Where Do YOU Fit Into Asheville Metro’s Income Growth?
Income growth is often considered one of the most critical indicators of an economy’s health. Most people likely think income means what people earn. But earnings only make up part of an economy’s complete income picture. Income is actually the sum of three major components; earnings, investment income and personal government transfers.
According to the U.S. Bureau of Economic Analysis, as of 2014 the Asheville Metropolitan Area’s (Buncombe, Henderson, Haywood & Madison County) total income equaled $16.1 billion. Over the last decade the metro area’s income has increased by $4.8 billion, up about one-half billion annually. Earnings (wages, salaries and proprietor’s returns) have contributed $1.9 billion or about 41 percent of the increase (see chart below). Investment Income (dividends, interest and rents) has contributed one billion or 21 percent of the increase. And Personal Government Transfers (mostly Social Security and medical benefits) have contributed the remaining $1.8 billion or 38 percent of the increase.
Net Change in Total Income ($)
Asheville Metro
Source: U.S. Bureau of Economic Analysis
Although the total dollar contributions of Earnings and Personal Government Transfers over the last decade have been fairly comparable, their current rates of growth are notably different. Earnings are growing at an average annual rate of 2.7 percent, while Personal Government Transfers are increasing by 6.1 percent annually on average. Investment Income rests between the two with a 3.8 percent average annual growth rate. This disparity in growth rates has led to the steadily declining role of Earnings in the metro. Earnings have dropped from 58.2 percent of the area’s total income in 2004 to 53.2 percent in 2014 (see chart below). Similarly, Personal Government Transfers have increased from 19.7 percent of income to 25 percent. Investment Income has remained nearly unchanged; 22.1 percent in 2004 to 21.8 percent in 2014.
Components of Income (percent of total)
Asheville Metro
Source: U.S. Bureau of Economic Analysis
The low contribution of Earnings to the metro’s income is unique. Asheville metro ranks 354th among all 382 metros in the nation for the percentage of income from Earnings; placing it in the bottom 10 percent. And among all North Carolina metros, Asheville has the lowest income from earnings (see chart below).
Components of Total Income (%)
North Carolina Metros-2014
Ranked by Percent Earnings
Source: U.S. Bureau of Economic Analysis
So what’s driving Asheville’s income growth? Although Earnings still have a slight edge as top contributor to income growth, gradually the impact of Personal Government Transfers is gaining. At current growth rates, Personal Government Transfers should overtake Earnings as Asheville’s major contributor to income growth.
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