Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for June 2011 (pdf). This is an important update because it contains revisions in the data back to 2003–click here to view the pre-revision data up to May, 2011.
The chart below shows the private sector share of personal income from January 1959 to June 2011. Post-revisions, the drop-off in the private sector was greater than before although the bounce-back is now greater–but it looks like the private sector still ends up in the same place. So, for June, the private sector share of personal income was 70.49 percent. This is well below the pre-Great Recession level of 74.48 percent in June 2007.
And since we have revised data, I have also updated this chart (see below) which shows, on a monthly basis, the contributions paid into Social Security and Medicare (red line) via the payroll tax versus the benefits paid-out by Social Security and Medicare (green line). Prior to the “Great Recession,” contributions paid-in almost always exceeded the benefits being paid-out.
However, beginning around 2007 and the Great Recession, contributions began to level off. The decline in contributions was exacerbated by the recent extension of the Bush tax cuts which included a one-year reduction of 2 percentage points in the payroll tax. So as of June 2011, the gap between benefits paid and contributions is $348 billion.
On the other hand, benefit payments have the looks of becoming an exponential function. I’ll have to do some more digging around, but I’m guessing a lot of the new growth was due to the Medicare Part D expansion which went into effect in 2006 which coincides with a large lurch upwards in benefit payments.
Note: “Supplements to Wages and Salaries” (benefits) in the BEA data are not broken down into “private” sector” versus “government” components. I used the ratio of private wages and salaries to total wages and salaries in order to disaggregate supplements.