Monday, June 17, 2013

Recent Trends in Income for Florida and Orlando

Last week, the Bureau of Economic Analysis (BEA) released the latest estimates for state and metropolitan personal income (overall and per capita; both figures in real terms; i.e., adjusted for inflation).  I exchanged a series of emails with a reporter from the Orlando Sentinel, but only a very small portion was included in the story, so I decided to include more of the details in this post.

After declining by nearly 7% in 2009, real personal income in Florida is recovering (up 3.7% in 2010 and 2.2% in 2011, the latest year for which data are available). As of 2011, it was still below where it had been in 2007. Likewise, real personal income per capita (i.e., real personal income divided by population, not the same as income per worker) is slowly recovering from a steep decline in 2009 (down 7.5% in 2009, up 2.7% and 1% in 2010 and 2011, respectively). As of 2011, it was still down just over 5% from 2007. Inflation in Florida was slightly lower than the US as a whole, averaging 1.6% from 2007-2011 compared to 1.9% for the US.

The performance of Metro Orlando mirrored that of the state as real personal income rose 3.4% and 2.7% in 2010 and 2011, respectively, while real personal income per capita rose by 2.1% and 1.2%. The ratio of real personal income per capita in Orlando compared to the nation as a whole remained steady from 2009-2011 at about 87%.

How does Orlando compare to other metropolitan areas in Florida?  Here's a table comparing some of the metropolitan areas in Florida.

  Per capita Income by Metropolitan Area: overall and by Type for 2011
Personal income
Personal income from earnings from work by place of residence
Dividends, Interest, and Rent
Current Transfers
note: add rows 2-4 to get row 1; data are not inflation adjusted

The headline number shows Orlando lagging behind other metro areas, but the reason is somewhat surprising.  While earnings explain some of the underperformance, the major reason is weakness in dividends, interest, and rental income.  For example, while earnings per capita are higher in Orlando than Tampa, personal income per capita is 10% higher in Tampa due to higher dividends/interest/rent and higher transfer payments.  Earnings in Orlando also lag behind Jacksonville and Miami, but once again, the other forms of income, particularly dividend/interest/rent, play a more significant role.

What explains the relatively low level of dividends/interest/rent in Orlando?  One possible reason is a smaller amount of wealth due in part to a younger population.  The median age in Orlando is 33 compared to 39 in Miami and 35 in both Jacksonville and Tampa (different sources provide slightly different estimates).  Other factors also play a role, but that's a subject for another day.

What are the key takeaways?  Income in Florida is slowly recovered from the damage suffered during the Great Recession.  Also, differences in per capita income reflect not only differences in earnings but also in unearned income, including income from wealth and government transfer payments.