Erie Vital Signs

Income: Transfer Payments and Components

Recent Performance

This trend has been deteriorating.

In 2013, total transfer payments accounted for 22.1 percent of personal income in the Erie MSA. This was higher compared to the state of Pennsylvania (17.9 percent), the U.S. as a whole (15.8 percent), and the average of the thirteen Erie Vital Signs peer areas (19.1 percent). Although transfer payments as a share of personal income increased across the U.S. between 1969 and 2013, the percentage-point increase was the highest in Erie (14.0), compared to Pennsylvania (9.7), the U.S. as a whole (8.3), and the average of the thirteen peer areas (11.9).

Most transfer payments are government payments to individuals -- as of 2013 in Erie, these government payments accounted for over 97 percent of total transfer receipts. In 2013 in Erie, medical benefits made up the largest component of government transfer payments to individuals (44.2 percent), followed by retirement and disability insurance benefits (35.0 percent), income maintenance benefits (12.1 percent), unemployment insurance compensation (3.6 percent), education and training assistance (2.6 percent), and veterans benefits (2.5 percent). Between 1969 and 2013, medical benefits also experienced the greatest increase in real terms.

We can also compare the sources (components) of Erie’s personal income with those of the U.S. and other areas. The data indicate that earnings have played a consistently smaller role as a source of Erie personal income since 1969, falling to 57.6 percent of income from 71.4 percent. In the U.S. as a whole during the same period, the share of personal income made up of earnings fell more modestly to 57.9 percent from 69.2 percent. In Pennsylvania, the share fell to 57.4 percent from 70.7 percent.

Between 1969 and 2013, “unearned income” components (dividends, interests, and rents) increased slightly to 15.6 percent of personal income from 11.6 percent in Erie. These “unearned income” components also increased in the U.S. (to 17.5 percent from 14.1) and in Pennsylvania (to 16.4 percent from 12.5 percent). Proprietors' income as a percent of personal income in Erie has been declining and stood at 4.7% in 2013.

But the most dramatic change for Erie has come in the area of transfer payments. In Erie, as noted above, these rose to 22.1 percent of personal income in 2013 from just 8.1 percent in 1969.

The "location quotients" indicate the proportionate share of each income component for Erie, compared to the proportionate shares of each component in the U.S. and PA.

The Basics

Transfer payments, more formally called “personal current transfer receipts,” are benefits received for which no current services are performed, and include payments by governments and businesses to individuals and nonprofit institutions.

Why is this important?

A large and increasing share of personal income in the form of transfer receipts rather than from business activity could reflect a variety of demographic and economic trends, such as an aging local population, or a deteriorating economic environment.

The Details

Data on transfer payments are available from the U.S. Bureau of Economic Analysis (BEA). Although these “personal current transfer receipts” include payments by governments and as well as by businesses to individuals and nonprofit institutions, transfer receipts of individuals from governments typically account for the largest share of total current transfer receipts. These government transfer receipts include retirement and disability insurance benefits (e.g., social security); medical benefits (e.g., Medicare); income maintenance benefits (e.g., benefits from the Supplemental Nutrition Assistance Program or “SNAP”); unemployment insurance compensation; veterans benefits; education and training assistance; and other miscellaneous payments.

The Nitty-Gritty Details

Subcategories

This EVS indicator has no subcategories. However, the BEA does break down government transfer receipts into the following major subcategories: retirement and disability insurance benefits (e.g., social security); medical benefits (e.g., Medicare); income maintenance benefits (e.g., benefits from the Supplemental Nutrition Assistance Program or “SNAP”); unemployment insurance compensation; veterans benefits; education and training assistance; and other miscellaneous payments.

Peer Areas

These variables include data on all 13 of the standard peer areas, along with U.S. and PA data.

Frequency

Annual

Source

Other Related Data

Latest Erie Data from the Economic Research Institute of Erie, at the Black School of Business at Penn State Behrend

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