The consumer price index jumped by 0.8% in April -- a far larger increase than many had anticipated. The recent spike in the cost of goods and services has led to widespread concerns over inflation. If the cost of living continues to climb at such a rapid pace, it could outpace wage growth, weakening the buying power of the American consumer. Such an outcome would be a reversal of a long-term trend in much of the United States.
Over the last 10 years, real personal income per capita, a measure of annual earnings that is adjusted for inflation, climbed in the United States from $42,287 in 2010 to $53,071 in 2020. There are many potential factors that drove up real personal income, not the least of which is wage growth outpacing inflation.
While every state reported an increase in real personal income per capita, incomes in some states climbed far faster than others. In New Jersey, personal income per capita climbed from $46,067 in 2010 to $56,161 in 2020. The 21.9% 10-year growth rate is lower than the 25.5% national growth rate over the same time. Of all states, New Jersey had the 24th highest real income per capita growth.
In addition to wage growth outpacing inflation, another factor that can affect change in real personal income include changes in the length of the average work week-- which can impact the income of workers. As of 2020, workers in New Jersey put in an average of 34.1 hours per week,up from 33.8 hours in 2010. Nationwide, the length of the average work week increased from 34.1 hours to 34.5 hours over the same period.
Yet another factor that can affect wage growth is the workforce participation rate. The share of a state's population that are employed and earning incomes can have a considerable impact on per capita income. The share of the New Jersey population in the workforce fell by 0.4 percentage points between 2010 and 2020. Meanwhile, workforce participation nationwide climbed by 0.9 percentage points over the same period.
Percent growth in real personal income per capita from 2010 to 2020 was calculated using data from the Bureau of Economic Analysis. Personal income figures were adjusted from current dollars to constant 2012 dollars using the U.S. personal consumption expenditure price index and were also adjusted for regional price differences using regional price parity in accordance with the methodology provided by the Bureau of Economic Analysis. These are the 16 states where incomes are rising the fastest.
|Rank||State||10-yr. chg. in real personal income per capita (%)||Real personal income per capita, 2020 ($)||10-yr. workforce participation chg. (ppt.)||10-yr. chg. in avg. weekly hours worked (%)|