© Copyright 2006 by the Wyoming Department of Employment, Research & Planning


Vol. 43 No. 2

Ask an Economist*

Adapted from the South Dakota Labor Bulletin

What’s the difference between personal income and per capita personal income?

Personal income is an economic statistic used to measure the economic well-being of a particular area. Estimates for personal income are released by the Bureau of Economic Analysis, the statistical branch of the U.S. Department of Commerce. The BEA releases personal income estimates on an annual or quarterly basis for states. For local areas such as counties however, only annual estimates are available.

Before examining personal income trends, it may be helpful to have a basic understanding of what personal income is and how it is calculated. Personal income is generally defined as income received by individuals for engaging in productive activities in both the private and public sectors within a particular area such as a state or county. It is calculated by summing wage and salary income, other labor income, proprietors’ income, personal dividend and interest income, and transfer payments. Personal contributions for social insurance such as government sponsored retirement and medical insurance are then subtracted from this total.

Per capita income provides a different perspective of economic well-being since it takes into consideration the size and growth in the population for a particular area. Per capita income is calculated by dividing personal income by the population of a specific geographical area.

Some sources of income are not calculated as per capita income. Examples would include barter or services provided by family members. Because per capita income includes all income levels, it can be influenced by a small number of wealthy people within a geographic area, and may not reflect the income level of the population majority.

*Originally published in the November 2003 issue of the South Dakota Labor Bulletin, a monthly publication of the South Dakota Department of Labor, Labor Market Information Center.

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