More poor households since recession — but also more higher-income ones

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It’s a statewide phenomenon: There are slightly more low-income households, there are more higher-income households — and the proportion of middle-income households is shrinking.

The most striking example is the City of Milford.

In 2007, about 14 percent of Milford households earned less than $25,000. Six years later, it went up to 18 percent.

Meanwhile, there were more households that earned at least $200,000 — 9 percent in 2013, up from 5.1 percent in 2007. And there were more households that earned at least $100,000 — 37 percent in 2013, up from 31 percent in 2007.

As America struggles with a shrinking middle class and state legislators look for a tax plan to help it, the data allows us to see what’s actually happening in Connecticut, and put it in the context of other places in the U.S.

But the bottom line is simple: In Connecticut, there was a small growth in households making more than $200,000, but also growth in households making less than $25,000, according to data from the U.S. Census Bureau’s American Community Survey. This trend is mirrored in data from Connecticut tax returns and the higher rate of students receiving free or reduced lunch, especially in the suburbs.

Nationwide, higher-income households have grown — but, unlike Connecticut, the percentage of households earning under $25,000 has decreased.

We used the three-year estimates from the ACS, which gives us data for the years 2007 to 2013. We used the question that asks respondents about their household income in the past 12 months. Margins of error are fairly small for most towns in Connecticut in this dataset.

More low-income in Connecticut

In Connecticut, the number of households earning more than $200,000 grew 1.7 percentage points — to 9 percent in 2013, up from 7.3 percent in 2007. Those making more than $100,000 grew 3.8 percentage points — to 33.1 percent in 2013, up from 29.3 in 2007.

Meanwhile, there were slightly more households earning less than $25,000 a year — 18.6 percent in 2013, up from 18 percent in 2007.

Nationwide, only nine states had more lower-income households in 2013 than in 2007. Nevada led the pack with a 3 percentage point increase. In 40 states, low-income households — ones earning under $25,000 — stayed the same or shrank from 2007 to 2013.

The biggest decrease in low-income households was in oil-rich North Dakota, where households making less than $25,000 dropped 6.7 percentage points — to 21.6 percent, down from 28.3 percent. Meanwhile, the state had a 9.8 percentage point increase in households making $100,000 or more — to 21.3 percent, up from 11.5 percent.

In many states, a strong recovery from the recession pulled households out of poverty, while boosting others into higher income brackets. In Connecticut, only the latter occurred.

These income cutoffs are arbitrary, but you can see a more nuanced picture in the charts at the top of this story. U.S. states are at the bottom of the pulldown list, so you can compare Connecticut — and its towns — to other states.

In two big cities, low-income share drops

There were slightly more low-income households in both the cities and suburbs. But compared to the suburbs, cities did not see the same increased rates of households making more than $100,000.

That said, some of two of the state’s biggest cities did not follow that trend.

  • In Hartford, there was a decrease in upper-income and lower-income households, leaving the middle income group a larger proportion of the whole.
  • In New Haven, there was a decrease in those making less than $25,000 — but a notable increase in the higher-income brackets.
  • But other cities followed statewide trends, with varying levels of growth in both low and high income brackets. (We’re looking at Bridgeport, Danbury, Waterbury, New Britain, Stamford, New London, Windham and Norwalk.)
Some suburbs had increased poverty

A handful of suburbs saw a growth of lower-income households from 2007 to 2013.

As we mentioned before, Milford is a good example, with its 4 percentage-point increase in residents making less than $25,000 from 2007 to 2013. It followed a trend of increased concentrated poverty in New Haven suburbs — despite New Haven staying steady. A 2013 Data Haven study categorized Census tracts with poverty rates of at least 20 percent as having “concentrated poverty,” and found a 300 percent increase in the suburbs since 1990.

Mansfield, East Hartford and Naugatuck also saw at least a 3 percentage point increase in households making less than $25,000. The margins of error in these towns are higher than in the cities, but long-term trends suggest these numbers are good estimates.

That said, many suburbs — including New Haven suburbs such as North Haven and East Haven — saw an increase in the higher-income and a decrease in the poor, bucking the statewide trend.

Note that, in the graphic at the top of this story, only towns with reasonable margins or error are included, which means about 110 smaller Connecticut towns aren’t in the list.

Elephant in the room: Income disparities

Much of this article has been about the changes from 2007 to 2013, but among the most notable — albeit expected — thing in the data is the massive income disparity between towns in Connecticut.

Connecticut has some of the richest municipalities in the U.S., and it shows in a place like Darien, where more than half the households made more than $200,000 a year in 2013. But even there, about 8 percent of households earned less than $25,000 a year. It’s also interesting to see the large impact the recession had on high-earning households in Fairfield County towns, although it barely makes a dent in the disparities.

Meanwhile, in Hartford, almost half the households earned less than $25,000 a year and less than 10 percent of households earned more than $100,000 a year.

Since the recession, each city or town in Connecticut has had a slightly different recovery, so perhaps one of the valuable uses of the graphic is to compare your town to others around the state.

We will continue to find other, hopefully better, ways of looking at income changes over time. If you have data or ideas on what we should look at, please reach out to us.

Update: We had a broken link to the spreadsheet here before. It is now fixed. For a more in-depth look at the data, download the entire spreadsheet here. It was compiled from the U.S. Census Bureau’s American Community Survey, three-year estimates, which means for 2013 they used survey data from January 2011 to December 2013.

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