Study: States’ personal income hit 20-year high in 2020 | Monday Morning Coffee

May 3, 2021 7:13 am

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Good Monday Morning, Fellow Seekers.

File this one under “Perfect Storm.”

States’ personal income growth hit a 20-year high in 2020 thanks to historic gains in unemployment benefits, federal aid, and other public assistance that drove the sharpest annual growth in two decades, new research has shown.

But before the free-marketers among you start praising the wonders of the market economy, the research by the Pew Charitable Trusts makes it quite clear that “without government support, most states would have sustained declines in personal income—a key economic indicator—as the COVID-19 pandemic took a toll on business activity.”

In Pennsylvania, the growth rate in personal income between the fourth quarter of 2007 and the fourth quarter of 2019 was 1.6 percent, according to Pew. In 2020, as government assistance flooded into the state, the commonwealth’s growth rate between the fourth quarter of 2019 and the fourth quarter of 2020 increased to 2.2 percent, the Pew research showed.

“Arizona and Montana recorded the top personal income growth for the year, 7.1 percent,” the Pew research concluded. “Both states benefited not only from a surge in government transfers but also from an increase in their workers’ aggregate earnings, unlike most other states. By comparison, Wyoming and several other states with economies more reliant on the energy sector experienced some of the weakest personal income growth as oil production dropped.”

For the purposes of its research, Pew defined personal income as state residents’ “paychecks, Social Security benefits, employers’ contributions to retirement plans and health insurance, income from rent and other property, and benefits from public assistance programs such as Medicare and Medicaid, among other items. Personal income excludes realized or unrealized capital gains, such as those from stock market investments.”

And all that income matters because Washington uses state personal income to help it determine “how to allocate support to states for certain programs, including funds for Medicaid. State governments use personal income statistics to project tax revenue for budget planning, set spending limits, and estimate the need for public services,” Pew noted.

Below, some other highlights from the fourth quarter of 2020.

Photo by Joe Raedle/Getty Images

Pew found that:

  • “South Dakota (6.3 percent) had the highest growth rate in the sum of all its residents’ personal income, followed by Montana (5.7 percent), Idaho (5.6 percent), and Nebraska (5.3 percent).  Year-over-year growth was largely driven by recovering farm earnings due to COVID-19 relief funds to farmers and ranchers, increased international demand for agricultural products, and higher crop prices.
  • “Personal income declined in four states over the year: Alaska (-1.2 percent), Wyoming (-0.9 percent), Hawaii (-0.4 percent), and New York (-0.1 percent). These states experienced some of the biggest declines in total earnings, and in all but Hawaii the boost in government assistance was lower than it was nationwide.
  • “In nine states—California, Colorado, Hawaii, Illinois, Massachusetts, Nevada, New Jersey, Pennsylvania, and Texas—government transfer payments increased by at least 20 percent from the fourth quarter a year ago.
  • “Among the 30 states with higher earnings than a year earlier, the strongest gains were in South Dakota (9.1 percent), Montana (5.9 percent), and Nebraska (5.6 percent). The sharpest losses were registered in Hawaii (-9.8 percent), Wyoming (-3.9 percent), and Nevada (-3.8 percent),” Pew found.

One more big takeaway from the Pew research: “As unemployment started to recover from record highs, earnings began to stabilize, returning to pre-pandemic levels nationally in the fourth quarter. Still, combined earnings for all states fell 0.9 percent in 2020 after adjusting for inflation, the largest decline since the depths of the Great Recession in 2009.”

The Pennsylvania Capitol building. (Capital-Star photo by Sarah Anne Hughes)

Our Stuff.
In this week’s edition of The Numbers RacketCassie Miller breaks down what you need to earn to rent a home in Pennsylvania. And, spoiler alert, the state’s current anemic minimum wage of $7.25 an hour just isn’t cutting it.

Black lawmakers could hold the deciding votes on two long-sought changes to state driving laws, giving them the rare leverage to ask that an expansion of police oversight be accompanied by protections for Black drivers, Stephen Caruso reports.

The four-member commission charged with the decennial redrawing of Pennsylvania’s legislative district boundaries has deadlocked on its pick for a fifth member to serve as its impartial chairman, which means the state Supreme Court will once again make the callI report.

