Monday, August 24, 2009

Poverty and Prosperity Part 4: Per Capita Personal Income

A multitude of wage and income measures are produced by the federal government, state governments, and private entities. Many of these measures attempt to gauge the relative prosperity or poverty of Oregon's individuals and households.

While each measure varies in purpose, scope and definition, they all help illustrate the financial situation of Oregon's individuals and families...

Per Capita Personal Income

The average covered pay is just one method to calculate the average income of Oregonians. It is a somewhat narrow measure, as it only includes the wages of workers who are covered by unemployment insurance – about 90 percent of Oregon’s working population.

A broader measure of average income is per capita personal income (PCPI), which measures the total annual income per person. In addition to earned income, it includes transfer payments from the government (like social security), interest from investments, and stock dividends. The data is gathered for each state at the federal level.

In 2008, Oregon’s per capita personal income was about $36,000. While this was an increase of $800 from 2007, the rate of increase (2.3%) was less than inflation from 2007 to 2008 (3.8%). Thus, after accounting for the approximate increase in the cost of goods, Oregonians had less average income in 2008 than in 2007.

The graph above shows the annual change since 1990 for both average covered pay and PCPI. With the exception of the early 1990s, it appears that the two measures change similarly each year. This makes sense, as earned income is a very large component of per capita personal income. Both measures tend to exceed inflation much of the time, although in some years inflation exceeds wage and income gains.

Final Segment on Tuesday: Part 5 - Oregon's Average Household Income

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