Oregon’s Per Capita Personal Income 2016

Oregon’s Per Capita Personal Income 2016

by Christopher Rich

September 18, 2017

Oregon’s total personal income ranked 27th in the nation in 2016; one spot above the 2015 rank. Data on personal income comes from the Bureau of Economic Analysis – a division of the U.S. Department of Commerce.

State personal income captures total income within a state and is the sum of three main components: net earnings (wages, salaries, employer contributions); personal current transfer receipts (retirement, Medicare, unemployment insurance); and dividends, interest, and rent.

Growth in personal income for the U.S. overall averaged 3.6 percent in 2016, a decrease of 0.9 percentage point from the previous year’s rate of growth (4.5%). For individual states in 2016, growth ranged from a 1.7 percent decrease in Wyoming to a 5.9 percent increase in Nevada. Personal income grew by 4.5 percent for Oregon in 2016, which was seventh fastest in the nation. The previous year Oregon’s rate of growth was 6.5 percent, which was first in the nation. Oregon’s drop in rank is not indicative of trouble on the horizon.

Growth slowed over the year for Oregon in all three components of personal income. The largest slowdown came in transfer receipts, where growth slowed from a rate of 6.4 percent in 2015 to a rate of 2.7 percent in 2016. Growth in dividends slowed from 3.4 percent to 2.0 percent and growth in net earnings slowed from 7.6 percent in 2015 to 5.9 percent (fifth in the nation) in 2016.

Per Capita Personal Income

The size of a state’s population plays a predominant role in the size of its personal income. California, Texas, Florida, New York, and Illinois – the five most populous states in the nation – are also the top five states in terms of total personal income. South Dakota, North Dakota, Alaska, Vermont, and Wyoming – the five least populous states in the nation – are also the bottom five states in terms of total personal income.

By dividing a state’s total personal income by its total population, we obtain per capita personal income (PCPI). This gives us a number that is more easily compared with other states. For instance, Oregon’s total personal income was just over $184 billion in 2016, while Texas’ was more than $1.33 trillion. Per capita personal income, however, was $45,049 for Oregon and $47,636 for Texas.

Adjusting to PCPI adjusts the income rankings of states as well. Connecticut ranked 23rd in total personal income and 29th in population in 2016, but Connecticut ranked first in the nation in PCPI. Mississippi ranked 35th in total personal income and 32nd in population, but Mississippi ranked 50th in PCPI. Oregon ranked 27th in total personal income and 27th in population, while we ranked 29th in PCPI (two spots higher than 2015).

Comparison of PCPI Components

For the U.S. as a whole, 64.2 percent of PCPI came from net earnings in 2016. Connecticut took the top slot and Mississippi the bottom in dollar value of per capita net earnings. For Connecticut, 66.2 percent of PCPI came from net earnings and for Mississippi, it was 59.0 percent. Oregon ranked 33rd among the states in per capita net earnings ($27,600), which accounted for 61.3 percent of state PCPI in 2016.

Many states ranked similarly in dividends per capita as they did in net earnings per capita. Oregon gained one spot over the year to rank 27th among the states in dividends, while Connecticut continued to hold the number two spot, and Mississippi maintained its position as 50th.

States that ranked high in per capita net earnings generally ranked low in per capita transfer receipts, and states that ranked low in per capita net earnings generally ranked high in per capita transfer receipts. Oregon, which ranked near the middle in both per capita net earnings and in per capita dividends, interest, and rent, moved down one spot to 18th among the states in per capita transfer receipts; Connecticut ranked 16th and Mississippi ranked 12th.

Net earnings per capita increased by $1,104 over the year in Oregon, while per capita dividends, interest, and rent increased by only $25, and per capita transfer receipts increased by $90. As a share of PCPI for the state, net earnings grew by 0.8 percentage point, dividends decreased by 0.5 percentage point, and transfer receipts decreased by 0.3 percentage point.

Oregon’s Population-Driven Relative Trend

Oregon’s PCPI has remained close to the U.S. level since estimates began in 1929. The largest difference between the Beaver state and the U.S. came in 1943 when Oregon climbed to its peak of 123.8 percent of the national level. Oregon’s PCPI was consistently above the U.S. from 1938 to 1956 when incomes were bolstered by defense manufacturing for World War II and the post-war economic boom. In 1943, war-related manufacturing propelled Oregon's PCPI to its highest level relative to the nation.

In 2009, Oregon’s PCPI dropped below 90.0 percent of the national level for the first time. And the state’s PCPI reached its lowest relative point (88.1%) in 2011. This was largely influenced by two main factors: the Great Recession of 2007 to 2009; and Oregon’s fast population growth. The Great Recession brought job loss and lower earnings, while at the same time Oregon’s population increased 5.4 percent between 2006 and 2011; an addition of roughly 200,000 people.

Many states with high annual growth in population are also states with low annual growth in PCPI. This relationship can greatly impact a state’s per capita personal income relative to the national level. 

Nevada, Arizona, and Florida, for instance, had the top three annual average population growth rates since 1980. Conversely, these states were at the bottom in average annual PCPI growth. For Nevada and Arizona, the result was a strong downward trend in percent of PCPI relative to the U.S. for the period. Florida’s percent of PCPI, however, remained tight to the U.S. level; propped up by a high level of per capita transfer receipts.

Connecticut and Mississippi held upward trends in percent of PCPI relative to the U.S. with Connecticut’s slope more pronounced. Both states sat at the low end of annual population growth. Connecticut was 41st in annual population growth and fifth in annual PCPI growth since 1980. Mississippi was 38th in annual population growth and 19th in annual PCPI growth.

Oregon was 17th in the nation in average annual population growth over the last 37 years, while 45th in average annual PCPI growth. During this period Oregon’s relative percent of PCPI remained flat as it trailed below the national level.

The Grass Is Greener in Oregon

Oregon’s PCPI relative to the U.S. showed a slow upward trend from 2013 to 2015 and remained virtually unchanged in 2016, dipping only 0.1 percentage point. Population growth works to drive PCPI downward, while income growth works to drive PCPI upward. Oregon’s 2016 population growth rate was sixth in the nation. The 2016 total personal income growth rate was seventh in the nation, however the PCPI growth rate was 31st in the nation.

Continued economic expansion that includes fast job growth, potentially high wages, technology-based industries, and increasing opportunity, along with an attractive Oregon lifestyle is, well…very attractive. This encourages immigration while discouraging emigration. We like it here. You might too. And that’s one reason why Oregon’s PCPI was 90.9 percent of the U.S. PCPI in 2016.