Transcript Document
What’s Behind the Regional
Personal Income Statistics, And
What Lies Ahead
Robert L. Brown
Monitoring Montana: Analyzing Local Economies
Through BEA Data
Missoula, Montana
May 9, 2007
Overview
▪ Personal Income
Personal income & its chief alternatives
Revision schedule
Sources of personal income by component
Employment and why BLS & BEA job
counts differ
▪ Regional improvements
▪ Future directions
www.bea.gov
2
Alternative Incomes
Per Capita Income (dollars), Montana, 2004
30,000
20,000
10,000
0
Adjusted Gross Money Income
Income (IRS)
(Census)
www.bea.gov
Personal
Income (BEA)
3
Per Capita Income Change 2000-01
(Dollars)
Montana
2,000
1,500
1,000
500
0
-500
-1,000
-1,500
Adjusted
Money Income
Personal
Gross Income
(Census)
Income (BEA)
(IRS)
www.bea.gov
4
Per Capita Income, 2004, dollars
Idaho
Montana
Oregon
Washington
www.bea.gov
Adjusted
Gross
Money
Income
Income
(IRS) (Census)
17,776
18,540
17,795
18,201
20,544
21,386
22,613
22,077
Personal
Income
(BEA)
26,877
27,657
30,561
32,166
5
Why Personal Income?
“…Personal income is the single most
comprehensive measure of our economic
performance at the state and regional level. It
goes up when more of us are working, of course,
but it also tells us something about the quality
and the intensity of those jobs. And it also
reflects the fact that about 34 cents of every
dollar of income American households receive
comes from something other than wages and
salaries.”
Patrick Barkey
University of Montana
April 23, 2007
www.bea.gov
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Derivation of Personal Income
Wage and salary disbursements
+ Supplements to wages and salaries
=
Compensation
+ Proprietors’ income
=
Earnings (place of work)
— Contributions for govt. social insurance
+ Adjustment for residence
=
Net Earnings (place of residence)
+ Dividends, interest, and rent
+ Personal current transfer receipts
=
Personal income
— Personal current taxes
=
Disposable personal income
www.bea.gov
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Some differences between BEA, Census, & IRS
▪ Definitional differences
Transfers, in cash, in kind
Capital gains
Pension benefits
FICA taxes
Misreporting
▪ Production of the estimates
Revisions
www.bea.gov
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Revision Schedule
Misc. late
or revised
quarterly
data
Jobs for
2005:Q1
JUNE
SEP
MAR
2005
JUNE
SEP
JUNE
SEP
MAR
2006
MAR
Wages for
2005:Q1
www.bea.gov
Misc. late
or revised
data for
2005
JUNE
Misc. late
or revised
data for
2005
JUNE
SEP
MAR
2007
SEP
MAR
USDA,
Transfers for
2005
JUNE
Benchmark
revision, all
years
JUNE
SEP
2008
SEP
MAR
SOI
Dividends,
interest & rent
for 2005
JUNE
MAR
2009
SEP
MAR
SOI
Proprietors’
income for
2005
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Revisions
▪ Regular revision schedule to
incorporate data that are:
More complete
More detailed
More appropriate
▪ Comprehensive revisions every 5 years
Definitional changes
Statistical changes
Presentational changes
www.bea.gov
10
How We Produce the Estimates
▪ Administrative record information
Advantage--provides detailed information at low
cost
Disadvantage--does not precisely match what is
being estimated
Adjustments made to compensate for differences in
definition, coverage, and geographic detail
▪ Some census data--quinquennial Agriculture
and decennial Population and Housing
▪ Very little from survey information
www.bea.gov
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Sources of Data
60%
BLS
5%
23%
Other
IRS
Personal
Income
CMS
6%
www.bea.gov
SSA
6%
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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
▪ Data adjusted upward by ~6% for uncovered
workers & under-reported wages & tips
