Personal income in Minnesota plunged during the Great Recession, driven by a combination of job losses, reduced work hours, delayed raises, wage cuts and other factors. Many of those factors have reversed direction since then, helping to boost real per capita income over the last three years.
A story by Dave Senf in the latest issue of Trends magazine says personal per capita income in Minnesota is nearly back to its pre-recession level, reaching $46,227 in 2012. That is only $125 below the record high that was reached in 2008, adjusted for inflation.
According to the article, Minnesota’s per capita personal income has grown faster over the last few years than the national rate. It soared during the 1990s and early 2000s compared with the rest of the country, peaking at 9.2 percent higher (or roughly $3,800 more income per person in Minnesota than nationally) in 2003 and 2004. The state’s advantage slipped some during the mid-2000s but has been rising again since the recession, now standing 8.2 percent above the U.S. average.
One significant source of income growth during the recovery that will likely wane in the future is farm income. Minnesota farm income doubled between 2007 and 2012, climbing from $2.1 billion to $5.5 billion. State farmers had an exceptional year in 2012, capturing 7.5 percent of nationwide farm income, their second highest share ever, topped only by the 7.8 percent attained in 1977.
Wage and salary payment gains and losses across nonfarm sectors mostly mirror job gains and losses in those sectors over the past five years. For example, health care and social assistance, which weathered the recession better than most sectors, saw wage and salary payments that were $1.6 billion higher in 2012 than in 2007. The situation was reversed in manufacturing and construction, which both were hit hard by the recession and suffered major layoffs. Wage and salary payments in manufacturing were $1.8 billion below their 2007 level in 2012, while construction wage and salary income was down $1.5 billion over the five-year period.
While per capita personal income has rebounded faster in Minnesota than the rest of the country since the Great Recession, the state isn’t all the way back yet. There is still plenty of lost ground to be recovered.
Read the full story here.