The Star Beacon; Ashtabula, Ohio

June 25, 2008

What it is, how it’s calculated

Per capita personal income:

By CARL E. FEATHER - Lifestyle Editor -

The issue:

Ashtabula County has the lowest per capita personal income in the region.

Why it matters:

When per capita is low, the local economy is less diversified; arts, retailing and entertainment options are fewer; school levies and other public tax issues are less likely to get voter approval; and business opportunities are limited to those related to basic needs.

Determining per capita income is a complex exercise that — at best — is a mathematical expression of a moving target.

In its simplest terms, per capita income is, according to the Ohio Department of Development, “the income of a given area divided by the resident population of that area.” Sounds simple enough, but arriving at the figure is not.

There are at least two per-capita figures for every Ohio county, and the numbers vary significantly.

“It’s an apples to oranges system,” admits Steve Kelley, manager of research for the Ohio Department of Development.

The figures released by the U.S. Census Bureau use information provided by citizens responding to long-form census questions. The numbers are in response to the question “What was the amount of money you earned in the previous calendar year?” or in the case of the monthly surveys, the previous 12 months?

For Ashtabula County, that figure was estimated at $19,061 (2006 inflation adjusted dollars). It was the lowest in the lake-shore region.

The Bureau of Economic Analysis takes a different approach to calculating its per capita figures, which rely on the accuracy of administrative data collected from employers and other sources. Their figures are a measure of total compensation, says Kelley, and include not only wages, but also benefits, something workers often overlook when reporting their income to the Census Bureau. The figure also includes dividend and rental income, as well as transfer receipts, that is money residents don’t work for, such as Social Security, Medicare, Medicaid, unemployment compensation, food stamps and Temporary Assistance to Needy Families.

“It’s different questions, different methodologies and timing — reporting different things,” says Kelley.

Not surprisingly, BEA’s figures are significantly higher than those of the Census Bureau because they cast a much wider income/benefits net. In Ashtabula County, the 2005 figure was $25,632. County data always runs one year behind state and national; in 2006 the Ohio per capita personal income figure was $33,338. Nationally, it was $36,276.

There is a third way of calculating per capita compensation, which relies upon Labor Market Information ES-202 data. Once again, administrative data files for individual sectors are used, however, without benefits included.

“It’s basically an hourly wage with no benefits, that can be broken out by sector,” says Kelley. The data are reported weekly; therefore, the figure is a single point of reference, which can vary widely based upon the season. And it does not take into account government payments or investments, as the BEA data do.

Further complicating the issue is what happens when a worker lives in one county but earns wages in another. According to the Ohio Department of Development, provision is made in the formulas for that scenario, but Kelly says it’s done by using a mathematical estimation, not an exact accounting.

Calculating median household income is likewise complicated because households are increasingly difficult to define. The household can be a traditional family unit, including a mom, dad and two kids, or two individuals co-habitating but each one reporting as a separate “household.”

While it would seem the simple solution to getting good data would involve compiling tax-return data, Kelley says that information is confidential and inaccessible.

“It gets to be difficult because of the role of taxes,” he says.