Angela Reyes
(CNN Spanish) – In the midst of inflation that does not let up 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’s a count of the states with the highest personal income per capita, according to data from the Commerce Department.
The city of Washington (District of Columbia) is, by far, where citizens receive a higher annual income per capita, according to statistics compiled by the Office 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 homeowner income, dividends, interest, rent, and government benefits, to provide a comprehensive comparison of well-being in the different states.
The states that top the list also recorded a higher per capita income than the national. 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
New York
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, following having registered a rise of 6.6% in 2020, according to official statistics.
The state where personal income increased the most was in Idaho (9.6%) and the one in which 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 the income once the payment of taxes is deducted, which is the money that people will actually have to spend and save.
If we take this variable into account, according to the Bureau 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 those 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 for income, is second for minimum wage.
You can check the rest of the positions here.
Income in the context of an economic slowdown
The US economy slowed in the first quarter of 2022, according to data from the same office 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 the strong growth it registered the previous year.
Although a single quarter does not mark a trend, it does represent a warning signal regarding how the recovery is going: two consecutive quarters of declining growth meet the commonly used definition of a recession.
This quarter’s results contrast with the 6.9% growth rate recorded in the last quarter of last year. Furthermore, this is the worst performance since the pandemic recession in the second quarter of 2020. Economists had forecast a 1.1% annualized growth rate, 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.
With information from Anneken Tappe.
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