5 States With the Highest Personal Income Growth

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Money

Source: http://www.flickr.com/photos/jackofspades/

The post-crisis recovery in the United States has been anything but robust. The all-important labor market has been chronically weak, and with gross domestic product growth 10 percent below the potential projected before the financial crisis, economists have warned of secular stagnation.

It’s not all gloom and doom for the U.S. economy, though. Despite some overall wage stagnation and a general feeling of “it will never be like the good old days again,” certain sectors of the economy have grown enormously over the past few years. Chief among them is the energy industry, which has experienced growth catalyzed by the shale gas boom. Other strong industries include healthcare, finance, and in some regions, construction and manufacturing.

Read more: 3 ETFs for Income Investors

All told, over the past 13-year period (between 2000 and 2013), personal income in the U.S. has increased at a compounded annual growth rate (CAGR) of 3 percent, and total full-time and part time employment has increased at a CAGR of 0.69 percent, according to the Bureau of Economic Analysis. However, as is always the case, some states have done better than others. Here’s a breakdown of which states have made out particularly well over the past 13-year period and have achieved the highest growth rate for per capita personal income.

1. Oklahoma

Per capita personal income increased at a CAGR of 4.12 percent between 2000 and 2013 in Oklahoma, the fifth-fastest rate in the nation for that period. Between 2012 and 2013, the state posted per capita personal income growth of 3.3 percent, the seventh-fastest growth rate in the nation. At the end of 2013, the state had per capita personal income of $41,586 per year, the 28th highest in the country at about 93 percent of the national average.

Oklahoma’s 2000-2013 personal income growth was complimented by total employment growth at a CAGR of 0.84 percent, well above the national average CAGR of 0.69 percent (although only 19th in the union). Oklahoma ended 2013 with a headline unemployment rate of just 5.4 percent, which was 1.2 percentage points below the national average at the time.

Read more: Economic Growth Is Below Trend: Is Stagnation the New Normal?

As the national data suggest, Oklahoma was a leader in employment growth within the mining and construction industries. Specifically, employment within the oil and gas extraction industry grew at a CAGR of 5.64 percent between 2000 and 2013, and employment within mining support increased at a CAGR of 8.96 percent. Oklahoma is home to the Devonian Woodford Shale. The number of wells in this area has increased from 24 in 2004 to more than 750 by early 2008.

Employment did contract severely in several industries, such as computer and electronic product manufacturing, which posted a CAGR of -6.30 percent between 2000 and 2013, and motor vehicle and parts manufacturing, which posted a CAGR of -6.47 percent. Overall manufacturing employment had a CAGR of -1.67 percent for the 13-year period.

Source: U.S. Bureau of Economic Analysis

Source: U.S. Bureau of Economic Analysis

2. South Dakota

Per capita personal income increased at a CAGR of 4.28 percent between 2000 and 2013, the fourth-fastest growth rate in the country over that time period. However, between 2012 and 2013, the state posted per capita personal income growth of just 1.8 percent, the fifth-slowest in the country. At the end of 2013, the state had per capita personal income of $45,558, the 21st highest in the country at about 102 percent the national average.

South Dakota’s 2000-2013 personal income growth was complimented by total employment growth at a CAGR of 0.88 percent, the 17th highest in the country. South Dakota has prospered in large part thanks to its reserves of natural resources. Employment within mining increased at a CAGR of 3.89 percent over the past 13 years. The state is home to the acclaimed South Dakota School of Mines & Technology, making the state a focal point of the rapidly evolving energy industry in the United States. South Dakota ended 2013 with an unemployment rate of just 3.6 percent, 3 full percentage points below the national average at the time.

Read more: Obama’s Overtime: Helping or Hurting the American Economy?

Despite the state’s low overall unemployment rate, employment did contract in industries such as non-Internet publishing, non-Internet broadcasting, air transportation, and at textile product mills.

Source: U.S. Bureau of Economic Analysis

Source: U.S. Bureau of Economic Analysis

3. Louisiana

Per capita personal income increased at a CAGR of 4.29 percent between 2000 and 2013 in Louisiana, the third-highest rate in the country. However, between 2012 and 2013, personal income increased just 2.1 percent, placing it 39th in the nation for income growth last year. At the end of 2013, the state had per capita personal income of $40,689 per year, 31st in the country at about 91 percent of the national average.

Louisiana’s 2000-2013 personal income growth was complimented by total employment at a CAGR of 0.72 percent, placing it 22nd in the country for employment growth over that period. Employment within the oil and gas extraction industry increased at a CAGR of 3.61 percent over the period and at a CAGR of 2.79 percent for support activities for mining (although mining employment sans oil and gas had a CAGR of -1.80). Louisiana ended 2013 with a headline unemployment rate of 5.4 percent, 1.2 percentage points below the national average at the time. Like most of the other states on this list, Louisiana has prospered from the evolving U.S. energy industry.

Source: U.S. Bureau of Economic Analysis

Source: U.S. Bureau of Economic Analysis

4. Wyoming

Per capita personal income increased at a CAGR of 4.35 percent between 2000 and 2013 in Wyoming, the second-highest rate in the country. However, between 2012 and 2013, per capita personal income increased just 1.8 percent, the sixth-lowest rate in the country. At the end of 2013, the state had per capita personal income of $50,924 per year, the seventh highest in the country at about 114 percent the national average.

Wyoming’s personal income growth was complimented by total employment growth at a CAGR of 1.56 percent, the fifth-fastest growth rate in the country and more than double the national average of 0.69 percent. Wyoming has also benefited from the shale gas boom, and employment within oil and gas extraction has increased at a CAGR of 4.95 percent over the past 13 years. Wyoming ended 2013 with a headline unemployment rate of 4.4 percent, 2.2 percentage points below the national average.

Source: U.S. Bureau of Economic Analysis

Source: U.S. Bureau of Economic Analysis

5. North Dakota

Per capita personal income increased at a CAGR of 6.37 percent between 2000 and 2013 in North Dakota, the highest rate in the country. Moreover, between 2012 and 2013, per capita personal income increased 7.6 percent, also the highest rate in the country. At the end of 2013, North Dakota had a per capita personal income of $57,084 per year, the second-highest in the country at about 128 percent the national average. By these metrics, North Dakota is one of the most prosperous states in the union.

North Dakota’s personal income growth was complimented by total employment growth at a CAGR of 1.97 percent, once again the highest in the country. Employment within the oil and extraction sector increased enormously, climbing at a CAGR of 10.35 percent over the past 13 years, while employment in mining support services increased at a CAGR of 26.67 percent. Employment within pipeline transportation increased at a CAGR of 10.93 percent. North Dakota ended 2013 with a headline unemployment rate of just 2.7 percent, which compares against the national average of 6.6 percent at the time.

Source: U.S. Bureau of Economic Analysis

Source: U.S. Bureau of Economic Analysis

More from Wall St. Cheat Sheet:

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business