State Personal Income and Employment

The two most comprehensive data sets on economic activity at the state level are personal income and payroll employment. The wage component of personal income (much the largest) is benchmarked to the QCEW as is, of course, payroll employment. As a general rule, other state-level data (including the nonwage components of personal income and household survey numbers) are much more tenuous, based on less frequent benchmarks and limited indicative numbers.

On March 22, BEA released initial estimate of the state personal income numbers for Q4 2017 and, naturally, for 2017 as a whole. For 2017 as a whole (year average 2017 vs. year average 2016), state growth in personal income ranged from -0.3 percent (North Dakota) to a whopping 4.8 percent in Washington. Aside from North Dakota, other states with particularly low growth included Iowa (0.3 percent), Alaska (0.4 percent), Kansas (1.0 percent), Nebraska (1.4 percent), South Dakota (1.4 percent), Connecticut (1.5 percent), Kentucky (1.6 percent), New Mexico (1.8 percent) and Wyoming (1.8 percent). States other than Washington with notably strong growth included Idaho (4.7 percent),Nevada (4.4 percent), Utah (4.4 percent), Arizona (4.3 percent), Colorado (4.1 percent), California (4.1 percent), Georgia (3.8 percent), Florida (3.8 percent), and North Carolina (3.8 percent). Clearly, growth in the West (with the obvious exception of Alaska, as well as Wyoming) outstripped the rest of the nation, especially the Plains states, where a drop in farm income had a notable impact.

Data on per capita income for 2017 was also released: there is considerable dispersion by state and region. Connecticut, despite its somewhat low aggregate income gain remains number 1 among the states, with income of $70,121 per head (Connecticut’s population growth is also quite low). Mississippi, number 50, had per capita income of $36,346, barely half that of the Nutmeg State’s residents (the gap from top to bottom would be even larger if DC’s $76,986 was included in the ranking). The differences in per capital income lead to some interesting contrasts in aggregate personal income between states which have clear population differences: New Jersey’s aggregate income is larger than Ohio’s, Connecticut’s is almost the same as Missouri’s, and Texas’ is only about 10 percent higher than New York’s despite Texas now having a population nearly 50 percent higher than New York.

Of course, these per capita figures do not take into account differences in prices and taxes across the states. BEA does produce estimates of real per capita disposable income by state, but these annual figures are released with a substantial lag. The price data by state are derived from estimates of state level PCE deflators, and these can’t be compiled until the state consumer spending numbers are produced. It is true that states with lower nominal pretax per capita incomes also tend to have lower tax burdens and lower prices, so the gaps are reduced somewhat when these adjustments are made, though there is not a wholesale reversal of rankings. It is often forgotten, though, that the personal income numbers are net of property tax—many “high-tax” states, such as New Jersey, are such because of high property taxes--though some may question the corresponding inclusion of imputed rental income in the computation of income). Moreover, no adjustments are made for differing levels of state and local government services consumed by residents without payment.

In the preliminary Q4 2017 results, state growth from Q3 ranged from 0.2 percent (North Dakota) to 1.5 percent (Nevada). These figures could well change substantively with the receipt of more comprehensive QCEW and other data.

State Employment
On March 13 BLS released January labor market estimates by state, and on March 23 the February numbers came out. These figures include the regular benchmark revisions to the QCEW of the payroll numbers, which had been incorporated into the national figures in the February 2 release. In late February BLS had issued revised household data, reflecting the introduction of new Census Bureau information. New seasonal adjustment factors were also rolled out with these releases.

BLS introduced some changes into the payroll data with the January release. First, as was the case in the national report, industry figures are now reported on a 2017 NAICS basis, updated from the prior 2012 NAICS basis. Second, BLS is now applying the same concurrent seasonal adjustment methodology to state payroll data that it has been using for several years on the national data. As is the case in the national numbers, the updated seasonal factors will, prior to annual revisions, only be applied to the newly reported and prior two months.

BLS does not force the sum of state payroll employment to equal the national total (in the household survey the sum of the state values for the labor force and employment does equal the national totals for not seasonally adjusted series). Thus, there is a sense in which the “sum of the states” figure is a separate estimate of the national payroll situation. With both the national and state data now benchmarked to the QCEW, it is a good time to check on how they compare.

The answer is that the state sums have shown a bit less robust growth than the national aggregate. Over the course of 2017 (December 2016 to December 2017), the national release shows that nonfarm payroll employment rose 2.188 million; the sum of the states’ figure was up 2.073 million. While that gap looks fairly modest, it was considerably larger in 2016: the national total was up 2.344 million, more than 300 thousand greater than the 2.035 million reported by the sum of the states. The levels of the two aggregates, though, are quite close (in January, the sum of the states total was 147.838 million vs. the national figure of 147.864 million). Comparable comments can be made about the not-seasonally adjusted data.

Turning to the February figures, the household survey numbers suggest that regional differences in the tightness of job markets may be, despite much discussion, fairly limited at this point in the cycle. The state with the highest unemployment rate in January was Alaska (7.3 percent), compared to the low state, Hawaii (a remarkable percent)—a 5.2 percentage point gap. In the lower 48 states the range was a much narrower 3.2 percentage points: ranging from New Mexico’s 5.8 percent to 2.6 percent in both New Hampshire and North Dakota.

On the payroll side, Texas had the largest absolute increase in February (40,500 jobs); in percentage terms the largest gains were in Tennessee and Virginia (both up .5 percent). The sum of the states’ aggregate showed a larger increase in February than did the national report (350,000 vs 313,000). Despite the size of the aggregate gain, most states reported virtually no change in payrolls from January to February (a few report small losses); only 11 states had increases that were deemed statistically significant. These gainers were in the Northeast (Massachusetts, New York, and New Jersey), the Middle West (Illinois and Michigan), the Southeast (Florida, Georgia, South Carolina, Tennessee, and Virginia), as well as Texas.