what’s behind the regional personal income statistics
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What’s Behind the Regional Personal Income Statistics. Robert L. Brown Calibrating the Nevada Economy: Data and Tools for Assessing Our State and Local Economies Reno, Nevada February 2, 2007. Overview. Personal income & its chief alternatives Revision schedule - PowerPoint PPT PresentationTRANSCRIPT
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What’s Behind the Regional Personal Income Statistics
Robert L. BrownCalibrating the Nevada Economy: Data and
Tools for Assessing Our State and Local Economies
Reno, NevadaFebruary 2, 2007
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2www.bea.gov
Overview
▪ Personal income & its chief alternatives
▪ Revision schedule▪ Sources of personal income by
component▪ Employment and why BLS & BEA
job counts differ
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3www.bea.gov
Alternative Incomes
Per Capita Income (dollars), Nevada, 2004
0
10,000
20,000
30,000
40,000
Adjusted GrossIncome (IRS)
Money Income(Census)
PersonalIncome (BEA)
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Per Capita Income Change 2000-01
(Dollars)
Nevada
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
Adjusted GrossIncome (IRS)
Money Income(Census)
PersonalIncome (BEA)
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Per Capita Income, 2004, dollars
Adjusted Gross
Income (IRS)
Money Income
(Census)
Personal Income
(BEA)
California 24,601 23,250 35,219
Nevada 27,016 22,360 33,787
Oregon 20,544 21,386 30,561
Utah 18,578 18,592 26,603
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Some differences between BEA, Census, & IRS
▪ Definitional differences Transfers, in cash, in kind Capital gains Pension benefits FICA taxes Misreporting
▪ Production of the estimates Revisions
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Revision Schedule
2005 2008 200920072006
MAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MAR
MAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MAR
Jobs for 2005:Q1
Misc. late or revised quarterly
data
Misc. late or revised
data for 2005
Misc. late or revised
data for 2005
Benchmark revision, all
years
Wages for 2005:Q1
USDA, Transfers for
2005
SOI Dividends,
interest & rent for 2005
SOI Proprietors’income for
2005
2005 2008 200920072006
MAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MARMAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MAR
MAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MARMAR JUNE SEP MAR JUNE SEP MAR JUNE SEP JUNE SEP MAR
Jobs for 2005:Q1Jobs for 2005:Q1
Misc. late or revised quarterly
data
Misc. late or revised quarterly
data
Misc. late or revised
data for 2005
Misc. late or revised
data for 2005
Misc. late or revised
data for 2005
Misc. late or revised
data for 2005
Benchmark revision, all
years
Benchmark revision, all
years
Wages for 2005:Q1
Wages for 2005:Q1
USDA, Transfers for
2005
SOI Dividends,
interest & rent for 2005
SOI Dividends,
interest & rent for 2005
SOI Proprietors’income for
2005
SOI Proprietors’income for
2005
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Revisions
▪ Regular revision schedule to incorporate data that are: More complete More detailed More appropriate
▪ Comprehensive revisions every 5 years Definitional changes Statistical changes Presentational changes
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Personal Income: income from all sources
▪ Income from labor services Compensation
▪ Income from household enterprises Proprietors’ income Net rent
▪ Income from ownership of capital Dividends Interest
▪ Taxes and transfers
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Derivation of Disposable Personal Income
Wage and salary disbursements+ Supplements to wages and salaries= Compensation+ Proprietors’ income= Earnings (pow) — Contributions for govt. social
insurance+ Adjustment for residence= Earnings (por)+ Dividends, interest, and rent+ Personal current transfer receipts= Personal income— Personal current taxes= Disposable personal income
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How We Produce the Estimates
▪ Administrative record information Advantage--provides detailed information at
low cost Disadvantage--does not precisely match
what is being estimated Adjustments made to compensate for differences
in definition, coverage, and geographic detail
▪ Some census data--quinquennial Agriculture and decennial Population and Housing
▪ Very little from survey information
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Sources of Data
Other
CMS SSA
IRS
BLS
PersonalIncome
60%
23%
6%6%
5%
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Wage & Salary Disbursements
▪ 55% of personal income (2005)▪ Based primarily on edited ES 202 report
(QCEW)▪ Excellent quality--Most workers are
covered by UI▪ Data adjusted upward by ~6% for
uncovered workers & under-reported wages & tips
▪ Data are by place of work
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Wage & Salary Disbursements
▪ Includes: Salaries of corporate officers Bonuses and incentive pay Pay in kind (meals, lodging, clothing) Commissions & Tips Stock options Severance pay Employee contributions to defined
compensation plans
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Real Wages – Nevada & US
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
2.5
2.7
1990 1992 1994 1996 1998 2000 2002 2004 2006
Nevada
US
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Supplements to Wages & Salaries
▪ 13% of personal income▪ Employer contributions to:
Pension & private insurance funds (9%)
Govt. social insurance funds (4%)
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Supplements as a % of Compensation, Nevada 2005
0
10
20
30
40
50
Social Assistance
Private SectorAvg
Arts, entertainment& recreation
Federal,civilian
Military
2005 data
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Real Compensation & Wages per Worker,U.S., 2000=1.00
1.00
1.02
1.04
1.06
1.08
1.10
2000 2001 2002 2003 2004 2005
Compensation
Wages
