We are 21

The good folks at the Illinois Policy Institute have taken some of my research and created a new website call “We are 21.” It’s based on the fact that in Illinois it takes 21 private sector workers to fund 1 state government worker.  Here is a cool video they have made:

The great thing I like about doing this report is that it is based on tax data from the liberal Institute on Taxation and Economic Policy.  What are they going to do, say it’s a lie 🙂

The State of America’s Private Sector XX: February 2011

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for February 2011 (pdf).

The chart below shows the private sector share of personal income from January 1959 to February 2011.  Since the private sector hit its inflection point in April 2010, the private sector continues to rebound up to 70.47 percent in February from 70.39 percent in January.  The private sector has now grown in 10 of the past 11 months adding a total of 0.78 percentage points.

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.

Private Sector Share of Personal Income for February 2011

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

The State of America’s Private Sector XVIII: January 2011

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for January 2011 (pdf).

The chart below shows the private sector share of personal income from January 1959 to January 2011.  Since the private hit its inflection point in April 2010, the private sector had its largest gain of 0.5 percentage points between December 2010 and January 2011.  The private sector has now grown in 9 of the past 10 months adding a total of 0.66 percentage points.

It will be interesting to see if the private sector can maintain this momentum in the face of the Egyptian riots and consequent rise in oil prices.  As David R. Kotok, Chairman and Chief Investment Officer of Cumberland Advisors, recently said in one of his email updates: “The risk of recession in the US and European economies is rising daily.”

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.

Private Sector Share of Personal Income for U.S. in January 2011

The State of America’s Private Sector XVII: December 2010

Today the U.S. Department of Commerce’s Bureau of Economic Analysis released their monthly personal income data for December 2010 (pdf).

The chart below shows the private sector share of personal income from January 1959 to December 2010. The private sector grew again by another 0.08 percentage points and has now grown for 4 consecutive months adding a total of 0.31 percentage points.  Interestingly, the revisions to recent months have downshifted the growth in the private sector.

Now that the Bush tax cuts extensions are now law, will the private sector be able to continue its growth against another round of government spending?  All of the new spending contained in the bill will show up in personal current transfer receipts, thus accelerating the growth in government spending.  As long as the private continues to grow as it has, I think the new spending will cause the private sector to plateau for awhile but not retreat.  Of course, in the long-run, I think the opposite is true with the downward trend in the private sector continuing.

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.

Private Sector Share of Personal Income for December 2010