Sources of Personal Income
Income Experiences Regional Shifts
Why is it important?
A comprehensive view of income origination helps identify key resources and how overall wealth will be affected by changes in the economy and population characteristics.
“Local wages” are closely tied to the local economy and measure its productivity through the value of goods and services produced by social, natural and financial capital.
“Capital payments” are income from stocks, bonds and real estate. Derived from accumulated wealth, this income is linked to national and global markets.
“Commute wages” are earned outside a person’s county of residence. People commute when they prefer to live other than where they work, they can’t afford to live where they work, or they can’t find appropriate work where they live. This income is offset by external costs such as traffic congestion, air pollution, and time away from family and friends.
Transfer payments” are a hodgepodge including retirement, disability, medical payments, food stamps, and unemployment.
Non-local sources of income, especially capital and transfer payments, buffer the local economy against downturns in important regional or seasonal industries such as timber and tourism. On the other hand, they also disconnect residents from local economic fortunes, weakening their incentives to invest in their communities.
How are we doing?
In 2001, local wages provided only half of the Sierra Nevada’s income, significantly less than the three-quarters local wages contributed to California’s economy. Capital payments paid 20 percent, commute wages 16 percent, and transfer payments 12 percent. None of these proportions have changed much since 1980.
Within transfer payments, medical payments were the fastest growing source of income, likely due to increasing medical costs. If age or poverty were driving factors, food stamps and unemployment would be expected to increase as well, but instead they became less important.
Within the Sierra Nevada, significant shifts occurred. Rapidly growing employment in western North Central caused local wages to be stable in the Sierra Nevada because it offset declines elsewhere. Although local wages dropped by 5 to 10 points in the rest of the Sierra, they still contribute two-thirds of income in the East, but they have dropped to 55 percent of income in the North and 47 percent in South Central.
Changes in commute wages show that as Sacramento expanded jobs moved out to the suburbs in Placer and El Dorado counties, which caused commuting income to become less important in North Central. The growth of Sacramento and Reno indicates that the South Central and the North are the new bedroom communities. In the East, commute wages flow out of the Sierra Nevada because people living outside the region commute to jobs at mines and ski resorts. In the North, South Central and East, capital payments are becoming more important as more retirees and others derive income from accumulated wealth.
