The United States Bureau of Economic Analysis (BEA) recently began publishing state-level data on the distribution of personal income across households. Similar income distribution and income inequality data have previously been available from other sources such as the IRS and U.S. Census Bureau. However, the BEA’s new approach draws on a wide variety of measures from those and various other sources to estimate the distribution of the BEA’s broader measure of personal income, which includes in-kind government transfers and other components not included in other measures of personal income. These newly released data offer an opportunity to examine the distribution of income and income inequality in New Jersey compared to the nation and other states over the last decade, with the possibility of eventually incorporating these measures into the R/ECON state economic forecast.
Based on the BEA data for 2022, New Jersey’s median personal income ranked 4th in the nation at $137,252, about 23% higher than the national median. New Jersey’s median was up 32.6% from 2012, ranking 37th among the states, compared to a national increase of 45.7% over the decade. The state’s total personal income grew by $230.4 billion, or 47.5%, over the ten-year span, ranking 31st in the nation, compared to national nominal income growth of 56.9%.
The chart below shows the distribution of personal income by income quintile, as well as for the top and bottom deciles, in New Jersey in 2012 and 2022. While the share of total personal income received by the bottom decile of the income distribution increased by just 0.1 percentage point over the decade, the share received by the top decile increased by 1.1 percentage points. Nearly 40% of the increase in income went to the top 10% of the income distribution, with nearly 54% going to the top 20%. In contrast, the bottom ten percent of households received only about 2% of the total income gain over the decade. This distribution is similar to that of the U.S. The top decile nationally saw its share of total personal income go from 36.5% to 37.1%, accounting for about 38% of the increase in total personal income over the decade. Notably, New Jersey's middle and upper-middle quintiles saw their share decrease by 1.2 percentage points.
Among BEA's measures is each state's Gini coefficient (based on equivalized income). The Gini coefficient is a metric that measures inequality ranging from complete equality (0) to maximum inequality (1). Gini coefficients for personal income in 2022 ranged from Maine's low at 0.37 to South Dakota's high at 0.52. New Jersey matched a national coefficient at 0.44 after peaking at 0.47 in 2018 before dropping to 0.42 in part due to elevated transfer payments bolstering lower earners' incomes.
This new data includes additional measures such as rental income distribution, personal transfer receipts, proprietor’s income, and further metrics on inequality.
References:
[1] See https://www.bea.gov/sites/default/files/2023-10/StateIncome%20Distribution_TechnicalDocument.pdf for more information on BEA’s personal income measure and methodology for estimating state distributions.
[2] Income deciles and quintiles are based on rankings adjusted for household size/composition; shares represent unequivalized household incomes per quintile as a percentage.
