Per Capita Personal Income Data Released
Friday, November 22, 2013on
For the past six years, the Greenville Chamber has been tracking Per Capita Personal Income (PCPI) in its Regional Economic Scorecard. PCPI is one of the better measures of a region’s economic vitality. It sums income from a wide variety of sources (wages, interest/rent/dividends, and governmental transfers) and divides that number by the total population in a community. Periodically, the Bureau of Economic Analysis (BEA) revises earlier published data sets. Just this week, the BEA published their revisions and issued new 2012 PCPI data. What did we find? Continuing a long-term trend, PCPI in Greenville County continued to decline relative to the nation. We currently stand at 89.5% of the US PCPI, a level we have not seen since 1985. The gap between Greenville County and the level of US PCPI is troubling. If we could close this gap, our local economy would improve by more than $2 billion each year. While the gap is important, more troubling are the longer-term trends in our PCPI relative to the U.S. If we look at the graph in three major segments (1969 to 1984, 1985 to 1999 and 2000 – 2012), we can see three distinct types of PCPI growth. There was little overall PCPI growth in the first period, strong PCPI growth during the second and significant decline in the third. What explains these trends? While the Regional Economic Scorecard provides a strong explanatory framework in terms of 4 major inputs – Human Capital, Innovative Activity, Entrepreneurial Environment and Industry Strength – there is good reason to look at the mathematics behind PCPI. It’s a very simple ratio of total income divided by total population. In order to improve PCPI, a community needs to grow income faster than its population is growing. In terms of population (PCPI denominator), Greenville has been growing about 1.9% per year, significantly faster than the US rate. Thus the denominator of Greenville’s PCPI has been getting larger more quickly than the US. This has certainly dampened our PCPI growth. In terms of income (PCPI numerator), several factors may come into play. Unemployment is an issue. Those who are unemployed obviously have less income than those who are employed. Greenville’s employment rate in the early to late 1990s was well below the US rate, falling to 1.9% in 1998 (the same year we saw PCPI above the national average). Since then, Greenville’s unemployment rate rose to above 10% in 2009, hovering now slightly above 6%. While the rates are important, of more impact are the actual numbers of individuals unemployed. Greenville saw about 3,700 unemployed individuals in 1998. In 2012, that number had grown to more than 16,000. This is certainly a drag on the income numerator of the PCPI ratio. More systemically, even after adjusting for inflation, Greenville’s wages are significantly below the U.S. average for both general industries as well as for what are traditionally higher paying occupations. The overall weekly wage for all industries in Greenville fell from slightly above 90% of the US average in 2002 to slightly above 85% in 2012. Business & Finance occupations in Greenville currently pay 85% of the US average; Computer Science and Mathematics pay 79% and Life, Physical and Social Science pay 76%. There are many reasons for this wage disparity but, no matter what the reason, these disparities impact the PCPI metric. This is only a very cursory look at what might impact Greenville’s PCPI. The Chamber and many other organizations are actively engaged in efforts to improve levels of human capital, increase rates of innovation, help entrepreneurs to launch and grow successful firms as well as assist existing industry to move up the economic value chain. As we work through job training and education programs to decrease unemployment and increase the productivity of both our human capital and our firms, we will see wages and income increase. Some of the increase in PCPI will be dampened by increasing rates of in-migration to our community. This will bring its own challenges. However, those challenges are certainly welcome. For more information on PCPI and the Regional Economic Scorecard, contact Hank Hyatt at email@example.com.