States Where Incomes Are Booming (or Not)
U.S. personal income totalled more than $13.5 trillion in 2014, up 8.9% from 2008, when Americans generated a total of $12.4 trillion. Income growth varied considerably between states. North Dakota led the nation, with 2014 personal income of $55,966, up 35.1% from 2008 — each were the highest such figures in the nation. Personal income did not contract in any state, but in Nevada it rose just 0.8%, the smallest growth rate.
Wages and salaries are the largest contributors to personal income, and employment gains in major state industries contributed to fast personal income growth. States with rapidly expanding energy sectors, for example, ranked at the top for income growth. Employment in North Dakota’s natural resource industry surged 173.2% from 2008 through 2013, by far the largest such increase. As a result, North Dakota led the nation for personal income growth. Similarly, Texas — taking the second-place position — added more than 54,000 energy jobs over that period, the largest raw increase in workers in the country. It will be interesting to see how these rankings change in the future, given the recent collapse in energy prices.
Employment opportunities in an area often help attract workers. While the working-age population fell 0.5% across the country from 2008 through 2013, this age group increased in 15 of the top 25 states for income growth. Conversely, only six states in the bottom half for income growth saw increases in this population.
Fast income growth is almost always a sign of a healthy economy. However, exceptionally strong income growth does not necessarily mean residents are exceptionally wealthy. Montana, Arkansas, Idaho, and Tennessee, for example, which were all in the top ten for income growth, still had per capita personal income well below the national average.
Similarly, income gains in states where residents were already quite wealthy did not appear as large in percentage terms. In fact, nine of the 15 states where income grew the slowest from 2008 through 2014 had per capita personal income above the national income figure in 2014.
Personal income, or the sum of net earnings by all people from all sources, was reviewed in each state and in each year from 2008 through 2014 from the Bureau of Economic Analysis (BEA). Income growth rates were calculated from real personal income in 2008 to real personal income in 2014, all in 2008 dollars. The BEA has not yet published real personal income figures for 2013 or 2014. We derived our own estimates of real personal income by adjusting nominal figures for regional and national prices, per the BEA’s methodology. Due to limited data availability, real personal income estimates for 2013 and 2014 were calculated with 2012 regional prices. Also from the BEA, we considered GDP contributions by industry for 2008 and 2013. Working-age population (25 to 54), industry workforce composition, including change over time, all came from the U.S. Census Bureau’s American Community Survey (ACS). Socioeconomic factors, such as educational attainment rates and poverty rates, also came from the ACS. Annual unemployment rates for 2008 and 2014 came from the Bureau of Labor Statistics (BLS).
These are the states with fastest- and slowest-growing personal income.
Correction: Due to a fact-checking error, a previous version of this article incorrectly cited total personal income in billions of dollars. In fact, U.S. personal income in 2014 was $13.5 trillion dollars.