Scott Walker says Wisconsin tops its neighbors in income growth

Wisconsin lagged all of the Midwest in job growth in the latest quarterly employment numbers, released in June 2014.

So is it possible that by another economic measure -- the state’s total personal income -- the Badger State is gaining faster than all of its neighbors?

Gov. Scott Walker made that claim July 30, 2014 on his campaign Twitter account:

Wisconsin is #1 in the Midwest for personal income growth over the year. (US BEA Q1 2013 over Q1 2014)

— Scott Walker (@ScottWalker) July 30, 2014

In the tweet, Walker cited U.S. Bureau of Economic Analysis estimates comparing the first quarter income total for 2014 to those from the same quarter one year earlier.

The agency, an arm of the U.S. Commerce Department, publishes quarterly estimates of the total personal income in each state.

There’s no "Midwest" category in the agency’s geographical breakdowns.

Two of the regions it defines include states often associated as Midwestern peers for the Badger State.

One is the "Great Lakes" region (Wisconsin, Illinois, Indiana, Michigan, Ohio). The other is the "Plains" region: (Iowa, Minnesota, Missouri, Kansas, Nebraska, North Dakota and South Dakota).

When we looked at percentage income growth for both regions, Walker’s claim held up.

Among those 12 states, Wisconsin’s 3.33 percent income growth led the way, topping Ohio (3.12 percent) and Illinois (3.08 percent.)

Minnesota and Iowa were toward the low end at 1.6 percent and 1.13 percent, respectively.

Nationally, Wisconsin’s increase fell below the overall U.S. growth (3.55 percent) and trailed growth in 20 states. The top five states -- Oregon, Colorado, Texas, California and Washington -- ranged from 4.5 percent to 5.35 percent.

Wisconsin’s top showing was an improvement over three previous one-year comparisons using fourth, third and second-quarter figures:

-- Fourth Quarter of 2013 vs. fourth quarter of 2012: Wisconsin trailed income growth in North Dakota and Iowa.

-- Third quarter: Wisconsin was in fifth place.

-- Second quarter: Wisconsin trailed two states, North Dakota and Michigan.

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In March 2014, the Journal Sentinel reported that from 2012 to 2013, Wisconsin's growth in personal income outstripped the national average. Earlier, it had rebounded more slowly from the Great Recession.

Reasons for the gains

Economist Brian Jacobsen said the uptick in personal income is due to a combination of gains in 2014 and government policies that depressed incomes in early 2013 (the comparison time period).

"Not only was there the ‘fiscal cliff,’ which encouraged businesses to pay dividends in the fourth quarter of 2012 instead of the first quarter of 2013," Jacobsen said. "There was also the expiration of the payroll tax holiday and some changes to farm subsidies."

Additionally, farm income didn’t drop nearly as much in Wisconsin as in nearby states, said Jacobsen, chief portfolio strategist for Wells Fargo Funds Management in Menomonee Falls: "The fact that Wisconsin’s agricultural programs didn’t lose as many subsidies as other programs helped."

Jacobsen said the best relative performers in the Wisconsin economy have been nondurable goods manufacturing; real estate and rental; management of companies and enterprises; administrative and waste management services; arts/entertainment/recreation; and state and local government.

"More business friendly policies have been helping, but so has the general pick-up in the U.S. economy," he said.

Before we close up shop, let’s answer how it is aggregate income can be rising faster here than the rest of the Midwest, even while job growth is dead last?

One answer is how  the government defines "personal income"  -- it’s a broader measure than than wages from a job.

The three components:

-- Net earnings from wages and salaries and bonuses, plus the current-production income of sole proprietorships, partnerships, and tax-exempt cooperatives;

-- Rental income, personal dividends and interest

-- Transfer payments, such as Social Security and Medicare and unemployment, by all units of government and business.

For much of 2013, Wisconsin’s personal income growth was faster in that second category than in wages from employment, the figures show. That shifted in the first quarter of 2014, when job earnings growth far outpaced the other two categories.

And therein lies the second answer.

We have the income estimates for the first quarter of 2014, but the jobs data is less up to date. The most reliable jobs data has not yet been released for early 2014.

Our rating

Walker tweeted that "Wisconsin is #1 in the Midwest for personal income growth over the year."

The governor correctly identified a good-news trend that has seen Wisconsin boost its status from a laggard to a leader on total personal income, including wages, property income and government assistance.

We rate the claim True.