Past decade hasn't been friendly to paychecks of Nebraskans, Iowans -
Published Wednesday, December 18, 2013 at 1:00 am / Updated at 12:00 pm
Past decade hasn't been friendly to paychecks of Nebraskans, Iowans

LINCOLN — If it seems your household budget doesn't stretch as far as it once did, it's not your imagination.

Newly released Census Bureau data show that median household incomes in Nebraska and Iowa have fallen behind inflation over the past dozen years.

The data also show that the number of lower-income households has grown, while the number of middle-income ones has declined.

In Nebraska, the median annual household income is currently $51,381, or 5 percent less than it was in 2000, when adjusted for inflation. Iowa's median annual household income is currently $51,129, or 6 percent less than the 2000 level.

Eric Thompson, director of the University of Nebraska-Lincoln's Bureau of Business Research, said those figures reflect a long-term “hollowing-out” of the middle class in America.

He said the trend has been building for four decades but accelerated during the past decade. Since 2000, the nation has gone through two economic downturns, including the recent Great Recession.

“I think it's appropriate for people to be concerned about this trend,” he said. “We want prosperity that's shared.”

Nebraska and Iowa were far from alone in losing ground to inflation.

Only the District of Columbia and four states — Wyoming, Maryland and the Dakotas — showed gains in household income, when compared with year 2000 incomes adjusted for inflation.

The national median income is $53,046, which was 8.3 percent smaller than inflation-adjusted 2000 income.

Nebraska ranked 19th best among all states for the change in median household income. Iowa ranked 23rd best.

David Drozd, a researcher with the University of Nebraska at Omaha's Center for Public Affairs Research, noted that half of Nebraska counties showed gains in household income over the period.

Those generally are rural counties that rely on agriculture, which has been an especially bright spot in the state's economy in recent years.

Thomas, McPherson and Hayes Counties led the pack on income gains.

The state's urban counties, by contrast, saw large losses, Drozd said.

Household incomes in Douglas and Lancaster Counties fell more than 10 percent behind inflation. Sarpy County's median household income fell 6.6 percent behind.

Thompson said the urban counties appear to share in the same trends that have pulled down incomes nationally.

He said economists puzzle over the reasons behind that long-term decline. A commonly cited factor is uneven educational attainment and a growing disparity in incomes for the most highly educated and the least educated.

Another trend has been toward smaller households and more single-parent households, he said. Other economists point to the decline of manufacturing in the United States and the growth of less-well-paying service industries. Still others say economic growth has been stifled by increasing regulations and taxes since the 1970s.

Thompson said the nation also might be going through a period of adjustment in wages in response to global competition.

James Goddard, an attorney with the Nebraska Appleseed Center for Law in the Public Interest, said the Census Bureau's data confirm that families are having a harder time meeting their needs.

He said the state should act to help those families, by such methods as raising the minimum wage, providing access to affordable health care and ensuring training and educational opportunities.

“The data underscores the need to make sure that hard work pays in Nebraska,” he said.

Drozd said the 2000s were the worst years that Nebraska has gone through in the last three decades when it comes to household income.

During the economic boom years of the 1990s, median household incomes grew 16.3 percent faster than inflation.

Median household incomes fell behind during the 1980s, but by a comparatively modest 0.9 percent.

Drozd said the lingering effects of the last recession could be affecting current household incomes, especially when compared with the strong economy at the end of the 1990s.

He noted, however, that the new data shows that more Nebraska households fall into the lower end of the income range.

In both Douglas and Lancaster Counties, the number of households with incomes below $35,000 grew by 7 percentage points since 2000, while the number of households in the highest income categories remained stable.

That means fewer households in the middle-income levels, between $35,000 and $200,000.

Drozd said a trend toward smaller households and a larger pool of Nebraskans in their college and early working years could contribute to the growth in low-income households. More immigrant households also could add to the number, he said.

Contact the writer: Martha Stoddard    |   402-473-9583    |  

Martha covers the Nebraska Legislature, the governor, state agencies, and health, education and budget issues out of our Lincoln bureau.

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