Transfer Payments are one of three components in the calculation of Personal Income; the other two components are Earnings from Work and Dividend or Interest Payments.  Personal Income is the total amount of all income from all three sources that can either be spent or saved and the Per Capita Personal Income is the total income from all three sources divided by the state’s population.

On the state’s 2010 balance sheet, these three items are noted in the Bureau of Economic Analysis Table SA04 (State Income and Employment).  Each of these components add up to the state’s total Personal Income.  The state’s Per Capita Personal Income of $32,641 is calculated by dividing Personal Income of $60.4 billion dollars by the state’s population of 1.8 million residents.

One component, Earnings by Work totaled $35.9 billion dollars, or 59.4% of total Personal Income.  Dividends and Interest income totaled $7.5 billion dollars, or 12.4%. 

The 2010 data shows that West Virginians received about $16.9 billion dollars from all government sources, equal to 28% of $60.4 billion dollars of total Personal Income.  This means that for every $1 dollar of income in West Virginia, .28 cents comes from government transfers such as UI benefits, Medicaid, TANF, and Food Stamps. 

West Virginia’s 28% of total Personal Income derived from Transfer Payments ranks as the highest in the nation compared to the US average of 18.3 percent.  Among our surrounding states Kentucky ranks #3 (24.8%), Ohio #10 (22.0%), Pennsylvania #13 (20.9%), Maryland #46 (13.7%), and Virginia #48 (13.4%). 

In upcoming blogs, we’ll investigate the historical record to see how West Virginia’s reliance on Transfer Payments as a percent of total Personal Income has changed since the Great Depression.  We’ll begin to drill down into Transfer Payments to see exactly which government transfer accounts for the state’s large share of Transfer Payments as a percent of total Personal Income.  We’ll take a closer look at West Virginia’s $32,641 Per Capital Personal Income and compare it to other states while also examining how ARRA funding impacted West Virginia’s Personal Income gains during the Great Recession.