Real Median Income Questions aka Texas: WTF?

The latest State Median Income numbers are out from the BLS, along with the state Cost of Living and Income Tax adjustments* that allow us to transform it into Real Median Income (RMI) and make an 'apples to apples' comparison between the various states to determine which states do the "best" for their average (aka: median) citizen. And it is critical that we take into account the variation in racial and ethnic mix of each state because different races and ethnicities possess differing average levels of human capital which is the raw material that generates personal income. It's quite obvious from racial/ethnic breakdowns that the more privileged races (European white, Asian) have an earning advantage over their less privileged (African American, Latino) neighbors. So if I tell you the racial/ethnic composition of a state it should help predict its relative prosperity - aka: Real Median Income.

I've plotted the 50 states by their Income Tax Adjusted RMI versus the proportion of their populations that are European White and Asian (aka 'privileged'). I've also made the circle size reflect population and mischievously colored the 'bubbles' according to whether they voted 'Trump' (Orange) or 'Clinton' (Blue). If you put your pointer over the chart it should get big enough to read. Or if you're on a smartphone, open the chart in another window and expand. Incidentally, some of the 'red' states are obscured by all the other states. The raw data I used to plot the chart is at the bottom along with notes on where I got the data and my methodology*.

So what does this tell us?

• First of all Hawaii is really poor, which I guess shouldn't surprise anyone, given its remote geography and politics that are hostile towards commerce.
• There are geographical "clumps" for Trump Southern and Midwestern states but no geographical clumping for blue states - unless  you consider upper New England to be a (particularly poverty stricken) clump.
• 14 of the 19 'blue' states have RMIs below the national average  (about $33, 415 - not exactly because this is a weighted mean of the state medians, not an overall US median. But this number is certainly within 1% of actual) while only 6 of the 31 'red' states do.  I tried a chart that broke out 'purple' swing states but it made the remaining 'blue' states look so much worse (three of the 5 above average "blue" states are in fact 'swing' or 'purple' states while only MI falls out of the top ten 'red' state ranks) and didn't affect the red state outcome much so I gave up on it.
• If you look at the top performing "blue" states  you see a bunch of oddities: they're either purple 'swing' states that recently were red:VA and CO, a bankrupt living on past glory: IL, a state justly recognized for its combination of good government and homogeneity but that gave a majority of its votes to "red" Presidential candidates in 2016: MN and finally, WA: a 'blue' state with a 'red' fiscal policy: its lack of an income tax is the single key differentiator with next door 'poverty champ' Oregon who has no sales tax but far and away the highest income tax on the median earner of any state in the Union.
• Indeed, lest you think this is all all 'blue' vs. 'red', WA and OR illustrate the immense chasm between state median incomes and therefore state economic policy. WA is a not very diverse (in the real sense) place that has the second highest RMI in the land, while OR, with the same geography and demographics is the poorest state in the continental US. Crossing a bridge gets you from richest to poorest. Wonder what the difference is? One might say "well WA has Microsoft and Amazon and Oregon doesn't" but that just begs the question: Oregon is a beautiful state with high earning demographics smack dab between the two greatest centers of wealth generation in the history of the world and it's scraping the bottom of the barrel. What gives?
• There's a major difference in the concentrations of Blue and Red populations. The blue states with almost half of all blue state population have RMI's in the bottom quintile, while virtually no red staters are stuck in such a low income position.  

• There is a correlation between the proportion of 'privileged' ethnicities in a state and RMI...for Clinton States, but not for Trump states. Unless you take away TX. Then the relationship returns - albeit it's a much weaker one (see above for my eyeballed lines). 

• Then there are the "Big Four": First of all FL is a bit of an anomaly because its huge number of retirees distort the data downward somewhat but it still falls in the range of other big Red southern states. But if you compare the other three: CA and NY are among the poorest states in RMI terms in the nation while TX, with the least advantaged ethnic mix save New Mexico is among the very richest. 
• So to put it succinctly:  What the Heck (I'm sorry but my mom might read this), Texas?  How in the hell does a polity founded by slavers, with a constitution written by libertarians and (we are told continually by the 'elite' media) run by yahoos, cretins and (until recently) Rick Perry (but I repeat myself) deliver a so much higher standard of living for regular people?

Texas is an enormous challenge to the racialist and statist narrative. Indeed, this entire chart is. Which is why it took a pro consumer website* economist to raise the issue. Academic economists are heavily on the left at least socially if not economically and analyses that present their valhallas in a bad light particularly when compared to the  "Trump Loving" world are "not done" or at least not published in the hallowed ivy halls of academe. Doesn't comport with the 'narrative'.

