News & Updates

Last summer, two separate North Star articles (published on July 18 and August 29) explored the growth in U.S. and Minnesota income inequality since the 1970s and 1980s. While recent data from the U.S. Census Bureau showed significant income growth in 2015, income inequality has continued to increase since the beginning of the Great Recession in 2007, as demonstrated in the preceding North Star article. The extent of the growth in income inequality in Minnesota and nationally can be precisely measured using a statistic known as the Gini coefficient.

Gini coefficients for Minnesota and the U.S. as a whole for each year from 2007 to 2015 are available from the U.S. Census Bureau’s American Community Survey (ACS). The value of the Gini coefficient ranges from zero to one. A value of one denotes a society of complete inequality in which all of the income accrues to a single household; conversely, a Gini coefficient of zero denotes complete equality, in which each household has identical income. The Gini coefficient for Minnesota and the entire U.S. has increased since 2007, denoting an increase in income inequality since the beginning of the Great Recession.


As measured by the Gini coefficient, income inequality in Minnesota is less severe than it is nationally. However, income inequality both in Minnesota and nationally increased at a similar pace from 2007 to 2015, as measured by Gini coefficient growth. (Growth in the Gini coefficient in Minnesota is slightly less than nationally, although the difference in the growth rate between Minnesota and the U.S. could be due to sampling error.) Based on Gini coefficients for all fifty states from the ACS, Minnesota had the twelve lowest level of income inequality in the nation in 2007; by 2015, Minnesota’s rank had improved to the tenth lowest.

Despite the long-term growth in income inequality from 2007 to 2015, inequality in Minnesota as measured by the Gini coefficient declined from 2014 to 2015, although some portion of the observed reduction in Minnesota income inequality could be due to ACS sampling error. Nationally, income inequality increased from 2014 to 2015.

Some portion of the reduction in income inequality in Minnesota may have been the result of state minimum wage increases. Minnesota’s large employer minimum wage increased from $6.15 to $8.00 per hour on August 1, 2014 and to $9.00 per hour on August 1, 2015. (There was another increase on August 1, 2016, although this increase would have no impact on 2015 ACS data.) On the same dates, increases in Minnesota’s small employer minimum wage, youth minimum wage, and training minimum wage also occurred.

Using ACS data, it is not possible to determine to what extent the decline in Minnesota income inequality from 2014 to 2015 was a result of these minimum wage increases. However, it is worth noting that the largest percentage increase in Minnesota mean wages from 2014 to 2015 (4.9 percent) occurred among the lowest quintile—the population most likely to be positively affected by minimum wage increases. The next largest increase (3.3 percent) occurred among the second quintile. These trends are illustrated in a November 9 North Star article.

While increases to Minnesota’s Working Family Credit (WFC) enacted in 2014 helped to improve the economic condition of many low-income households in the state, the impact of the WFC is not reflected in the ACS definition of income and thus 2014 enhancements to the WFC would not affect the level of income inequality as measured by the ACS Gini coefficients.

Strong income growth from 2014 to 2015 was certainly something to celebrate—as was Minnesota’s superior income performance relative to the national average among all six income groups during the period from 2007 to 2015. However, while real mean incomes among high income groups have surpassed pre-Great Recession levels, mean incomes among lower income groups are still below pre-recession levels, both nationally and in Minnesota. Given the economic drag that income inequality creates on the economy, reversing the tide of rising income inequality should be a priority.

Big Debt, Big Deal

Minnesota is living under a $27 billion mountain of student loan debt.1 A student graduating in Minnesota today has an average of $31,000 in debt.2 Whether we realize it or not, it is affecting both individuals and the broader community. The challenge of student loan...

Minnesota Business Tax Rate Equals U.S. Average

Business groups—including the Minnesota Business Partnership and Minnesota Chamber of Commerce—actively cultivate the notion that business taxes in the Gopher State are high relative to the rest of the nation. However, total state and local business taxes as a share...

Ensure Respect for Minimum Wage Laws

(Note: This article is co-authored with Laura Huizar, a staff attorney at the National Employment Law Project in Washington, D.C.) A few weeks ago, the St. Paul City Council introduced a draft ordinance that would raise the city’s minimum wage to $15 an hour. That’s a...

Caring in Central Minnesota

Minnesota is getting older every day.1 The aging of our population is increasing demand for home health and personal care workers. We also continue to have population growth through both immigration and natural growth. To fill the needs of our changing population we...

Gas Tax Buys One-Third Less Today Than in 2000

The single largest source of funding for Minnesota’s transportation system comes from the state gas tax. However, the purchasing power of that tax has dropped by over one-third over the course of the century, leaving funding for state roads and bridges in a precarious...

State Aids: The Shrinking Slice of the City Revenue Pie

City property taxes have increased significantly in recent decades. Even after adjusting for inflation and population growth, the property taxes collected by Minnesota cities have increased by 48% from 1990 to 2018. However, real (i.e., inflation-adjusted) per capita...

Government Growth in Context

Shocking claims of growth in government abound. However, viewed in context of the economic, demographic, and societal changes that have occurred over the last fifty years, the growth in government is far less astounding than the sound-bite statistics indicate. For...

Impact of Legislative Decisions on School Funding

State aid to Minnesota school districts—properly adjusted for inflation—has fluctuated significantly over the last fifteen years, but the overall trend has been downward, as documented in a recent North Star report. Of course, long-term trends are not exclusively the...

Minnesota’s Shared Health

Minnesotans value a high quality of life. It is part of the Minnesota story and one of our competitive advantages. This includes having healthy people in healthy communities. Historically, policy makers have recognized the importance of health care access by investing...

Contact Us

Use this form to get in touch with North Star staff, or send your questions, suggestions, and ideas to