The State of America’s Private Sector XIX: 2010

Last week the U.S. Department of Commerce’s Bureau of Economic Analysis released their preliminary 2010 personal income data (pdf) (which includes revisions to previous years).

The chart below shows the private sector share of personal income since 1929 (the first year of available data) to 2010 (the last year of available data).  The opposite of the private sector is the public sector which is defined as all government compensation paid to employees (military and civilian) plus all personal current transfer receipts (Social Security, Medicare, Medicaid, Welfare, etc.).

As the chart clearly shows, the private sector has been steadily crowded-out by the public sector.  Nationally, the private sector has plummeted 24 percent to 68.7 percent of personal income in 2010 from 92.7 percent in 1929.  More troubling, 2010 is the lowest private sector share in history after dropping another 0.6 percentage points from 2009.  How low will it go?

Additionally, the decline in the private sector can vary dramatically by state.  The chart also shows my two favorite states for making such comparisons–New Hampshire versus Maine.  These two states are alike in so many ways, yet differ in one major area which is the size of the public sector.  New Hampshire has the largest private sector in the country while Maine has the 41st largest private sector in the country.

Also note that New Hampshire’s private sector leveled off in 2010 while continuing to fall in Maine and nationally.  Now if New Hampshire can only get right-to-work enacted, then maybe they can get its private sector up back to over 80 percent 🙂

Private Sector Share of Personal Income 2010