Connecticut personal income per capita has been among the highest in the nation for many
years and the most recent estimates from the United States Department of Commerce,
Bureau of Economic Analysis (BEA) show the State's per capita
income 33 percent above the national average in 1995. But a look at
the percentage distribution of total Connecticut personal income by
source over time shows that, to some extent, those with wealth have
been making that wealth work for them, while those without have
received increasing assistance from government.
Personal income (PI) is defined as income received by, or on behalf of, all residents of the
State. Classified into five categories, it includes wages and salaries; other labor income (e.g.,
employee benefits and fees paid to corporate directors); proprietors' income; dividends, interest and rent;
and transfer payments.
Trends in the 1990's
Real income has been far more stable over the business cycle in the
United States since World War II than before. Several long-term shifts in the
composition of personal income have contributed to this increase in
stability. Largely, it has been due to the increase in the share of PI of
those components that until recently have been relatively recession-proof
(interest, rental income) or even counter-cyclical (transfer payments).
In fact, transfer payments (social security, unemployment, government
pensions, etc.) are at their highest level since before 1969 both
in Connecticut and the United States.
The share of total income accounted for by transfer payments
fluctuates somewhat with the business cycle, rising as the
economy worsens and falling as the economy grows. The exception to
this rule appears to be the most recent recession which caused significant growth in transfer payments
at the state and national levels; through the end of 1994 there
has been no evidence of a decline in this component. As shown in figure
The share of total income accounted for by transfer payments
fluctuates somewhat with the business cycle, rising as the
economy worsens and falling as the economy grows. The exception to
this rule appears to be the most above, between 1969 and 1994 the
transfer share of total personal income has almost doubled, rising
from 7.2 percent to 14.1 percent in Connecticut and from 9.2 percent to
16.9 percent at the United States level.
There appears to have been other trend-shifts in the composition of PI
in both the United States and Connecticut in the early 1990's. Table 1 presents
the changes in the composition of quarterly PI for Connecticut and the
United States from the peak of their respective 1980's expansions to the 1995:Q4
estimates in the current expansion. At their 1980's expansion peaks,
wages and salaries were a slightly higher percent of total PI in Connecticut
than in the United States, as were dividends, interest and rent, and
other labor income. Conversely, transfer payments were a significantly
lower share of income in Connecticut than in the nation, and
proprietor's income a slightly lower share.
Through the most recent recession and current expansion, some
noteable changes in the composition of PI have taken place in the State
relative to the national economy. Wages and salaries declined as a
share of PI in both the State and nation, but are now a smaller share
of PI for Connecticut than for the United States indicating a larger relative
decline for Connecticut over the period. Further, while transfer
payments increased as a share of PI in both the State and nation, the
relative increase over the period was greater for Connecticut. Nevertheless,
the 1995:Q4 estimates show that transfer payments are still a
much larger share of income at the national level than in Connecticut.
Also of note, proprietor's income decreased as a share of Connecticut
income from 1989 to 1995, but increased as a proportion of total
national income.
Other than transfer payments, the only other component to increase
its share of State PI in the early 1990's was other labor income.
In addition to wages and salaries and proprietors' income, dividends,
interest, and rent declined as a share of PI. For the United States, though
dividends, interest and rent also lost share (along with wages and salaries),
other labor income and proprietors' income (like transfer payments)
gained as shares of United States PI over the current business cycle.
Effect of the Recession
Clearly, the trends in the sources and composition of quarterly PI for
the United States and Connecticut reflect the differences in the severity and length
of the recessions and the disparate recoveries at the national and state
levels. While the United States recession lasted three quarters (1990:Q3 to
1991:Q1), the Connecticut recession lasted 16 quarters (1989:Q1 to
1992:Q4). Further, even though both the state and national economies
have gone through a restructuring, in addition to recession, in
the early 1990's, Connecticut's restructuring has had a much more
pronounced effect on the State's economy.
Though the latest quarterly PI estimates, as well as other economic
data, seem to indicate that Connecticut is finally seeing the light at the
end of the economic tunnel, the trends in changes in the composition of PI continue
at both the state and national levels. Table 2 shows the changes in the composition of PI for
the United States and Connecticut over the more current period, 1994:Q4 to
1995:Q5. Wages and salaries continued to decline as a share of PI in
Connecticut and the United States, but at a faster pace in Connecticut.
Proprietor's income also declined as a percent of quarterly PI for both the
United States and Connecticut. Other labor income also declined as a source of PI
in Connecticut while gaining share in the nation. Thus, three components
declined in share for Connecticut, compared with two for the United States. For
both Connecticut and the United States, dividends, interest, and rent and
transfer payments gained as a percent of personal income, the pace
again slightly faster for Connecticut than for the United States.
