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Government Assistance Drives Big Growth in Personal Income

A funny thing happened on our way to the recession last year: our personal income went up. Well, maybe not yours or your cousin Billy’s, but on the whole, personal income grew at higher rates than it had since the good old days under President Obama. And, as you might expect, that growth wouldn’t have happened without big government socialism:

Barb Rosewicz, MIke Maciag, and Joe Fleming, "States Began 2021 with Record Personal Income Growth," Pew Charitable Trusts, updated 2021.09.02.
Barb Rosewicz, Mike Maciag, and Joe Fleming, “States Began 2021 with Record Personal Income Growth,” Pew Charitable Trusts, updated 2021.09.02.

Notice that the last time capitalism broke down (assuming you view the normal exploitation of labor and the environment and the failure to provide affordable health care and housing as “working properly”), during the December 2007–June 2009 recession, personal income shrank by as much as 5%. But this time, with capitalism not only not able to function properly because of a pandemic but also threatening to make the pandemic worse, we responded to a recession with far greater government assistance, keeping families afloat and setting the stage for a far faster economic recovery. As we poured on coronavirus relief funds in the first quarter of this year, enough Americans had enough money to order more take-out meals and stuff on Amazon to raise everybody’s regular income from work and other market/non-government sources.

But as you can see from the blue spikes of total income towering over the meager green squiggle in the chart above, our income growth in 2021 Q1 was almost all government:

The portion of personal income from earnings—which includes wages from work, extra compensation such as employer-sponsored health benefits, and business profits—also increased, although by far less than total government assistance. Earnings were $177 billion higher in the first quarter of 2021 than a year earlier, after adjusting for inflation, compared with a $2.8 trillion increase in income from all sources of government assistance. Earnings ticked up for the third consecutive quarter and are above pre-pandemic levels after plummeting in the early months of 2020. All but 10 states experienced year-over-year gains [Barb Rosewicz, Mike Maciag, and Joe Fleming, “States Began 2021 with Record Personal Income Growth,” Pew Charitable Trusts, updated 2021.09.02].

The heavy-spending hand of government made up the bulk of South Dakota’s income growth just like everywhere else, but South Dakota also experienced the second-highest growth in income from work, dividends, interest, and rent, helping us beat the national average of 14.4% and post the 13th-highest total personal income growth among the states at 16.8%:

Rosewicz, Maciag, and Fleming, 2021.09.02.
Rosewicz, Maciag, and Fleming, 2021.09.02.

In 2020, South Dakota’s personal income grew 5.82%, better than the national average of 4.86%, and the highest South Dakota had seen since 2011’s 7.13% growth.

5 Comments

  1. John Dale 2021-09-07

    This was foist upon us.

    With a healthy thriving free market economy, these “gains” look like scraps.

  2. John Dale 2021-09-07

    It takes faith, like recursion (Computer Science).

    It does work. It really does work.

    Recursion (adjective: recursive) occurs when a thing is defined in terms of itself or of its type. Recursion is used in a variety of disciplines ranging from linguistics to logic. The most common application of recursion is in mathematics and computer science, where a function being defined is applied within its own definition. While this apparently defines an infinite number of instances (function values), it is often done in such a way that no infinite loop or infinite chain of references can occur.

  3. Jake 2021-09-07

    Government working as government should! Now, to pass voting rights and2nd infrastructure bill.

    Then, higher taxes on the upper 10%!

  4. Mark Anderson 2021-09-07

    Your tail is calling John recursive as it may be. Eliminate it.

  5. M 2021-09-08

    Go back to the hole you crawled out of John Dale. Then we can put a rock over it and never see the likes of you again. You make no sense, must have had too many beers again.

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