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Real Compensation & Wages per Worker,Nevada, 2000=1.00
1.00
1.02
1.04
1.06
1.08
1.10
2000 2001 2002 2003 2004 2005
Wages
Compensation
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Real Compensation & Wages per Worker,California, 2000=1.00
0.96
0.98
1.00
1.02
1.04
1.06
1.08
1.10
2000 2001 2002 2003 2004 2005
Compensation
Wages
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Proprietors’ income
▪ 9.2% of personal income (farm 0.4%, nonfarm 8.8%)
▪ Accounting framework▪ Nonfarm: Based on tabulations of
IRS tax returns—Schedule C & Form 1065
▪ Farm: Based on USDA data▪ Adjusted for misreported income
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Contributions to Nevada Earnings Growth,2006:3
-0.05 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35
FarmForestry, f ishing, relatedMiningUtilitiesConstructionDurable goodsNondurable goodsWholesale tradeRetail tradeTransportation, w arehousingInformationFinance and insuranceReal estate, rental, leasingProfessional, technicalMgt of companies, enterprisesAdministrative, w asteEducational servicesHealth care, social assistanceArts, entertainment, recreationAccommodation, foodOther servicesFederal, civilianMilitaryState and local
0
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Contributions for Govt. Social Insurance
▪ 8% of personal income▪ This is a deduction in the
derivation of personal income▪ Mostly contributions for Social
Security & Medicare▪ Contributions from Employers,
Employees, & the Self-Employed
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Major Social Insurance Programs
▪ OASDI (Social Security)▪ Health Insurance (Medicare)▪ Unemployment Insurance▪ Workers’ Compensation▪ Supplementary Medical Insurance▪ Temporary Disability Insurance▪ Veterans’ Life Insurance▪ Pension Benefit Guaranty Corporation▪ Railroad Employee Retirement
Insurance
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Adjustment for Residence
▪ <0.5% of personal income nationally Nevada: -0.6%
Clark, NV -1.1% Washoe, NV -1.6%
Oregon: -2.0% California: >-0.1%
San Francisco -30.0% Utah: <0.1%
▪ Inter-county commuters Based on Census Journey to Work data &
updated with IRS wages (por)
▪ Border commuters Based on BEA Balance of Payments data
▪ Exceptions: College students Migratory workers
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Adjustment for Residence
▪ Place of work compensation and earnings Shows location of production Used as proxy for current production
▪ Place of residence income Indicator of economic well-being Shows where income is available for
tax planning and for spending analyses
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Dividends, Interest, & Rent
▪ 16% of personal income▪ Almost half of interest is received
by pension funds and life insurance carriers on behalf of persons
▪ About 20% of interest is an imputation for banking and other services
▪ National estimate is distributed regionally on the basis of tabulations of income tax returns and Census housing statistics
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Personal Current Transfer Receipts
▪ 15% of personal income▪ Includes in-kind transfers such as
Medicare & Medicaid▪ Excludes in-kind transfers such as
housing and public schools▪ Based on primary data tabulated
by state or county
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CA30 Regional Economic ProfilesWashoe, NV
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Nevada Per Capita Dividends, Interest, Rent
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CA35 Personal Current Transfer Receipts—Nye, NV
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Personal Current Taxes
▪ 11% of personal income▪ Mostly income taxes▪ Property taxes deducted in
derivation of rental income▪ Sales taxes are considered part of
personal consumption expenditure
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State & Local Personal Taxes as a % of 2005 Personal Income: US=2.7%
0
1
2
3
4
5
CA NV OR UT
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Federal Personal Taxes as a % of Personal Income: US=9.1%
0
2
4
6
8
10
12
CA NV OR UT
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Personal Income
▪ Comprehensive▪ Timely
Quarterly income by sector is available 3 months after end of period
▪ Historical Comparability▪ County-based local areas
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Caveats
▪ Extreme per capita income Unusual conditions such as bumper
crop, drought, or hurricane Special populations such as college
students, prisoners Major construction projects
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Employment Data
▪ Total employment: Wage & salary jobs Sole proprietorships General partners
▪ Job Count not Worker Count Earnings and employment are
consistent Earnings per job
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BEA vs. BLS Employment
Total Employment, QCEW 127.8Misreporting adjustment 2.8Exempt employment 3.4Other employment 3.1
W&S Employment, BEA 137.1Proprietors employment 29.9
Total Employment, BEA 167.0
US, millions of jobs
QCEW and BEA employment estimates, 2003
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MSA Income and Employment Growth(% change 2002-03)
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0
Wage and Salary Employment, % change
Per
son
al I
nco
me,
% c
han
ge
inflation rate, 1.9%
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For Further Information
Working papers available at
http://www.bea.gov/bea/regional/articles.cfm?section=papers
Alternative Measures of Household Income: BEA Personal Income, CPS Money Income and Beyond by John W. Ruser, Adrienne T. Pilot, and Charles Nelson
Reliability of the State Personal Income Estimates by Robert L. Brown, Bruce T. Grimm, and Marian B. Sacks
Using Efficiency Tests to Reduce Revisions in Panel Data: The Case of Wage and Salary Estimates for U.S. States by Jeremy J. Nalewaik
State Pension Benefit Estimates
Methodologies available athttp://www.bea.gov/bea/regional/articles.cfm?section=methods