Growing concern and frustration among Centre County residents over animals in need and the diminishing presence of the state’s dog law wardens has led one state lawmaker to offer up a supplemental approach to protecting animals, Cassie Miller also reports.

A new report has revealed that there’s lead in a majority of Allegheny County’s water systems, our partners at Pittsburgh City Paper report.
As wildfires across the United States grow in size, intensity and duration each summer, members of Congress from the West are pushing for massive new investments in ecosystem management and wildfire mitigation, Capital-Star Washington Correspondent Allison Winter reports.

On our Commentary Page this morning, Shria Goodman of the Philadelphia ADL notes that Pennsylvania lawmakers just can’t resist comparing things to the Holocaust & Nazis. It’s time to banish this lazy and offensive rhetoric from our dialogue, she argues. And opinion regular Dick Polman points out U.S. Supreme Court Justice Amy Coney Barrett’s supreme conflict of interest.

En la Estrella-Capital: La junta estatal del sistema de educación superior respalda el plan para consolidar seis universidades a dos. Y con el objetivo de mejorar la equidad de las vacunas en Pa., el Departamento de Salud dió a conocer los datos demográficos ampliados sobre las vacunas.

Are Pennsylvania’s legislative maps gerrymandered? That depends, Spotlight PA reports (via the Inquirer).
In the Mon Valley, near Pittsburgh, U.S. Steel has canceled a major investment — and questions remain, the Post-Gazette reports.
PennLive takes stock of police reform efforts in central Pennsylvania, and activists are hoping for more.
The Morning Call profiles a gay Catholic man who’s advocating for LGBTQ parishioners in the Lehigh Valley.
LancasterOnline explains how the lingering effects of the 2020 election are impacting the 2021 primary for local elections officials.
The York Daily Record explains what a $15/hr minimum wage would mean for the restaurant industry (paywall).
The Wilkes-Barre school board will hold hearings this week on closing two area high schools (paywall).

Here’s your #Harrisburg Instagram of the Day:


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WHYY-FM explains why Philly’s air quality might be worse than you think.
WITF-FM explains the balance-of-powers showdown embodied by a proposed constitutional amendment seeking to limit the emergency powers of Gov. Tom Wolf and his successors.
Speaking to GoErie, Pennsylvania workers debunk myths about the minimum wage (paywall).
The Observer-Reporter goes deep on how local schools are trying to address pandemic learning losses.
PoliticsPA runs down last week’s winners and losers in state politics.
Some locals worry about the ecological impact of wind and solar farms intended to fight climate change, reports.
U.S. Sen. Tim Scott, R-S.C., is optimistic about Congress’ chances of passing police reform, Politico reports.

What Goes On.
The House comes in at 12 p.m. today. Here’s a look at the day’s committee and event action:
8 a.m., 60 East Wing: House State Government Committee
9 a.m., Senate Chamber: Pa. Athletic Oversight Committee
10 a.m., Capitol Steps: Nurses rally for patient safety
10:30 a.m., Capitol Fountain: State Rep. Austin Davis, D-Allegheny, talks about making it easier to enroll in health insurance coverage
11 a.m., 205 Ryan: House Commerce Committee
12 p.m., Capitol Fountain: Rally for healthcare insurer preauthorization reform
Call of the Chair, 140 MC: House Appropriations Committee

What Goes On (Nakedly Political Edition).
5:30 p.m.: House Democratic Campaign Committee. Admission runs $1,000 to $5,000.

Gov. Tom Wolf 
heads to Philadelphia for a 2:30 p.m. event with the Philadelphia Flyers to encourage people to get vaccinated.

You Say It’s Your Birthday Dept.
Have a birthday you’d like noted in this space? Send me an email at [email protected].

Heavy Rotation.
Here’s some new music from veteran Brit psych-poppers The Coral. It’s ‘Lover Undiscovered,’ from the concept LP ‘Welcome to Coral Island.’

Monday’s Gratuitous Baseball Link.
Baltimore dropped a 7-5 decision to Oakland on Sunday. Oakland’s Ramon Laureano sparked his team for the win.

And now you’re up to date.

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John L. Micek

A three-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's former Editor-in-Chief.