In the midst of relentless inflation and a slowdown in the economy, many Americans may be wondering if the state in which they live is the most convenient for their finances. The answer involves evaluating multiple variables, including income. Here, a count of the states with the highest per capita personal income, according to information from the Department of Commerce.
The city of Washington (District of Columbia) is, by far, where citizens receive the highest per capita annual income, according to statistics prepared by the Bureau of Economic Analysis of the Department of Commerce. In 2021 the figure rose to US$96,873, well above the national figure of US$63,444.
This measurement (obtained by dividing state income by population) not only includes wages, but also includes income of owners, dividends, interest, rent, and government benefits, to provide an more comprehensive comparison of well-being in the different states.
The states that top the list also registered a higher per capita income than the national one. Here you can see what they are.
Massachusetts
Annual per capita income of US$82,475
Connecticut
Annual per capita income of US$82,082
NY
Annual per capita income of US$76,415
California
Annual per capita income of US$76,386
New Jersey
Annual per capita income of US$74,805
N.H.
Annual per capita income of US$72,003
Washington (state)
Annual per capita income of US$71,889
Maryland
Annual per capita income of US$ 69,266
Colorado
Annual per capita income of US$ 69,016
Alaska
Annual per capita income of US$67,138
At the other end of the table are Mississippi, which has the lowest annual per capita income, West Virginia, Alabama, and New Mexico.
At the state level, personal income increased by 7.4% in 2021, after having registered a rise of 6.6% in 2020, according to official statistics.
The state where personal income increased the most was Idaho (9.6%) and the state where it increased the least was Vermont (4.5%).
How does it affect the payment of taxes?
Another key indicator to understand the situation in the different states is income after taxes are deducted, which is the money that people will actually have to spend and save.
If we take this variable into account, according to the Office of Economic Analysis, the first three places are still occupied by the city of Washington, Massachusetts and Connecticut. However, New York falls in the table to seventh place among the states (eighth if we take into account the city of Washington).
In third place at the state level is California, followed by New Jersey and New Hampshire.
Higher income vs. higher minimum wage
This list shows that there are some correlations between places where the minimum wage is higher and where per capita income is higher. This is the case, for example, of the city of Washington (District of Columbia), which heads both lists.
Massachusetts, which is the highest ranked state in terms of income, is second in terms of minimum wage.
You can check the rest of the positions here.
Revenues in the context of an economic slowdown
The US economy slowed in the first quarter of 2022, according to data from the same bureau published in late April.
The country’s gross domestic product (GDP) ––the broadest measure of economic activity–– contracted at an annualized rate of 1.4% between January and March, in a sharp reversal of strong growth recorded the previous year.
While a single quarter is not a trend, it is a warning sign of how the recovery is going: two consecutive quarters of declining growth meet the commonly used definition of a recession.
The results for this quarter contrast with the growth rate of 6.9% registered in the last quarter of last year. Also, this is the worst performance since the pandemic recession in the second quarter of 2020. Economists had forecast an annualized growth rate of 1.1%, according to Refinitiv.
The work factor
Another key factor in this account is the labor market. The most recent statistics show that the market has almost fully recovered from the pandemic: in 2020 it lost a total of 22 million jobs and in April, with the jobs that were added, it was 1.2 million below the pre-pandemic level.
