by Kevin Schofield
This week’s “long read” is a research report from the Economic Innovation Group looking at Americans’ different sources of income and in particular focusing on the one most closely tied to wealth: income from assets.
The report categorizes income into three types: “transfers” such as Social Security, Medicare, unemployment insurance, and food stamps; wages and earnings; and income from assets. An asset can be a financial investment such as stocks and bonds, but it can also be the housing that a landlord rents out, an apple orchard generating produce, or a manufacturing plant used to create goods.
Over the past fifty years, there has been a steady shift in the sources of personal income from Americans. In 1969, 77% of income was from wages and earnings; as of 2019, it was only 63%. Income from assets, however, has grown from 15% to 20%.
But that growth has not been uniform across the country: since the early 1980s, the U.S. counties with the most income from assets grew their share at a far higher rate than the rest of the country. As of 2019, the top 10% of counties have asset income per capita around $20,000, while the bottom 90% average around $8,000. King County comes in at $24,100, thanks mainly to Amazon, Microsoft, Starbucks, and the other tech and large multinational companies with workforces here.
It would be easy to ascribe this to Wall Street, Silicon Valley, and other tech and finance hubs, but the story is a bit more complicated than that because income-generating assets can take many forms — and because the people who own them can live anywhere. The county with the highest per-capita asset income, $164,000, is Teton County, Wyoming, home to Jackson Hole where plenty of the super-rich live; but Uinta County, Wyoming has a per-capita asset income of only $7,100. Cities such as Benton, Arkansas, the headquarters of Wal-Mart, not surprisingly tend to have more income from assets; as do major manufacturing hubs dotted around the nation. That makes a map showing asset income by county confusing, without much of a clear pattern.
Counties with high wage earnings also tend to have high income from assets; that’s not surprising, given that higher wage earnings allow for retirement savings and other investments. However, the reverse is not true: a community with high income from assets doesn’t necessarily have high wages. You can see this clearly in the graph below: there are no counties with high wages and low asset income, but there are plenty with the reverse.
The report also points out that it’s not just geography that matters: the types of industries active in a county are an enormous factor. Manhattan has high asset income, while the Bronx’s is low; the same holds true for Los Angeles and Riverside. There are several other fascinating side-by-side comparisons in the report that highlight how complicated and nuanced the asset-income picture is.
Finally, it notes that the two most reliable generators of asset income are home ownership and retirement savings plans. Unfortunately there are significant barriers preventing many Americans from taking part in either.
Kevin Schofield is a freelance writer and publishes Seattle Paper Trail. Previously he worked for Microsoft, published Seattle City Council Insight, co-hosted the “Seattle News, Views and Brews” podcast, and raised two daughters as a single dad. He serves on the Board of Directors of Woodland Park Zoo, where he also volunteers.
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