Personal Income
A strong economy is characterized by prosperity that is reflected in improving standards of living. Virginia's per capita income stagnated in the aftermath of the Great Recession, but has begun to rise again over the last two years.
Why is This Important?
Per capita personal income -- which includes wages and salaries, transfer payments, dividends, interest, and rental income -- is used as the broadest indicator of the magnitude of improvement in an economy. Rising income levels allow individuals to provide for their families, buy homes, and improve the quality of their lives.
How is Virginia Doing?
In 2015, virtually every state in the union saw an increase in their average per capita personal income; for many states, like Virginia, it was the second consecutive year of improvement.
Virginia ranked 11th among the states with an average per capita personal income of $52,136 (in 2015 dollars); this was a significant increase from the previous year's average income of $50,405. Virginia's relation to its peer states with per capita income has stayed the same for well over a decade: Lower than Maryland, which in 2015 stood at $56,127, but higher than North Carolina ($40,656) and Tennessee ($42,069). National per capita income stood at $47,669. The nation's highest 2015 per capita income was again in Connecticut, at $66,972.
Within Virginia, the Northern region again had the highest per capita personal income in 2014 at $66,121 (in 2014 dollars); no other region came close to this figure, or even bested the state average, even though every region saw a modest increase over the previous year. The Southside and Southwest regions had the lowest per capita personal income at $32,150 and $32,763, respectively.
Between 2005 and 2014, Virginia's per capita income grew at a rate of just 0.36 percent, compared to a national average growth rate of 0.56 percent over the same period. Within Virginia, the Eastern region experienced the fastest growth rate at 0.81 percent.
What Influences Income?
Two of the most important factors affecting personal income are educational attainment and economic opportunity. Studies show that individuals with more education generally enjoy higher incomes and are unemployed for shorter periods of time when compared to people with less education. According to data from the 2014 American Community Survey, median earnings over the previous 12 months for an individual in Virginia with a bachelor's degree was $55,797; for an individual with a high school diploma or equivalent, the comparable figure was $29,126.
In addition to educational attainment, the mix of industries in an area also contributes to a state or region's per capita income.
What is the State's Role?
Per capita personal income is dependent on many social and market forces that are outside the purview of the state. Even so, there are areas in which the state can exert influence over annual average wages and salaries. These include:
- facilitating higher levels of educational attainment
- targeting economic development efforts toward industries that are forecasted to grow and pay wages that lift regional averages
- encouraging and supporting a diverse economy that isn't overly reliant on any one driver, sector, or industry
- supporting new business startups
- maintaining a business climate that encourages economic growth
State rankings are ordered so that #1 is understood to be the best.
Data Definitions and Sources
U.S. Department of Commerce, Bureau of Economic Analysis (national and regional data):
www.bea.gov/iTable/iTable.cfm?ReqID=70&step=1 (updated
annually each spring; revised estimates in the fall)
W. Michael Cox and Richard Alm, "What D'Ya Know?" Federal Reserve Bank of Dallas 2004 Annual Report, pp.3-23.
See also Tiffany Julian and Robert Kominski, " Education and Synthetic Work-Life Earnings Estimates," Table 2-B: Median Synthetic Work-Life Earnings by Education, Race/Ethnicity, and Gender, All Workers, U.S. Census Bureau, July 2011.
www.census.gov/prod/2011pubs/acs-14.pdf
Note: When comparing income over time, the dollar values must be "adjusted" to account for inflation. Inflation, which is the general rise in price level, means that a dollar today is generally worth less than a dollar in the past. To account for the difference in value over time, we divide income by the consumer price index (CPI), which is one measure of inflation.
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.