Income Distribution and Policy Implications
It should be emphasized that a decline in the share of a component
of quarterly personal income does not imply that that source of income did not experience positive growth. It
implies that the growth rate of that component did not keep pace with
the growth of total PI. This point is depicted in Table 2, which presents
the growth rates of the sources of PI for Connecticut and the United States over
the 1994:Q4-1995:Q4 period, compared to the growth rate of total
PI. Those sources of income growing faster than PI increased as a share of
PI; those growing more slowly than PI experienced a decline as a percent
of total PI over the period. Nonetheless, there appears to be a fundamental shift in the sources of
quarterly PI at both the state and national levels, with the shift
proceeding at a faster pace at the state level. That shift seems to
indicate an acceleration of the sources of income associated with
those at the high and low ends of the income spectrum. This in turn,
implies a continuation of the trends in the distribution of income. The
next year or two will reveal what effect the recent changes to the
minimum wage and welfare laws will have on these trends.
(The United States Bureau of Economic Analysis
produces quarterly estimates of personal income on a four month lag basis for all
states and the nation. The Connecticut Department of Labor forecasts the
quarterly State PI one to two quarters beyond the BEA series to provide timely,
up-to-date estimates for the State. For a more detailed discussion of the composition
of personal income and the derivation of the DOL forecasts, contact the Department
of Labor's Office of Research.)
Table 1:
Connecticut:
PI Component |
First Quarter 1989* |
Forth Quarter 1994 |
Forth Quarter 1995 |
Change 1989-1995 |
Change 1994-1995 |
Wages & Salaries |
59.17 |
56.12 |
55.61 |
-3.56 |
-0.51 |
Other Labor Inc. |
5.99 |
6.77 |
6.76 |
+0.77 |
-0.01 |
Proprietors' Inc. |
7.14 |
7.11 |
6.96 |
-0.18 |
-0.15 |
Div., Int., Rent |
19.23 |
17.64 |
18.03 |
-1.20 |
+0.39 |
Transfer Payments |
10.13 |
14.10 |
14.45 |
+4.32 |
+0.35 |
Adjustments** |
-1.66 |
-1.74 |
-1.80 |
-0.14 |
-0.07 |
United States:
PI Component |
Third Quarter 1990 |
Forth Quarter 1994 |
Forth Quarter 1995 |
Change 1990-1995 |
Change 1994-1995 |
Wages & Salaries |
58.93 |
56.90 |
56.70 |
-2.22 |
-0.20 |
Other Labor Inc. |
5.90 |
6.72 |
6.73 |
+0.83 |
+0.01 |
Proprietors' Inc. |
7.41 |
8.40 |
8.09 |
+0.68 |
-0.31 |
Div., Int., Rent |
17.86 |
16.17 |
16.41 |
-1.45 |
+0.24 |
Transfer Payments |
14.75 |
16.77 |
17.02 |
+2.27 |
+0.25 |
Adjustments** |
-4.85 |
-4.96 |
-4.95 |
-0.11 |
+0.01 |
Source: United States Bureau of Economic Analysis.
* Peak of 1980's expansion for the State and United States.
** Adjustments to Income = Contributions to social insurance and residential adjustment to payroll data.
Table 2:
|
Connecticut |
United States |
Transfer Payments |
7.07% |
6.85% |
Div., Int., Rent |
6.74% |
6.85% |
TOTAL PI |
4.48% |
5.29% |
Other Labor Income |
4.35% |
5.51% |
Wages & Salaries |
3.46% |
4.93% |
Proprietors' Income |
2.35% |
1.47% |
The Connecticut Department
of Economic and Community
Development today announced that
Connecticut communities authorized
764 new housing units in July 1996
an 11.7 percent increase compared
to June 1996 when 684 were authorized.
The Department further
indicated that the 764 units permitted
in July 1996 represent a decrease
of 2.1 from 780 units permitted in
July 1995, and that the year-to-date
number are down 11.9 percent, from
4,817 in 1995 to 4,245 in 1996.
Reports from municipal officials
throughout the state indicated that
Tolland County showed the greatest
percentage increase in July compared
to the previous year: 69
percent. Litchfield County reported the greatest percentage decline: 39
percent. Hartford County documented
the largest number of new,
authorized units in July with 187.
Fairfield County followed with 133
units and New Haven County had
128 units. Waterford led all Connecticut
communities with 40 units,
followed by Southington with 28 and
Ellington 26.
The permit activity figure for July
included the following statewide
amounts by structure type: detached
single-family units, 636;
attached single-family units, 77; two
unit structures, l6; three and fourunit
structures, 27; structures
containing five or more units, 8.
