Detroiters' income rises for second year but poverty rate doesn't improve

Lisa Bednarz, president of the Mortenson Grand River Home Association, stands on the property of the former Lodge elementary school, in Detroit, September 12, 2018. Bednarz hopes to get the school and its field renovated for the neighborhood to use.

Detroiters' incomes rose in 2017 for a second straight year, what experts called a positive sign of economic gains for the state’s largest city. 

But residents living in poverty didn't appear to benefit, and Detroit remained the nation's poorest big city last year, according to U.S. Census' American Community Survey estimates released Thursday. 

Detroit's median household income was $30,344 in 2017, a 5.9 percent hike from the previous year. Last year's increase was 7.6 percent, the first significant increase recorded by the U.S. Census Bureau in the city since the 2000 census.  

"Detroit is one of a few large cities in Michigan to see significant median household income growth," said Xuan Liu, manager of research and data analysis for the Southeast Michigan Council of Governments. "And it has been two years in a row now. It is certainly good news for the city."

Detroit's increase was more than double the national increase in income of 2.6 percent to $60,336. 

But the city's poverty rate of 34.5 didn't change significantly in 2017, although it is down from 40.7 percent five years ago. Some other big cities did see poverty rates decline last year, including Oakland, California, St. Louis, Fort Worth, Texas, and Grand Rapids. Detroit's poverty rate was just above Cleveland's 33.1 percent.

Mayor Mike Duggan said efforts to get Detroiters good paying jobs are paying off. 

“There are two ways to deal with poverty: bring jobs into Detroit and train Detroiters to do them. We are doing both of those things,” said Duggan, referring to his Detroit At Work program

Last month, 70 residents certified in programs from carpentry to welding graduated from the Randolph Career and Technical Center. It was the biggest class to date. It has served 15,705 participants during the months of April-June.

“The numbers are going the right direction,” Duggan said.

Despite the gains, Detroiters' household income remains lower than what residents were earning before the national Great Recession — $33,019 adjusted for inflation in July 2007. 

A deeper look at the data shows income increases in Detroit were seen by African-American residents, not white or Hispanic residents or those making between $35,000-$49,999. 

"The economy is not moving folks out of poverty," said Kurt Metzger, a demographer and director emeritus of Data Driven Detroit. "Detroit’s biggest challenge is to increase the labor force participation rate by providing significant adult education and job training programs."

Sylvia Orduño, an activist with Michigan Welfare Rights Organization, agreed, saying many long-time residents haven't seen improvements. 

“These are the working poor folks, working the worst of the jobs. I know one woman who works midnights at (a restaurant). She has to keep her kids alone at home. That’s combined with poor transit, no medical insurance,” Orduño said. "We have not made it possible for a family in the city to be successful."

The poverty rate for children in Detroit remained at about 48 percent. 

Mental health issues and homeless veterans are two areas that need addressing, said Lisa Bednarz, president of Mortenson Grand River Home Association on the city’s west side. But instead, the city is focused too much on downtown development.

“They are too busy building up the city and not taking care of the residents,” she said.

Liu said overall Detroit's numbers are showing positive trends, including the unemployment rate going down, home occupancy rate going up and the level of education increasing. 

H. Luke Shaefer, director of Poverty Solutions at the University Michigan, a university-led poverty effort, said he is disappointed that Detroit’s poverty rate did not improve more but was pleased with the progress on income.

Three key areas to reducing poverty are providing transportation for jobs and education, affordable housing and improving third-grade reading levels across the city, Shaefer said.

“While the economy is strong, this is the time to do this and bring the poverty number down," he said. 

Meanwhile, statewide incomes rose for the fifth-straight year, and Michigan also saw poverty drop, according to the census release. But the gains haven't been enough to get back to pre-Great Recession earnings. 

The state's median household income in 2017 was $54,909, a 2.3 percent boost from the previous year. That's lower than what residents were earning in July 2007 — $56,349 adjusted for inflation. Metro Detroit saw median household income rise by 2 percent to $58,411.

Poverty dropped in Michigan to 14.2 percent, a 0.8 percentage point decrease. In comparison, the poverty rate nationally was 13.4 percent last year, a 0.6 percentage point drop. The poverty line for a family of four, including two children, is an income below $24,858.

The census release included a variety of other data for cities with more than 65,000 population, including race. The American Community Survey collects data from a sample of the population and issues overall estimates based on their calculations.

Detroit's white population — 10.5 percent — was statistically unchanged, according to estimates. The change from 2013 to 2014 — a 1.3 percentage point jump — was the first significant increase of the city's white population since 1950.

Only three other cities besides Detroit, above 65,000 residents, saw an income boost: Southfield, which saw a 16 percent increase to $58,813; Farmington Hills, with a 16 percent increase to $82,592; and Livonia with 14 percent increase to $82,410.

Experts caution not to pay too much attention to large year-to-year changes.

But Southfield's poverty rate also has dropped for the last five years. In 2017, it was 7 percent, a 5.7 percentage point drop from the previous year.

Southfield Mayor Ken Siver said he's heartened to hear the numbers. He has seen homes values rise and noticed the lack of participants looking for work at a recent job fair. 

"People have jobs," Siver said. "We've seen some pretty dramatic increases in home prices."

Statewide, the percentage of people older than 25 with a bachelor's degree or higher increased to 29.1 percent from 28.3 percent. 

Flint saw no significant change in poverty or income and remains the poorest city in the country above all cities with 65,000 or more residents. Flint's poverty rate was 38.9 percent in 2017 and the median household income was $26,901.