State Per Capita Personal Income
Of the fifty U.S. states, the one with the highest per capita income in 2005 was Connecticut, where residents' median income hit $42,620 (all figures are in real 2000 dollars). As for the states within the Fourth District, per capita incomes grew in Kentucky and West Virginia, to $25,398 and $23,345, respectively. Compared with the median state per capita income, Kentucky's is about 13 percent lower, and West Virginia's is about 20 percent lower. While Ohio's per capita income was 2 percent lower than the median, Pennsylvania was 7 percent higher.
With respect to rankings of median per capita incomes among the fifty states, the ranking of each of the four states in the district has fallen since 1929. Overall, the gap between the richest state and poorest state has narrowed since 1929, as economic growth theory predicts (See our 2005 Annual Report essay for a more detailed analysis of per capita income growth across U.S. states).
In 1929, New York had the highest per capita personal income of all the states at $9,837. The disparity across states was greater then than in 2005, with the standard deviation of state incomes in 1929 more than twice the 2005 level. While Ohio and Pennsylvania's income levels were about 30 percent higher than the median in 1929, Kentucky's and West Virginia's, at $3,316 and $3,923 respectively, were 35 percent and 23 percent lower than the median.
Since 1929, incomes have grown in real terms for every state. The U.S. average, which was $5,969 in 1929 and $30,939 in 2005, grew 418 percent. Growth in Pennsylvania (373 percent) and Ohio (334 percent) trailed the national mark, but growth in Kentucky (666 percent) and West Virginia (495 percent) exceeded it.
More recently, Ohio's per capita income growth has started to slow. Since the beginning of 2000, it has grown by 3.1 percent, compared to 6.9 percent for the U.S. as a whole. Meanwhile, growth in per capita incomes in Pennsylvania (8.4 percent), Kentucky (5.8 percent), and West Virginia (10.6 percent) all outpaced Ohio's over this time period.
Looking at the industrial components of earnings growth reveals that no one specific sector is responsible for Ohio's relatively slower growth. In fact, in terms of the contributions that different industry sectors make to earnings growth, every major industry in Ohio lagged with respect to the contribution it made to U.S. growth from 2000 to 2005. For example, while the natural resources, mining, and construction industry added 2.5 percent to overall U.S. earnings growth in this time period, it added only 0.8 percent to Ohio earnings growth.