▪ Data are by place of work
www.bea.gov
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Wage & Salary Disbursements
▪ Includes:
www.bea.gov
Salaries of corporate officers
Bonuses and incentive pay
Pay in kind (meals, lodging, clothing)
Commissions & Tips
Stock options
Severance pay
Employee contributions to deferred
compensation plans
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Supplements to Wages & Salaries
▪ 13% of personal income
▪ Employer contributions to:
Pension & private insurance funds (9%)
Govt. social insurance funds (4%)
www.bea.gov
15
Real Compensation & Wages per Worker,
U.S., 2000=1.00
1.10
1.08
Compensation
1.06
1.04
Wages
1.02
1.00
2000
www.bea.gov
2001
2002
2003
2004
2005
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Real Compensation & Wages per Worker,
Montana, 2000=1.0
1.14
1.12
1.10
Compensation
1.08
1.06
Wages
1.04
1.02
1.00
0.98
2000
www.bea.gov
2001
2002
2003
2004
2005
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Real Compensation & Wages per Worker,
Washington, 2000=1.0
1.04
1.03
1.02
Compensation
1.01
1.00
Wages
0.99
0.98
2000
www.bea.gov
2001
2002
2003
2004
2005
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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
www.bea.gov
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Contributions to Montana Earnings Growth,
2006:4
Farm
Forestry, fishing, related
Mining
Utilities
Construction
Durable goods
Nondurable goods
Wholesale trade
Retail trade
Transportation, warehousing
Information
Finance and insurance
Real estate, rental, leasing
Professional, technical
Mgt of companies, enterprises
Administrative, waste
Educational services
Health care, social assistance
Arts, entertainment, recreation
Accommodation, food
Other services
Federal, civilian
Military
State and local
-0.05
0.00
www.bea.gov
0.05
0.10
0.15
0.20
0.25
0.30
0.35
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Contributions for Govt. Social Insurance
▪ 8% of personal income
▪ This is a deduction in the derivation of
personal income
▪ Mostly contributions for Social Security
& Medicare
▪ Contributions from Employers,
Employees, & the Self-Employed
www.bea.gov
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Major Social Insurance Programs
▪
▪
▪
▪
▪
▪
▪
▪
▪
OASDI (Social Security)
Medical benefits (Medicare)
Unemployment Insurance
Workers’ Compensation
Supplementary Medical Insurance
Temporary Disability Insurance
Veterans’ Life Insurance
Pension Benefit Guaranty Corporation
Railroad Employee Retirement Insurance
www.bea.gov
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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
www.bea.gov
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Adjustment for Residence
▪
<0.5% of personal income nationally
▪
0.1%
-4.5%
5.1%
1.3%
-13.2%
2.9%
2.4%
>-0.1%
-30.0%
Inter-county commuters
▪
▪
Montana:
Missoula, Mt
Lake, Mt
Washington
King, Wa
Skagit, Wa
Whatcom, Wa
California:
San Francisco
Based on Census Journey to Work data & updated with
IRS wages (place of residence)
Border commuters
Exceptions:
www.bea.gov
College students
Migratory workers
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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
▪ About 20% of interest is an imputation
for banking and other services
▪ National estimate is distributed
regionally on the basis of tabulations
of income tax returns and Census
housing statistics
www.bea.gov
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Personal Current Transfer Receipts
▪ 15% of personal income
Social Security accounts for 1/3
Includes in-kind transfers such as Medicare
& Medicaid—40% of transfers
Income maintenance, unemployment
benefits, veterans’ benefits, etc.
