Exploring Poverty as a Crucial Economic Performance Measure

(Image Source: Madison Kaminski / Unsplash)

Wisconsin IDEA

Insight • Data • Economics • Analysis

Wisconsin Lags Behind Neighboring States in the Recovery from the Great Recession

There are numerous measures of economic performance ranging from population and employment growth, and relative income levels, to new business formation. One important measure that tends to receive less attention in policy discussion is poverty. The share of the population living below the Census Bureau-defined poverty threshold is a common measure of not only the economic performance of a region but also general community well-being. In addition, the poverty rate is used for administrative purposes determining financial eligibility for certain government programs such as food, housing, and childcare assistance. From the perspective of broader economic trends, the change in the poverty rate over time can provide powerful insights.

Figure 1. Trends in Wisconsin Poverty Rates

By analyzing the period from 1993 to 2021 and considering the neighboring states of Wisconsin, several patterns become apparent. First, over time Wisconsin’s poverty rate largely mimics our neighbors and tracks the overall economy. For example, the jump in poverty during the Great Recession is evident, but for the seven years before the Great Recession Wisconsin poverty rates were trending upward. Second, Wisconsin lagged behind our neighboring states in the recovery from the Great Recession. Wisconsin’s poverty rate has not returned to its low of 8.1 percent in 2000/02. The impact of the COVID-19 pandemic on poverty is evident. Third, Wisconsin’s poverty most closely tracks Iowa but consistently has lower poverty rates than Illinois or Michigan, but is above Minnesota. A simple mapping of the most recent poverty data (2021) for Wisconsin counties reveals familiar patterns.

Map 1. Poverty Rates by County

The counties with the lowest poverty rates include Ozaukee (4.7%), Waukesha (5.0%), Washington (5.3%), and St. Croix (5.4%), each of which can be described as suburban areas within larger metropolitan areas. The counties with the highest poverty rates include Menominee (24.2%) and Milwaukee (17.8%) followed by Adams (15.2%), Vernon (15.2%), and Ashland (14.6%). Studying poverty rates can help policymakers not only better understand economic performance but also help steer limited economic growth and development resources.

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