Income Trends

State personal income continued to increase in 2012, growing by 3.5 percent over 2011. That growth rate was slower, however, than in 2011, when income grew by 5.2 percent over 2010. Personal income grew the most in North Dakota in 2012—by an impressive 12.4 percent—while personal income fell slightly in South Dakota—the only state to have negative growth over the period—falling by 0.2 percent.

President Obama stressed economic equality and opportunity, focusing particularly on the financial woes of those earning the minimum wage, during his recent State of the Union address. He called on Congress to raise the federal minimum wage to $9 an hour by the end of 2015 and tie it to inflation, a move the White House estimates would bump up the wages of about 15 million low-income workers. The last time the federal minimum wage was raised was in 2009, when it went from $6.55 to $7.25 an hour. Since then, the upward creeping cost of living has eroded the value of that wage. If it had been adjusted for inflation, it would be around $7.61 today. If the rate moves to $9 an hour, it will be the highest—in inflation-adjusted terms—that it has been since 1979.

Legislators in several states are considering raising the minimum wage this year, but the issue is controversial. Proponents of raising state minimum wages argue that while the federal rate has remained stagnant—it hasn’t increased since 2009—the costs for housing, food, utilities and health care have continued to climb. This leaves those earning minimum wage with less money to afford the basics, which in turn puts downward pressure on the demand for goods and services. Opponents warn that raising the wage now would have a negative impact on businesses—especially during anemic economic times—and that a minimum wage hike actually hurts those that it intends to help by forcing employers to cut jobs at the low end of the pay scale.

According to new data out today from the Bureau of Economic Analysis, state personal income growth slowed in the second quarter of 2011to 1.1 percent.  That's compared to an average growth rate of 2.1 percent in the first quarter. Growth rates ranged from a high of 2.2 percent in Nebraska and South Dakota to a low of 0.7 percent in both Washington and Georgia.

According to reports released today by the Bureau of Economic Analysis, national personal income increased by $42.4 billion – or 0.3% - in July compared to June. Personal consumption also went up in July, increasing by 0.8%. Growth rates in July were similar to those in June, when personal income increased $27.7 billion, or 0.2%, and personal consumption was up 0.1%.  Personal income was up 5% over July 2010.  

Although childhood poverty rates declined throughout most of the 1990s, they have been on the rise again.  Between 2008 and 2009, child poverty jumped 10 percent – the single biggest year-over-year jump in the data’s history.  And from 2000-2009, rates increased in 38 states.  That means 1 in 5 children now live in poverty.

Although the wage gap between men and women has narrowed slightly in recent years, the difference between a woman’s paycheck and a man’s is still significant. The ratio of women’s to men’s median weekly earnings (full-time wage and salary workers) in 2010 was 81.2.  That means that a woman who earns a weekly wage that is statistically in the middle of all weekly wages earned 81.2% of what the same statistical middle-of-the-road male earned last year. The median weekly earnings for a female were $669, while a male earned $824.

As unemployment rates have skyrocketed in the economic downturn, state unemployment insurance funds are being depleted at increasing rates.  As funds run out, states are borrowing from the federal government, raising taxes and cutting benefits.