And it's not oil: over six years before this data was collected, the price of natural gas fell to (and has largely stayed at) the lowest levels in history and four years after that, oil prices fell from upwards of $120 to a little over $40 a barrel. In other words, the Texas data were gathered in the midst of one of the most catastrophic oil and gas depressions in history. While NY and CA's dominant industries were in the middle of major booms.

So once again:  all together now:  "What the (Heck), Texas?"

 Here's the raw data in a form that can be copied and pasted into a spreadsheet so that you can check my math:

State	Real Median Income	Federal BLS Cost of Living Index 2016	Federal BLS Nominal Median Income (Individual) 2016	Median Income Tax Paid 2016	2017 Estimated Pop. Census  Bureau
WY	$41,250	92.8	$38,280	$0	589,713
WA	$39,802	106	$42,190	$0	7,384,721
VA	$38,351	94.5	$38,180	$1,938	8,492,783
TX	$37,311	92.6	$34,550	$0	28,449,186
ND	$37,296	101.2	$38,170	$427	790,701
IL	$37,223	96.5	$37,320	$1,400	12,815,607
MI	$37,166	91.2	$35,400	$1,505	9,935,116
OH	$37,080	92.5	$35,030	$731	11,646,273
CO	$36,314	101.9	$38,800	$1,796	5,658,546
IN	$36,164	88	$32,910	$1,086	6,663,280
MN	$36,017	101.5	$38,870	$2,312	5,554,532
KS	$35,682	90.9	$33,700	$1,265	2,929,909
TN	$35,238	90.3	$31,820	$0	6,705,339
NE	$35,075	92.3	$33,840	$1,465	1,922,610
DE	$35,060	102.8	$37,750	$1,709	965,866
UT	$34,946	92.4	$33,990	$1,700	3,098,761
AK	$34,772	133.5	$46,420	$0	741,204
IA	$34,739	92	$33,650	$1,690	3,152,735
OK	$34,556	89.7	$32,430	$1,433	3,974,794
MO	$34,538	91.5	$33,380	$1,778	6,123,362
GA	$34,476	91.7	$33,430	$1,816	10,450,316
AZ	$34,179	98.8	$34,680	$911	7,026,629
KY	$34,054	90	$32,340	$1,692	4,450,042
PA	$34,020	103	$36,150	$1,110	12,819,975
WI	$33,853	98.1	$35,110	$1,901	5,795,147
ID	$33,734	88.2	$31,860	$2,107	1,695,178
AL	$33,273	90.2	$31,550	$1,538	4,884,115
MS	$33,174	83.5	$29,000	$1,300	2,990,113
MA	$33,171	130.4	$45,580	$2,325	6,873,018
LA	$33,138	93.4	$31,980	$1,029	4,714,192
MD	$32,968	121.1	$41,860	$1,936	6,068,511
NC	$32,564	95.8	$33,100	$1,903	10,247,632
NJ	$32,269	125.6	$41,320	$790	8,996,351
CT	$31,744	131.8	$43,830	$1,992	3,583,134
FL	$31,652	100.5	$31,810	$0	21,002,678
NV	$31,643	106.5	$33,700	$0	2,995,973
NH	$31,540	118.2	$37,280	$0	1,335,832
NM	$31,016	100	$32,320	$1,304	2,084,193
AR	$30,767	91.4	$29,420	$1,299	3,000,942
RI	$30,483	123.3	$39,050	$1,464	1,059,080
SC	$30,345	97.5	$31,280	$1,693	5,030,118
SD	$30,029	102.5	$30,780	$0	868,799
MT	$29,522	102.7	$31,970	$1,651	1,052,343
NY	$28,948	135.6	$41,600	$2,346	19,889,657
VT	$28,857	123.8	$37,040	$1,315	624,592
CA	$28,651	134.3	$39,830	$1,352	39,849,872
ME	$28,393	114.7	$34,710	$2,143	1,327,472
WV	$28,066	103.7	$30,240	$1,136	1,834,882
OR	$26,238	129.5	$37,080	$3,102	4,144,527
HI	$21,511	168.6	$38,750	$2,483	1,454,295
USA	$33,415				325,744,646

*Bankrate - a website that advises consumers on the best mortgages and other financing made another crucial adjustment that had been skewing these comparisons in the past:  Taxes.  All property and excise taxes are already reflected in the cost of living calculations but the impact of income taxes was being left out. At the extreme it means that that a state like Oregon which has no general sales tax would have its income inaccurately inflated relative to Washington which has no income tax. The population data come from the Census Bureau, the COLA adjustments come from the Bureau of Labor Statistics as do the Nominal Median Income estimates. The Tax Institute provided the Median Income Taxes paid.