers a third measure in its ALICE Project. Its most recent report on the Asset Limited Income Constrained, Employed found that 37 percent of New Jersey households in 2014 could not afford such basic needs as housing, childcare, food, healthcare, and transportation.
“From what we are seeing, there are still a lot of people struggling below the ALICE threshold,” said Stephanie Hoopes, director of the ALICE Project. While rising median income and a slight drop in overall poverty are positive signs, “there are still large gaps” among the races when looking at these measures.
For instance, the poverty rate for New Jersey blacks and Hispanics is more than double that of non-Hispanic whites, although that gap has closed a bit since 2007. Last year, 6.4 percent of non-Hispanic whites were living below the poverty limit, compared with 18.6 percent of Hispanics and 17.4 percent of blacks. In 2007, the poverty rates were 5.2 percent for whites, 16 percent for Hispanics, and 16.9 percent for blacks.
“Due to longstanding and significant structural barriers to opportunity, New Jerseyans of color continue to experience significantly higher levels of poverty than others,” Whiten said.
The gaps between the poorest and the wealthiest households are growing. From 2012 to 2016, the percentage of New Jersey households with $15,000 or less in inflation-adjusted income dropped from 9.4 percent to 9 percent. During the same time, those with $200,000 of income or more accounting for inflation rose from 9.6 percent to 12 percent, a leap considered statistically significant.
The census data shows that median earnings for full-time male workers rose by almost 1 percent between 2015 and 2016 to $62,311. Female full-time workers, however, saw their median earnings rise by less than 1/10 of 1 percent to $50,574, or just 81 percent of male earnings.
“There has not been enough of a push for policies to address income inequality,” Baer said. “Raising the minimum wage would be the most obvious one.”
“Federal investments in health coverage, food assistance, affordable homes, public transit, higher education, and more must, at the very least, be maintained, not slashed as current plans from the House leadership and Trump administration propose,” Whiten said. “State policymakers are confronting a once-in-a-generation opportunity to turn the tide next year, when a new governor and new Legislature will convene and, we hope, set their sights on boosting economic opportunities for all New Jerseyans and growing broadly shared prosperity.”
The Census Bureau released single-year estimates for the nation, states, most counties, and populous municipalities today. In addition to data on income and poverty, the ACS data covers dozens of other demographic, social, housing, and work topics.