1. www.bea.gov BEA’s State and Local Area Personal Income Robert L. Brown Navigating the Nevada Economy Reno, NV September 29, 2009

2. www.bea.gov BEA Personal Income ▪ The most current, comprehensive and consistent measure available of household income ▪ Comprehensive: measures income received by persons from  production (returns to labor and capital)  business and government transfers ▪ Consistent across time and geography

3. www.bea.gov 3 BEA Regional Personal Income ▪ Consistent time series with BEA national statistics ▪ Timely  State—3 months  Metro—8 months  County—12-16 months ▪ Industrial structure of earnings and compensation

4. www.bea.gov State Personal Income ▪ Quarterly estimates by place of residence from 1948  3 months after the end of the quarter ▪ Annual estimates by place of residence from 1929  Preliminary 3 months after end of year  Detailed 9 months after the end of the year  Includes per capita and disposable personal income estimates ▪ Annual earnings, compensation, wages, and employment by industry by place of work

5. www.bea.gov Local Area Personal Income ▪ Annual data from 1969  Metro area released 8 months after end of year  County compensation released 12 months after end of year  County PI released 16 months after end of year ▪ Geographic availability:  3,111 counties  366 Metropolitan Areas  574 Micropolitan Areas  179 BEA Economic Areas ▪ Industry detail by place of work  Compensation by county and industry available 12 months after reference year  Earnings and employment by county available 16 month after end of year

6. www.bea.gov BEA Income is a Dynamic Series ▪ Personal income has changed to better reflect the ever-changing economy  Definitional and classificational changes  Source data and methodological changes  Presentational changes 6

7. www.bea.gov 7 Regional Income First Produced ▪ 1940—”Income Payments to Individuals, by States, 1929-38”  Income payments to individuals for services rendered in current production  An attempt to measure product ▪ Income payments definition—4 components:  Salaries and wages  Other labor income  Direct and work relief and unemployment benefits, workmen’s compensation, pension payments, and related items  Entrepreneurial withdrawals  Income of self-employed persons  Dividends, interest, and net rents and royalties

8. www.bea.gov 8 State and Local Area Personal Income ▪ State personal income first published in Survey of Current Business in 1955 ▪ 6 Major Components  Wages and Salaries  Other Labor Income  Proprietors’ Income  Property Income  Transfer Payments  Less: Personal Contributions for Social Insurance ▪ Local area personal income first published in 1975 ▪ Consistent with the integrated national economic accounts

9. www.bea.gov 9 State and Local Area Personal Income—What Has Changed? ▪ More component detail ▪ Broader range of income-in-kind and imputed income items ▪ Now includes income of nonprofit institutions serving individuals ▪ Now includes employer contributions to private pension funds  Instead of benefits ▪ New component—transfer payments  Government payments to individuals

10. www.bea.gov Continued Improvements ▪ Detail continues to expand  Compensation by industry in 2005  Dividends, interest, and rent detail in 2009/10 ▪ Definitions continue to be updated  Treatment of Medicare prescription drugs  Treatment of Economic Stimulus payments ▪ New source data and methods continue to be developed and used 10

11. www.bea.gov Key local area statistics ▪ Total personal income  All income received by residents ▪ Per capita personal income  Personal income divided by population  Indicator of economic well-being ▪ Earnings by place of work and by industry  Proxy for production  Industrial structure ▪ Dividends, interest, and rent  Income from assets and housing ▪ Transfer receipts  Social Security, government-administered medical, income maintenance

12. www.bea.gov How We Produce the Estimates ▪ Administrative record information  Advantage--provides detailed information at low cost  Disadvantage--does not precisely match what is being estimated—must make adjustments to compensate for differences ▪ Some census data--quinquennial Agriculture and decennial Population and Housing ▪ Very little from survey information

13. www.bea.gov Sources of Data Personal Income BLSIRSSSACMSOther 60% 23% 6% 5%

14. www.bea.gov Wage & Salary Disbursements ▪ 55% of personal income (2005) ▪ Based primarily on Quarterly Census of Employment and Wages (QCEW) report  Byproduct of Unemployment Insurance (UI) program  Excellent quality--Most workers are covered by UI ▪ Other data sources used for 6% of noncovered workers & under-reported wages & tips ▪ Data are by place of work

15. www.bea.gov Supplements to Wages & Salaries ▪ 13% of personal income ▪ Employer contributions to:  Pension & private insurance funds (9%)  Govt. social insurance funds (4%)

16. www.bea.gov Wages and Supplements United States

17. www.bea.gov Proprietors’ income ▪ 9.2% of personal income (farm 0.4%, nonfarm 8.8%) ▪ Farm:  Based on US Department of Agriculture data ▪ Nonfarm:  Based on tabulations of IRS tax returns— Schedule C & partnership Form 1065 ▪ Adjusted for misreported income

18. www.bea.gov Adjustment for Residence ▪ Place of work compensation and earnings  Shows location of production  Used as proxy for current production ▪ Place of residence income  Indicator of economic well-being  Shows where income is available for tax planning and for spending analyses

19. www.bea.gov Adjustment for Residence ▪ <0.5% of personal income nationally  Nevada -0.6%  Carson City-13.4%  Douglas 10.5%  Washoe -1.4% ▪ Inter-county commuters  Based on Census Journey to Work data & updated with IRS wages (place of residence)

20. www.bea.gov Dividends, Interest, & Rent ▪ 16% of personal income ▪ Nearly 1/2 of interest is received by pension funds and life insurance carriers on behalf of persons ▪ Local estimates based on tabulations of income tax returns and Census housing statistics

21. www.bea.gov Personal Current Transfer Receipts ▪ 15% of personal income  Social Security accounts for 1/3  Includes in-kind transfers such as Medicare & Medicaid—45% of transfers  Income maintenance, unemployment benefits, veterans’ benefits, etc. ▪ Based on primary data tabulated by state or county

22. www.bea.gov 22