Incoherent Indicators

Poverty appears to be down, both in the United States as a whole, and in Rhode Island in particular. According to the annual figures released this week by the Census Bureau, the national poverty rate fell from 12.6% to 12.3% and the Rhode Island poverty rate fell from to 12.1% to 10.5% between 2005 and 2006. The good news is that Rhode Island has ended its four-year streak of poverty levels greater than 90% of the national rate. The bad news is that Rhode Island's relative poverty rate still hasn't dropped below the level it was at just before the beginning of welfare reform in 1996…

(Interestingly, there was a corresponding spike in the Massachusetts poverty rate, from 10.1% to 12.0% while the RI rate was dropping. Maybe we should ask Jon Keller for his thoughts on this).

A second piece of bad news is that Rhode Island's one-year decline in poverty rate was accompanied by a one-year decline in median income -- the second largest decline observed in the data…

The other 39 states saw their median incomes increase between 2005 and 2006. (Kansas, incidentally, had a median income increase [+$1,133] that was larger than RI's decline, showing that there's really nothing the matter with Kansas -- nor with the 14 states that did better than Kansas in the rankings!)

For both of these metrics, there is a danger of inferring too much from single-year numbers, but a simultaneous, dramatic drop in both poverty rate and median income suggests something unusual. Whether the strangeness is methodological or a real effect is yet to be determined.