▪ Based on primary data tabulated by
state or county
www.bea.gov
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Personal Current Taxes
▪ 11% of personal income
▪ Mostly income taxes
▪ Property taxes deducted in derivation
of rental income
▪ Sales taxes are considered part of
personal consumption expenditure
www.bea.gov
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State & Local Personal Taxes as a % of 2005
Personal Income: US=2.7%
5
4
3
2
1
0
ID
www.bea.gov
MT
OR
WA
28
Federal Personal Taxes as a % of Personal
Income: US=9.1%
10
8
6
4
2
0
ID
www.bea.gov
MT
OR
WA
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Personal Income
▪ Comprehensive
▪ Timely
Quarterly income by sector is available 3
months after end of period
▪ Historical Comparability
▪ County-based local areas
www.bea.gov
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Caveats
▪ Extreme per capita income
Unusual conditions such as bumper crop,
drought, or hurricane
Special populations such as college
students, prisoners
Major construction projects
www.bea.gov
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Employment Data
▪ Total employment:
Wage & salary jobs
Sole proprietorships
General partners
▪ Job Count not Worker Count
Earnings and employment are consistent
Earnings per job
www.bea.gov
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BEA vs. BLS Employment
QCEW and BEA Employment Estimates, 2005
US, millions of jobs
Total Employment, QCEW
Misreporting adjustment
Exempt employment
Other employment
W&S Employment, BEA
Proprietors' employment
Total Employment, BEA
www.bea.gov
131.6
2.7
3.9
2.9
141.0
33.3
174.2
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BEA’s Regional Accounts Initiatives
▪ Accelerated
estimates
▪ New
statistics
▪ Future
improvements
www.bea.gov
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Accelerations
Acceleration
Data release
From
To
Timing
Quarterly state personal income
4 months
3 months
Completed 2004
Total GDP by state
18 months 6 months
18 months 10 months
16 months 12 months
16 months 9 months
Completed 2005
Completed 2005
Completed 2005
Completed 2006
GDP-by-state industry detail
County industry detail
Metro-area personal income
www.bea.gov
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New Statistics: Local Area Compensation
▪ County estimates of compensation by
industry, 1998 forward
Sum of Wages and salaries and
supplements to wages
Labor costs of production
First released in 2005
December release provides early indicator
of economic activity for counties
www.bea.gov
36
New Statistics: More Local Area
Data
▪ Metro area disposable personal income
Researching the estimation of personal
current taxes for metro areas
Subtracted from personal income to derive DPI
Some results from the prototype
estimates…
Bridgeport, CT per capita personal current
taxes 16,150—26.1% of personal income
McAllen, TX per capita personal current taxes
1,082—7.4 % of personal income
www.bea.gov
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New Statistics: More Data on
Tables
▪ New tables—CA04 summary and CA06
Compensation
▪ More Geography
New Metropolitan area definitions—including
micropolitan areas
▪ More detail on tables
Since 1996 the amount of detail on tables has
doubled
1996—0.9 million lines per year
2006—2.0 million lines per year
www.bea.gov
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New Statistics: Longer Time Series
▪ Annual state earnings industry data
now back to 1990 on a NAICS basis
Previously only 2001 forward
▪ GDP by state now available for 1963
forward on SIC basis
Previously 1977 forward
www.bea.gov
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Future Improvements: More Accelerations
of Releases
▪ GDP by state and sector
6 months after end of calendar year
June 2007
▪ Personal income for metropolitan areas
8 months after end of calendar year
August 2007
www.bea.gov
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Future Improvements: More Local Area
Data
▪ Gross metro product (GMP)
Initial estimates—top-down approach:
Allocate state GDP by local area earnings data
Research into bottom-up approach for
non-labor part of GMP
Taxes and gross operating surplus
Research using sub-state Census Bureau data
▪ September 2007
www.bea.gov
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Future Improvements: Alternative
Estimates of Regional Income
▪ Develop alternative household income
measures that better meet user needs
to:
Measure spending capacity
Track tax base
Research to be released this Summer
www.bea.gov
42
Future Improvements: Personal Income
Mapping
▪ Interactive Web-based state and
county personal income mapping
Prototype this Spring
www.bea.gov
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Long Term Improvements
▪ FY 2009 Budget Initiative to:
Accelerate release of county personal
income to 10 months after end of year
Fully fund the extension of geographic
coverage of GDP to metropolitan areas
Develop expenditure estimates of GDP by
state
Develop more accurate estimates of real
GDP by state
www.bea.gov
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And Finally: Comprehensive Revision
▪ Spring 2009—every 5 years
Definitional revisions
Statistical and methodological revisions
Presentational revisions
www.bea.gov
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Questions?
▪ Contact:
Robert L, Brown
202.606.9246
[email protected]
www.bea.gov
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