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Poverty in black and white

Poverty snapshot in the Ninth District: race.

November 1, 2006


Joe Mahon Director, Regional Outreach
Poverty in black and white

The ethnic mix of poverty in the nation reflects its changing population, but continues to be something of a funhouse-mirror view: Various minority groups make up a disproportionate share of the poor compared to the overall population, and that's particularly the case in Ninth District states.

In general, minority groups suffer from higher poverty rates than white Americans. District states have a lower share of racial minorities than the nation, yet minority poverty rates in district states are higher than national levels.

Most poor residents in the district are white; that's not surprising, given that whites comprise about 90 percent of the district population. However, the share of the poor in 2005 who are white varied from 60 percent in Michigan, which is 80 percent white, to 86 percent in North Dakota, which is 91 percent white. The state with the most apparent disparity is probably Minnesota, where whites are 88 percent of the population but only 70 percent of the poor, owing to pockets of minorities in Minnesota cities. South Dakota looks similar to Minnesota, but minority poverty there is due to a large population of poor Native Americans.

In fact, Native Americans make up the biggest minority in the district as a whole, and are also the most destitute. South Dakota has the largest Native American population in the district, and 44 percent live below the poverty line; Michigan and Wisconsin hover in the low-20-percent range, comparable to the national rate of about 25 percent. Minnesota has a 27 percent poverty rate among Native Americans, and Montana is at 32 percent, about the same as North Dakota.

The causes of Native American poverty are well known. Their populations are concentrated on reservations, which are geographically isolated from metropolitan areas and lack economic opportunities. South Dakota is home to the two poorest counties in the country: Buffalo and Shannon, home of the Crow Creek and Pine Ridge reservations, respectively. In both counties—along with three other counties that together comprise five of the seven poorest counties in the nation—Native Americans make up a majority of the population.

Along with the other factors associated with poverty on Indian reservations—poor infrastructure and public services, and lack of valuable natural resources—some researchers have pointed out that since the lands are held by the U.S. Bureau of Indian Affairs, those who live on reservations cannot sell or mortgage their land, effectively denying them of an opportunity to build up their personal capital.

Although the black population in district states is much lower than the national level, blacks are also overrepresented among the district's poor. In the Dakotas, for example, blacks make up about 1 percent of the population in poverty, but they make up only half a percent of the total population. Only about 3 percent of all Minnesotans are black, but a little more than 11 percent of the poor are black. Minnesota's black poverty rate was 33 percent in 2005, about four times as high as the white poverty rate. Nationally, about one in four African Americans lives below the poverty line.

In contrast to the Indian population, blacks in the district are mostly concentrated in cities like Minneapolis and St. Paul, as well as Detroit, Mich., and Milwaukee, Wis. (the latter two of which are technically located outside the geographic boundaries of the Ninth District, but included for this analysis).

Both black and Indian poverty rates have stayed relatively consistent in the district since 1980. Black poverty in Montana and the Dakotas was higher in 2000 than in 1990; however, current levels for all states are lower than in 1970. What has increased is the share of the poor who are black, and this is consistent with the overall increase in the size of the black population in district states.

In contrast, poverty rates for Asians and Hispanics have mostly fallen, which is especially striking given the growth of these populations. For example, the poverty rate among Asians in Minnesota fell from 31 percent in 1990 to 17 percent in 2005, a time when the total Asian population of the state grew 72 percent. Minnesota's Hispanic population grew a whopping 315 percent in the same period, but the Hispanic poverty rate fell from nearly 25 percent to below 22 percent. The Asian poverty rate in Wisconsin fell from 40 percent to 17 percent, and Hispanic poverty stayed about the same while the total population nearly tripled.

Chart: Ninth District Poverty Rates by Race, 2005

While these last statistics are encouraging, it is important to consider that since these populations are growing rapidly, the number of poor Asians and Hispanics has also grown, along with their shares of poor families. In Minnesota the fraction of poor who are Hispanic rose from less than 4 percent in 1990 to more than 8 percent in 2005, and in Wisconsin it went to 10 percent from just over 6 percent.

Editor's note: All comparisons over the period 1990-2005 use two U.S. Census Bureau surveys that are not directly equal, but offer the best available information over the period investigated. Data from 1990 and 2000 are from the decennial census and are the most reliable. Data after 2000 come from the American Community Survey, an annual Census Bureau survey that uses sample data. Research has shown that ACS data have a tendency to be biased slightly higher than decennial figures.

Joe Mahon
Director, Regional Outreach

Joe Mahon is a Minneapolis Fed regional outreach director. Joe’s primary responsibilities involve tracking several sectors of the Ninth District economy, including agriculture, manufacturing, energy, and mining.