Last week’s report on 2013 state personal income by the U.S. Bureau of Economic Analysis (BEA) provides personal income data to compare among states.

After U.S. personal income rose by 4.2 percent in 2012, it increased at a slower rate of 2.6 percent to $14.1 trillion last year. Slower national growth was reflected in slower growth in all states. The highest growth rate of 7.6 percent was in North Dakota, due primarily to booming oil production in the Bakken Formation, and the slowest was in West Virginia of 1.5 percent.

Why was there slower personal income growth across all states in 2013?

According to the BEA:

The slower personal income growth reflected the effects of several special factors including the expiration at the beginning of 2013 of the “payroll tax holiday” (a temporary two-percentage point reduction in the personal contribution rate for social security) and the acceleration of the receipt of income, especially personal dividends and salary bonuses, into 2012 in anticipation of changes in individual income tax rates for 2013. The expiration of the payroll tax holiday increased contributions for government social insurance, a subtraction in the calculation of personal income.

Clearly, personal income was dragged down by contractionary federal fiscal policy after years of temporary measures that in retrospect did little to stabilize the economy in spite of adding trillions to our national debt.

Despite slower growth across the board, Texas remains in second place with personal income of $1.2 trillion, closing in on California’s $1.8 trillion. Compared with countries, the Lone Star State and the Golden State rank in the world’s top 15.  

The next three of the top five states are New York ($1.1 trillion), Florida ($0.9 trillion), and Illinois ($0.6 trillion).

After Texas led these top five states with its personal income growth rate of 5.5 percent in 2012, Texas continued its dominance in 2013 with the top rate of 3.7 percent (see figure below).


The faster growth rate in Texas also led to a growing share of U.S. personal income. 



Personal income per capita in Texas was $43,522 in 2013, which was slightly lower than the national average of $44, 543. Although the average Californian’s income of $47,401 is higher than for an average Texan, it costs about 40 percent more to live in the Golden state, leading to much lower purchasing power in California, and in the other states.


The average Texan did see their income grow faster (2.1 percent) than the national average (1.8 percent) and the other top five states last year. 

These personal income data prove that the limited government approach of the Texas model should be the framework that other states and the federal government should follow for a flourishing economy that creates good jobs for everyone.