The consumer price index jumped by 0.8% in April — a far larger increase than many had anticipated. The recent spike in the cost of goods and services has led to widespread concerns over inflation. If the cost of living continues to climb at such a rapid pace, it will outpace wage growth, weakening the buying power of the American consumer. Such an outcome would be a reversal of the long-term trend in much of the United States.
Over the last 10 years, real personal income per capita, a measure of annual earnings that is adjusted for inflation, climbed by 25.5% in the United States — from $42,287 in 2010 to $53,071 in 2020. There are many potential factors that drove up real personal income, not the least of which is wage growth outpacing inflation.
While every state reported an increase in real personal income per capita, incomes in some states climbed far faster than in others. Using data from the Bureau of Economic Analysis, 24/7 Wall St. identified the 16 states where incomes are rising at a faster than average pace.
Other factors that can contribute to personal income growth include broad economic growth as well as longer average work days — meaning a single worker is producing more and often generating more income. Currently, the average American worker puts in about 34.5 hours per week, up from 34.1 hours in 2010. Here is a look at how long the typical work week is in other countries around the world.
For most of the states on this list, however, rapidly rising real income per capita appears to be largely the result of a growing share of the population working. In 12 of the 16 states on this list, workforce participation climbed at a faster than average rate between 2010 and 2020. One main reason for the growing workforce participation has been strong job growth in many of these states in the last decade. Here is a look at the American cities that added the most jobs during the pandemic.
To identify the states where incomes are booming, 24/7 Wall St. calculated the percentage growth in real personal income per capita from 2010 to 2020 with data from the Bureau of Economic Analysis. Data on personal income was adjusted from current dollars to constant 2012 dollars using the U.S. personal consumption expenditure price index and was adjusted for regional price differences using regional price parity in accordance with the methodology provided by the Bureau of Economic Analysis. Data on PCE and RPP, as well as supplemental data on GDP, also came from the BEA. Supplemental data on employment, employment by industry, and seasonally-adjusted unemployment came from the Bureau of Labor Statistics. Data on population and the components of population change from 2010 to 2020 came from the U.S. Census Bureau.