Several Indiana governors, upon taking office, promise to raise per capita personal income. It sounds good, but rarely do they know the components of the personal income and how little influence they have on it.
Note: this is Per Capita, meaning a sum divided by the population of an area (county in this case). It is not per job, not per household, not per acre, and not per citizen as recognized by the denizens of the federal bureaucracy.
There are four major components of per capita personal income (PCPI):
1. Earnings brought home from current activity. What your job pays, minus whatever you or your employer pays for social security or other government insurance programs.
This component was $40,470 statewide in 2024; highest in Hamilton at $72,795 and lowest in Starke at $24,059. It was a growing portion of PCPI in only 8 counties over the past decade. In 2024, it was 63% of PCPI statewide, 73% in Lagrange, but 48% in Wabash.
Perhaps the economic development “experts” at the Indiana Economic Development Corporation (IEDC) can explain why these differences exist. Is it diversity (excuse the forbidden word) in the composition of the population or in the employment opportunities in our counties?
2. Current receipts from government to maintain our income (actually our consumption). Welfare, public assistance, the value of food stamps.
This component accounted for just 1% of Indiana’s PCPI, a tiny, shrinking portion of our economy, despite the incendiary blather of rabid Internet writers. It peaked at 2.5% in Marion and was a mere 0.3% in Greene\
However, small statewide, (0.83% growth) this component grew in 59 of our 92 counties. In 3 counties of formerly coal-dependent southwestern Indiana (Knox, Pike, and Sullivan), as well as in 5 counties of formerly significant manufacturing eastern counties (Grant, Howard, Fayette, Wayne and Blackford), this component exceeded 10% growth in the decade.
3. Funds from previous savings (retirement, social security, and similar sources).
As our population ages, this component of personal income has increasing importance, moving from 17% of PCPI in 2014 to 19% in 2024. It accounted for more than a third of PCPI in 4 counties (Fayette, Blackford, Crawford and Starke) and less 10% in Boone and Hamilton.
4. Funds from investments (dividends, interest, rent).
Financial returns, likewise, are an increasing portion of PCPI, moving from 15.5% in ’14 to 16.3% in ’24. Note: capital gains/losses are not included in personal income because they are not related to economic production, but merely a reflection of price changes. (A position disputed by friends who are day-traders.)
The data offered here are important to serious economic development policies at the county and state levels. They tell us about areas often highlighted, but persistently neglected when it comes to meaningful action