Per Capita Income
Sierra Nevada Must Reverse Widening Income Gap
Why is it important?
Per capita income measures a region’s economic strength and the standard of living its residents enjoy. To calculate it, all sources of income – wages, capital payments and transfers – are added together, divided by total population, and then adjusted for inflation to track real income over time. When per capita income rises, a region’s financial capital is growing faster than its population.1
How are we doing?
Since 1993, the Sierra Nevada’s per capita income grew on average 2.06% per year, faster than the California rate of 1.53%, suggesting a strong overall economy with the region’s financial capital growing faster than population. But when examined more closely, the North Central’s economy was so large and strong that it obscured weaker economies with declining financial capital in the rest of the Sierra Nevada. The North Central’s spectacular per capita income growth is primarily due to the growth of Sacramento. As the city spreads out, western North Central is evolving from a collection of bedroom communities to an economic engine in its own right.
As already mentioned, the rest of the Sierra Nevada did not fare as well. The North, with a growth rate of 1.46%, barely kept pace with California. The South Central and East both lost ground with growth rates of only 0.77% and 0.70%, respectively. These trends mirror those found in rural areas across the United States where incomes average 70 percent of urban levels with a growing gap.2 This widening income gap puts rural Sierra Nevadans at a disadvantage relative to urban dwellers who can afford to pay high prices for retirement or second homes. Although some Sierrans could earn higher incomes in urban areas, they forego some income in return for the “second paycheck” they receive from having an outstanding quality of life. But if incomes in the Sierra Nevada fall too far behind the California average, such non-financial compensation may no longer suffice as a reimbursement for lower incomes. If the Sierra Nevada is to reverse the widening income gap, it must find ways to create more high-wage jobs.
1 Note that these numbers do not include people incarcerated in Mule Creek State Prison in Ione (Amador County) or the Sierra Conservation Center in Jamestown (Tuolumne County).
2 Michael E. Porter, Competitiveness in Rural U.S. Regions: Learning and Research Agenda, (Harvard Business School, (February 25, 2004); available from www.
