Dan Haar: CT is -- gasp! -- no longer the richest state by one key measure

 

Through struggles and fat times, Connecticut's unquestioned status as the nation's richest state was part of our economic self-image for more than a generation. 

Until now. 

We knew the title meant little when it came to shared prosperity. It was driven by high-paid executives, Wall Street traders and the Gold Coast denizens of dividends. But it was our claim to fame alongside our rightful moniker as the arsenal of democracy, or Hartford's title as the insurance capital, or Danbury's old identity as the Hat City. 

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A Lead Evaporates 

Per-capita personal income since 2013. Figures for 2022 are for the first half of the year. 

YEAR    CT            MA           US

2012    $64,121    $56,669    $44,548
2013    $62,647    $56,628    $44,798
2014    $65,498    $58,924    $46,887
2015    $67,321    $62,376    $48,725
2016    $68,680    $64,295    $49,613
2017    $70,011    $66,679    $51,550
2018    $72,926    $69,693    $53,786
2019    $75,533    $73,213    $56,250
2020    $78,463    $78,388    $59,765
2021    $83,294    $83,653    $64,143
2022    $84,756    $84,010    $64,553

source: U.S. Bureau of Economic Analysis

Specifically, the measure where we reigned as No. 1 in the United States was per-capita income -- total income divided by population. It mattered because it signaled Connecticut's high productivity and a lot of that wealth does indeed trickle down, though never enough. 

Connecticut was always in the top few states, sometimes No. 1, going back to the 1920s when federal records began. Then in 1987 we passed Alaska and we never looked back. 

And we didn't just hold the top spot; we crushed it. For most of those years Connecticut's lead looked untouchable, like Wilt Chamberlain's 100 points in a basketball game or Joe DiMaggio's 56-game hitting streak. 

But the "lost decade" of 2010 to 2019 did in Connecticut's claim. Data released this fall by the U.S. Bureau of Economic Analysis, or BEA -- the referee for growth and income -- show that Massachusetts inched ahead of Connecticut in per-capita income for the full year, 2021.

It was just a tiny edge, $83,653 to $83,294, a difference of less than one-half of 1 percent after a years-long surge by Massachusetts, driven by biotech. Both states are far ahead of the nation's $64,143 in 2021. 

In 2008, the first year of the Great Recession, Massachusetts was No. 2 with a per-capita income of $51,810, compared with the $41,026 national average. 

Connecticut? We stood like a skyscraper at $60,970 -- a lead of more than $9,000 per person over the second richest state. By 2020, the weird pandemic year, Connecticut led our neighbor to the north by a mere $75 Uber ride. 

'CT couldn't be bothered'

There's good news with the bad. On Sept. 30, the same day the BEA revealed new and revised totals for 2017 through 2021, the agency, part of the Commerce Department, also gave per-capita income figures through the second quarter of 2022.

Connecticut is back in the lead in 2022; if all goes well we'll reclaim the No. 1 spot for the full year. Since the pandemic, we are ahead of the nation in income gains. 

Still, the reality of 2021, and the fact that Connecticut's enormous margin that lasted for decades has whittled away, comes with lessons. 

"Big surprise," UConn economist Fred V. Carstensen said sarcastically of the end of the state's reign. As head of the Connecticut Center for Economic Analysis, he has long been a critic of this state's efforts to forge new growth.

"Massachusetts  in the '90s faced an enormous crisis, so what did they do? Two billion dollars for bioscience," Carstensen said. "What’s the big story about Boston? It’s bioscience."

He named other Bay State initiatives including building a large data center in Holyoke. "They did a variety of things that were ultimately transformational. Connecticut couldn’t be bothered."

"Now we're doing a few things," Carstensen said, praising Gov. Ned Lamont's job-training efforts and corporate incentives that any company can earn, not just a chosen few.

Lamont, for his part, sees no winners and losers in this.

“It’s not a sports contest," he told my colleague Ken Dixon Thursday at the Capitol. "We’ve got some of the highest per-capita income in the country and I like the fact that Boston and New York do as well. It speaks well to the region. It speaks well to the high-quality work that we’re doing here. I don’t feel competitive about that at all.”  

The governor, famously, is doing his share to keep Connecticut on top.  An heir to a Wall Street fortune and former telecom entrepreneur, Lamont reported a $52 million income in 2021 and spent $22 million on his re-election campaign -- a pretty good piece of wealth redistribution as these things go. 

What personal income measures

By any measure, the value of total income has climbed sharply over the decades, far faster than inflation. In 1942, Connecticut shot up to No. 1 with a surge of nearly $300 to $1,440 per person as the factories making airplane engines, guns and ammunition shot into overdrive. That $1,440 was worth just $26,327 in today's dollars -- though with larger households it was more than enough to build middle-class comfort. 

The personal income number as the Bureau of Economic Analysis measures it includes regular salaries, wages and bonuses, of course, along with dividends and interest on investments. And it includes rent collected by owners of property, and the value of all employment benefits, such as retirement fund contributions and the subsidies companies typically pay for health insurance.

It also includes all government payments, not just cash supports for low-income families but Medicare, Medicaid and Social Security -- along with unemployment, workers compensation, child care credits and those pandemic relief checks. Remember those? 

Connecticut topped $300 billion in 2021, all in. The state lagged the nation in all categories of personal income in the lost decade.

Personal income does not, however, include capital gains, those profits investors make on the sale of corporate stock that grows in value over the years. That's a giant source of wealth in Connecticut, so it's possible that if BEA measured income the way the IRS does it, we'd have that wide lead back. The idea at BEA is to measure economic activity in a given quarter or year, and capital gains can represent many years of activity. 

"That’s the measure that BEA stands behind," said Matthew von Kerczek, who explained the subtleties patiently. 

It's also not the same as median household income, a measure of broad prosperity by the U.S. Census based on surveys -- where Connecticut is usually in the top 5 but not No. 1. 

We will continue to debate the best ways to grow the state's economy. 

"Personal income growth is definitely a measure of something that matters," said Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, the state's largest business group. 

DiPentima gives mixed reviews to the state's economy and to its economic development programs. We need to offer more incentives for building housing and find ways to attract more immigrants, he said. 

The wavering status as the nation's richest state? "It should raise concerns. We shouldn’t have a knee-jerk reaction to it," he said, "But we need to do things to address it."

dhaar@hearstmediact.com