While several methods exist to determine which U.S. states are the poorest as of 2019, looking at median household income, poverty rate, and unemployment rate offers a simple and straightforward way to compare how much a typical family in one state is earning versus a typical family in another state. Based on these metrics, the poorest states in America are Mississippi, New Mexico, and Alabama.
The Gap Between Rich and Poor
Income inequality continues to be a hot topic in 2019. Politicians and activists have brought to the forefront of the national conversation the fact that the gap in earnings between the richest Americans and those at the bottom of the economic ladder is greater than at any time since the 1920s and 1930s. While the most affluent citizens continue to amass extravagant fortunes, build opulent mansions, and live lifestyles of luxury, poor people struggle more each year, their wages rising more slowly than the inflation rate, which means that, in many cases, their paychecks have less purchasing power now than five or 10 years ago.
Glaring discrepancies in income are seen at the state level as well as the individual level. Common threads exist between the richest states and between the poorest states. Wealthy states, such as Maryland, Connecticut and New Jersey, tend to have high educational attainment among citizens and are located in close proximity to major economic hubs, such as New York City and Boston. Poorer states almost invariably have a less-educated populace and offer less in the way of economic opportunity. None of the 50 largest U.S. metropolitan statistical areas (MSAs), where high-paying jobs are often found, are located in Mississippi, West Virginia or Arkansas.
It should be noted that positive correlation exists between states' affluence and their cost of living. The median family in Maryland earns almost twice what the median family in Mississippi earns, but each dollar goes further in Mississippi. Much of the wealth in Maryland comes from the Washington, D.C. to Baltimore corridor, where everything from real estate to gas prices runs higher than the national average. By contrast, Mississippi offers some of the nation's lowest living costs.
As of 2017, the median household in Mississippi earned $42,009, compared to a national median of just under $61,372. The state's 2019 unemployment rate was 5.7%, much higher than the national rate of 3.8%. In addition to the lowest median household income, Mississippi had the nation's highest poverty rate in 2019 at 21.5%. The latter figure suggests that, on average, more than one out of five four-person households in the state earned less than $24,300.
Mississippi has low educational attainment and a dearth of urban centers with high-paying jobs. Only 21.1% of the state's residents hold bachelor's degrees, compared to 30.1% of people nationally. Mississippi's largest city, Jackson, ranks 94th in the nation in MSA population.
New Mexico's median household income in 2017 was $46,718. The unemployment rate was 7.7%, and the poverty rate stood at 20.6%. Although New Mexico's economy has started growing again, much of the working population is leaving the state, along with its children.
Actually, more young adults and older folks are entering the state than leaving, but New Mexico's 30- to 59-year-olds, pushed by the state's sluggish economic recovery, are fleeing by the masses, taking kids with them, who researchers say are unlikely to return. Experts contend that the loss of these working-age residents and their children is worrisome because they are not optimistic the trend will reverse.
Alabama has comparable household incomes to Mississippi and New Mexico and lower rates of unemployment and poverty. In 2017, the median Alabama household earned $46,472. The state's unemployment rate was 7.4%, and the poverty rate was 18%. However, things are appearing to turn around.
According to the Center for Business and Economic Research at the University of Alabama’s Culverhouse College of Business, Alabama's economy ended 2018 with 2.2% growth rate, a 70% increase compared with 2017.
"A strong labor market, a continued positive consumer sentiment, an increase in final sales and a steep decline in inventories gave a major boost to GDP growth, a trend that is expected to continue throughout the remainder of the year," the CBER said. Alabama will share in the growth. "As the national economy continues to gain momentum, Alabamas real GDP will grow by 2.2 percent in 2018, to around $187 billion," the CBER continued.
The Alabama economy is adding jobs and is adding to school and general government taxes for Alabama. From July 2017 to July 2018, Alabama added 22,200 nonagricultural jobs, compared to 16,100 jobs from July 2016 to July 2017.