The consumer price index jumped by 0.8% in April. That was 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.
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. Many potential factors drive 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 (BEA), 24/7 Wall St. identified the 16 states where incomes are rising at a faster than average pace. From this list, 24/7 Wall St. picked the state where it is rising fastest.
Other factors that can contribute to personal income growth include broad economic growth, as well as longer average workdays. That is, a single worker is producing more and often generating more income. Currently, the average American worker puts in about 34.5 hours per week, which is up from 34.1 hours in 2010.
For most of the states on this finalist 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 the finalist 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 past decade.
To identify the state where income is booming, 24/7 Wall St. calculated the percentage growth in real personal income per capita from 2010 to 2020 with data from the BEA. 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 BEA. Data on personal consumption expenditures and regional price parity, as well as supplemental data on gross domestic product (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.
Utah is the state where income is rising fastest. Here are the details:
- Personal income per capita growth: +39.0%
- Personal income per capita: $48,052 (10th lowest)
- Employment growth: +29.6% (the highest)
- Real GDP growth: +36.6% (third highest)
Real personal income per capita climbed by 39.0% in Utah over the past decade, from $34,576 in 2010 to $48,052 in 2020. That was by far the largest percentage increase in the country. Increased workforce participation likely explains the surge in per capita income, as 47.1% of Utah’s population is employed, up from 42.8% in 2010, the largest increase of any state.
Greater labor participation came along with the strongest job growth in the country. Between 2010 and 2020, employment climbed by nearly 30% in Utah, triple the comparable 9.1% U.S. job growth. Over the same period, unemployment in Utah fell from 7.8% to 4.7%. Professional and business services and construction were the two fastest-growing industries by employment in Utah between 2010 and 2020.
Click here to see the 16 states where income is rising fastest.
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