Personal Income
A strong economy is characterized by prosperity that is reflected in improving standards of living. Overall, Virginia's per capita income has increased steadily over the past decade.
Why is This Important?
Per capita personal income -- which includes wages and salaries, transfer payments, dividends, interest, and rental income -- is used as the broadest indicator of the magnitude of improvement in an economy. Rising income levels allow individuals to provide for their families, buy homes and improve the quality of their lives.
How is Virginia Doing?
In 2008, Virginia ranked eighth among the states in per capita personal income, with $41,291 per capita income (in 2008 dollars). Relative to its peers, Virginia's per capita income was lower than Maryland, ($46,313) in 2008, but higher than North Carolina ($33,166) and Tennessee ($33,061). National per capita income stood at $38,281. The highest 2008 per capita income was in Connecticut at $54,168.
Within
Virginia, the Northern region
had the highest per capita personal
income in 2007 at $56,981 (in
2007 dollars), while the Central
region had the second-highest
($39,719). At the other end
of the spectrum, the Southside
and Southwest regions had the
lowest per capita personal income
at $25,527 and $26,264, respectively.
Between 2000 and 2008 Virginia's per capita income grew at a rate of 1.1 percent, compared to the national average of 0.7 percent over the same period. Within Virginia, Hampton Roads had the fastest growth rate at 1.9 percent between 2000 and 2007.
What Influences Income?
Two of the most important factors affecting personal income are educational attainment and economic opportunity. Studies show that individuals with more education generally enjoy higher incomes and are unemployed for shorter periods of time when compared to people with less education. According to the Federal Reserve Bank of Dallas, the lifetime earnings of a worker with less than a 9th grade education is $976,350, while a person with an associate's degree can earn $1,801,373, and with a master's degree, $2,963,076.
In addition to educational attainment, the mix of industries in a region also contributes to a state or region's per capita income.
What is the State's Role?
Annual average wages and salaries are dependent on many social and market forces that are outside the purview of the state. Even so, there are areas in which the state can exert influence over annual average wages and salaries. These include:
- facilitating higher levels of educational attainment
- targeting economic development efforts toward industries that are forecasted to grow and pay wages that lift regional averages
- supporting new business startups
- maintaining a business climate that encourages economic growth.
Data Definitions and Sources
U.S. Department of Commerce, Bureau of Economic Analysis
www.bea.gov/regional/docs/reis2006dvd.cfm (updated
annually in April)
www.bea.gov/regional/spi/ (updated
annually in May)
W. Michael Cox and Richard Alm, "What D'Ya Know?" Federal Reserve Bank of Dallas 2004 Annual Report, pp.3-23.
See also Jennifer Cheeseman Day and Eric C. Newburger, "The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings," Table 2: Synthetic Estimates of Work-Life Earnings by Educational Attainment, Sex, Work Experience, and Age, Based on 1997-1999 Work Experience, U.S. Census Bureau, July 2002.
Note: When comparing income over time, the dollar values must be "adjusted" to account for inflation. Inflation, which is the general rise in price level, means that a dollar today is generally worth less than a dollar in the past. To account for the difference in value over time, we divide income by the consumer price index (CPI), which is one measure of inflation.
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.
