We continue our look at the components of income data from our new annual report with how Michiganians earn their income.
Per capita income for the state in 2009 was $34,315. By major components it was:
- Private sector employment earnings $19,785
- Government employment earnings $4,060
- Dividends, Interest, Rent $5,499
- Transfer payments $7,737
We also looked at per capita income growth between 1989 and 2009 corrected for inflation. Over that 20 year period real per capita income grew by $3,962. An increase of 12 percent. By component the twenty year growth was:
- Private sector employment earnings -$181
- Government employment earnings $643
- Dividends, Interest, Rent -$105
- Transfer payments $3,713
As you can see, transfer payments account for almost all (94 percent) of Michigan’s real personal income growth over the past two decades. The other obvious highlight (really lowlight) is no real growth over two decades in private sector employment earnings. Both of these trends need to change if Michigan is ever again going to be a high prosperity state.
In 2009 69 percent of Michigan’s personal income came from employment earnings (57 percent from private employers and 12 percent from government employers.) Transfer payments were nearly 23 percent. And if you combine transfer payments and government employment earnings, you find that 34 percent of state personal income is paid for with government revenue. Twenty years earlier employment earnings were 77 percent of personal income (66 percent from private employers and 11 percent from government employers.) Transfer payments were 13 percent. And personal income paid for with government revenue was 25 percent.
How does Michigan compare to the US. Not well! State per capita income is now $5,320 (13 percent) below the national average. Over the past two decades state real per capita income grew $3,835 slower than the nation. About half the growth the country experienced. By component compared to the nation the 2009 levels and 20 year growth were:
- Private sector employment earnings -$3,542/-$3,694
- Government employment earnings -$1,173/-$279
- Dividends, Interest, Rent -$1,644/-$835
- Transfer payments $753/$608
One final note: Michigan is not a big government state. Wasn’t twenty years ago, isn’t today. In fact one can make a better case that Michigan is a small government state. Government employment earnings for the state are 78 percent of the nation’s. Michigan ranks 47th.