Today, the median US household takes home nearly $20,000 more in income than it did in 1970 after adjusting for inflation. Based on this number alone, it would seem that the average person in the US is better off financially now than they were 50 years ago. But this single number fails to capture an underlying reality of the country’s economy: Not every state has experienced the same economic growth.

In this brief and the data tool below, we explore which states have seen large swings in median income and what factors are most associated with these changes, demonstrating how states have not shared equally in economic growth.

Why This Matters

For state policymakers and others in the economic development field, understanding how economic outcomes differ across states can offer lessons for fostering future growth. Of course, income alone does not determine a family’s prosperity, but it does offer a snapshot of economic growth.

What We Found About How States Have Not Shared Equally in Economic Growth

In general, inflation-adjusted incomes in Western, mid-Atlantic, and New England states have grown the most since 1970, while incomes in Midwestern states have grown the least. Utah saw the greatest percentage growth in median income, whereas West Virginia was the only state to see median income fall.

Previous research has linked a number of factors to state and regional economic growth, including public education spending, entrepreneurship, population growth, and even weather. Because our work looks at income more narrowly than overall economic growth, some of our findings diverge from these past studies.

In our analysis, we find the following:

  • A state’s educational attainment is the most important factor associated with income change. There are several potential reasons for this association: increasing educational attainment could lead to increased incomes for state residents; higher paying jobs could attract people with higher educational attainment into these states; and strong collegiate programs could entice out-of-state students who then stay after graduation.
  • An increasing share of a state’s foreign-born population is positively associated with income growth. This could be because immigration leads to economic growth, immigrants seek out growing areas, or both.
  • State sales and income taxes, whether higher or lower, had no association with changes in median household income.
  • States with colder temperatures and higher property taxes saw greater median income growth, contrary to conventional wisdom, showing how states have not shared equally in economic growth.

Read the full article about states not experiencing the same economic growth by Brett Theodos and Brady Meixell at Urban Institute.