GEORGIA
Income per capita rank
1990 $17,563 29
1991 $18,110 28
1992 $19,139 28
1993 $19,866 28
1994 $20,945 28
1995 $22,023 24
1996 $23,340 25
1997 $24,287 26
1998 $25,680 26
1999 $26,772 27
2000 $28,541 26
2001 $29,346 25
2002 $29,526 28
2003 $30,056 30
2004 $31,126 32
2005 $32,775 27
2006 $34,061 28
2007 $35,369 33
2008 $35,857 36
2009 $33,887 36
2010 $34,531 37
2011 $35,979 39
2012 $36,869 40
Source: Bureau of Economic Analysis
Georgia has slipped to the back of the pack among states in a key measure of its residents’ financial well-being – a decline that started even before the recent recession.
Georgia is now 40th among states in per capita income, down from 25th in 2001 and the same rank it held in 1979, federal data shows.
The actual income figure for Georgia has grown, to $36,869 last year, but the national figure has grown faster, to $42,693, lowering the state’s relative standing.
“It is concerning,” said Amir Farokhi, executive director of GeorgiaForward, a non-partisan group that works with business and political leaders. “It reflects that we are not growing as many high-paying jobs as we did in the 1990s.”
Per capita income is a catch-all statistic that includes dividends, stock sales, rent from property and even government assistance. In a rough way, it’s an indicator of a state’s prosperity – a measure of growth in the economic power of residents.
The state’s slide raises again the question of whether Georgia is falling short of its economic potential. Slower income growth can restrain spending and investing by consumers and businesses.
The trendline is not encouraging. Louisiana, Tennessee and North Carolina moved ahead of the state in recent years, according to the federal Bureau of Economic Analysis, while Alabama was just two places and a couple hundred dollars behind as of last year.
“The story I am seeing is having job growth above average, but earnings per job growing more slowly,” said economist Martin Shields, director of the Regional Economics Institute at Colorado State University. “So you’re adding more jobs, but they are lower paying jobs.”
Culprits, according to other experts in regional economics, may include two recessions that wounded Georgia’s technology and housing sectors; a reliance on bringing in lower-paying jobs from outside to jumpstart the state economy; and, possibly, a lower proportion of residents with investment income that also figures into the stats.
From 1979 through 2001 the state enjoyed a long run of above-average growth in per capita income as new residents and businesses flocked to Georgia.
In 1997, with the expansion peaking, Georgia’s per capita income had closed to 94.7 percent of the national average. In the latest data it is 86.36 percent of the national average.
Some change in rankings can be explained by particular events swirling around a state, said Rajeev Dhawan, director of the Georgia State University Economic Forecasting Center.
For instance, Louisiana actually leaped up the ranks after Hurricane Katrina in 2005, he said, which could be partly because the state’s population declined while aid money flowed in for rebuilding.
A resurgent energy sector also has buoyed Louisiana.
But that doesn’t explain why Georgia has fallen behind North Carolina, Tennessee and Texas.
It might be a bit of bad luck: the nation suffered two recessions since 2001 and both hit Georgia harder than many other states.
The 2001 downturn came after the burst of the tech bubble, eliminating thousands of good-paying metro Atlanta jobs in telecommunications. Travel and conventions dwindled, which meant the loss of high-paid jobs at Delta Air Lines, as well as in leisure and hospitality.
Six years later, it was a housing bubble that set off a deeper recession – and Georgia was among the hardest hit.
To recover, Georgia has aggressively tried to lure companies into shifting their operations or opening new ones in the state. A large part of that effort is pegged to having low costs for business – which often means lower wages.
Some sectors with high-paying jobs remain down, dampening income growth. About 105,000 people in Georgia now have jobs in information technology, for instance, down from 144,900 in 2000. And there are 16,000 fewer jobs in the financial sector.
“It is very much about your state’s make-up,” said economist Susan Steward at Towson State University’s Regional Economics Studies Institute. “It is not one small index or indicator.”
While IT accounts for 2.6 percent of Georgia jobs and finance 5.7 percent, retail jobs represent 11.54 percent of positions – but the average pay in retail is much lower at $23,830, according to the Bureau of Labor Statistics.
Some experts on job growth say luring companies rather than growing them can dampen a state’s performance.
Recent research done for the Edward Lowe Foundation – a think tank on growth – showed that 1 percent of companies are responsible for 75 percent of all job growth employment growth, said Harrison Campbell of the University of North Carolina-Charlotte.
“And with employment growth comes income growth,” he said. “If two or three percent of your economy were in high-impact firms, you would see substantial increases in your per capita income.”
Branch plants and regional headquarters don’t provide that kind of growth, he said.
Much of income is in dividends, as well as the sale of stocks and bonds. Wall Street in recent years has bounced back more vigorously than the job market.
Georgia’s slower improvement may be because the state has fewer households invested in the market than the nation overall, Colorado State’s Shields speculated.
But long-run, Georgia’s economic health depends more on the job market than the stock market, said Ross DeVol, chief research officer at the Milken Institute, a California-based think tank.
“A substantial portion of the story is that Georgia has not done as well in creating its own jobs,” he said.
On the other hand the state – and especially metro Atlanta – remains a desirable destination, which means a flow of new talent and money, DeVol said.
“It’s too early to write off Georgia,” he added.
He said the recent combination of recessions, workforce changes, intensifying competition with other states and weakness in creating fast-growing firms has taken a toll reflected in the statistics.
“You combine all these things and you don’t perform as well as the rest of the United States, or as well as the other Southern states.”