Year-to-date totals indicate that
Hartford County has issued the most building permits through the
first seven months of 1996 with
1,011, followed by New Haven
County with 858, and Fairfield
County with 842. Southington
authorized 122 new permits during
this period, followed by Rocky Hill
with 120, Waterford with 106, and
Stamford and Wallingford, each
with 105.
One of the most frequently
asked questions we get is for
the wages typically paid to a
person in a particular occupation.
To help answer that question, the
Department of Labor recently
released a new publication called
Connecticut Occupational Employment
and Wages in an effort to
provide accurate and meaningful
wage information to employers, job
seekers, counselors, students,
planners of vocational education
programs, economic developers,
Regional Workforce Development
Boards, and others. Employers
may find the data useful as a guide
in analyzing pay scales; job seekers
and students could utilize the
information in making employment
and career decisions; program
planners should be aware of
employment and wage levels in
determining training programs to
be offered.
The product of three years of
survey efforts, this report offers
employment and wage data for
occupations in nonfarm industries
(except for private household
employees). The information is
based on the results of the Occupational
Employment Statistics
(OES) Program, a survey-based
statistical program which produces
estimates of current occupational
employment and staffing patterns
by industry. It is conducted by
individual state employment
security agencies in cooperation
with the United States Department of Labor,
Bureau of Labor Statistics. Employment
information and wage
data are obtained from a large
representative sample of more
than 10,000 employers over the
course of a three-year survey cycle.
Occupational employment estimates
based on the survey results
are expanded to reflect total
employment covered by the unemployment
insurance program,
which covers more than 90% of all
workers. The collected data are
also submitted to the Bureau of
Labor Statistics for input into
national occupational employment
statistics by industry.
The new publication also lists
the occupations with the highest
average hourly wage for the seven
major occupational groups. The survey found the
top ten highest paying occupations
overall to be: Dentists, $45.70;
Physicians & Surgeons (MD),
$44.80; Life Science Teachers-
Postsecondary, $38.50; Sales
Agents-Securities/Commodities/
Financial Services, $35.00; Lawyers/
Attorneys/Legal Counselors,
$33.20; Engineering/Mathematical/
Natural Sciences (EDP) Managers,
$31.60; General Managers
& Top Executives, $31.00; Actuaries,
$30.90; Social Scientists,
$29.80; Nuclear Engineers,
$29.60.
Connecticut's leading employment
index jumped to its
highest level in the current recovery
with the release of the (preliminary)
June data. The coincident index continues
to send a positive signal, rising
smartly this year and having not
fallen on a month-to-month basis
since December 1995.
The leading index, a barometer
of future employment activity, experienced
its largest one-month fall in
January 1996 and rebounded dramatically
in February. It then rose
in March, fell in April, and popped
higher in both May and June. Now,
the leading index exceeds its level in
every other month since its last
trough in June 1992.
The coincident index, a gauge of
current employment activity, paused
(did not change) in June after sending
strong positive signals in four of
the first five months. The exception,
March, also saw a one-month pause.
The coincident index accelerated its
upward movement this year from its
prior slow increase during the current
recovery. No end is now seen
for the current recovery, based on the coincident index.
The June release, therefore, provides
more support for the view that
the current recovery has strengthened,
at least in the short term. In
addition, the longer-term expectations
for the current recovery have
improved somewhat with the most
recent peak of the leading index.
Cautious optimism about the longterm
future of the Connecticut
economy seems reasonable. Nonetheless,
a careful watch over future
monthly data will provide a broader
base for such optimism.
In sum, the coincident and leading
indices add to the growing consensus
that the Connecticut recovery
began to accelerate this year. As
an example, the headline in the April
issue of The Connecticut Economy:
A University of Connecticut Quarterly
Review stated that "Finally, It
Looks Like a Recovery."
The leading employment index
rose from 86.3 in June 1995 to 89.9
in June 1996, or somewhat above
its previous peak of 89.4 in September
1995. All five index components
sent positive signals on a year-overyear
basis with a higher average
work week of manufacturing production
workers, lower initial claims for
unemployment insurance, higher
Hartford help wanted advertising, a
lower short-duration (less than 15
weeks) unemployment rate, and
higher total housing permits.
The coincident employment index
rose from 83.2 in June 1995 to 88.2
in June 1996. All four index components
continued to point in a positive
direction on a year-over-year
basis with higher nonfarm employment,
higher total employment, a
lower total unemployment rate, and
a lower insured unemployment
rate.
Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 322-3466,
Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Tara Blois [(860) 486-4752, Storrs
Campus] provided research support.
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