Arizona's per capita personal income up 3.9 percent in 2011 - East Valley Tribune: Business

Arizona's per capita personal income up 3.9 percent in 2011

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Posted: Friday, March 30, 2012 5:34 pm

Arizona’s per capita personal income rose by 3.9 percent last year.

New figures from the U.S. Bureau of Economic Analysis put the figure at $35,875. That compares with $34,539 in 2010.

But the increase was less than the national average of 4.3 percent. And that leaves Arizona in 40th place among all the states for income — where it was in 2010.

Despite those numbers, economist Tom Rex of the W.P. Carey School of Business at Arizona State University was not downbeat.

“The situation is probably not quite as bad as it looks,” he said. The key, he said is the figure the government uses to decide how many people are living here — one part of the equation in figuring per capita income.

Carey said the Census Bureau overestimated Arizona’s population growth in the last decade. And even with the 2010 decennial count, “they still have not figured out that the employer sanctions law that’s in effect here.”

That law allows a state judge to suspend or revoke the business licenses of any firm found guilty of knowingly hiring an undocumented worker. Rex said that legislation has affected the number of people living here.

Put more simply, if the federal government used a lower — and he believes more accurate — population figure, then the per capita income would be higher.

Marshall Vest of the Eller College of Management at the University of Arizona agreed that the population numbers are off.

But Vest said he’s not sure how much using more accurate numbers would boost that $35,875 figure.

“Arizona’s per capita income has consistently trailed the nationwide average,” he said. In fact, Vest noted, the trend is the state is slipping.

In 1986, for example, Vest said Arizona’s per capita income was 93.5 percent of the national average. By last year it had slipped to 86.1 percent, the lowest point since 1993 when it hit 85.9 percent.

“I’m not surprised we had another pretty mediocre year,” Rex said, saying the Arizona economy is “very, very cyclical.”

Still, Rex said it’s unlikely that Arizona will ever skyrocket in the national ratings.

Some of it, he said, is the “sunshine factor,” with people who come here because the weather suits them willing to accept lower wages. But Rex said other factors are at work.

One is that, in comparison with some other states, Arizona has a relatively low percentage of its population working — and adding to the cumulative income figures for the state. Rex said that includes not only a high youth population and number of elderly but also that there are a fair number of working age people who, for whatever reason, are unemployed.

Vest noted, though, that a closer examination of the figures shows some bright signs.

He pointed out that what constitutes personal income actually consists of several different elements. And the earnings component — what people bring home from employment — grew at a 5.9 percent annual rate.

What held down the overall figure, he said, were things like “transfer receipts,” such as unemployment insurance, Social Security benefits and disability payments, income not linked to people actually having jobs and making money. Vest said these fall at a 1.4 percent annual rate.

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