Per capita income level improves in Arkansas

Arkansas’ per capita personal income in 2008 ranked 46th in the U.S., the highest ranking since Alaska and Hawaii were admitted to the Union, according to research from Arkansas Policy Foundation Director Greg Kaza.

Data from the U.S. Bureau of Economic Analysis shows the state’s per capita personal income (PCPI) in 2008 at $32,397, which was 80.6% of the U.S. average.

The bottom five states in terms of PCPI in 2008 were
46: Arkansas,  $32,397 — (80.6% of U.S. average)
47: Kentucky,  $32,076 — (79.8%)
48: Utah,  $31,944 — (79.4%)
49: West Virginia, $31,641 — (78.7%)
50: Mississippi, $30,399 — (75.6%)

The U.S. PCPI average in 2008 was $40,208. Connecticut ($56,272, 140%) led the 50 states followed by New Jersey ($51,358, 127.7%); Massachusetts ($51,254, 127.5%); New York ($48,753, 121%); and Wyoming ($48,608, 120.9%)

Arkansas has ranked second or third worst in income rank for most of the postwar era.  Arkansas was 47th in rank in 1973, 1978, 1988, 1992, 1999, 2004 and 2007, according to Kaza’s research. Arkansas PCPI exceeded 80 percent of the U.S. for the first time in 2007 and 2008.  Arkansas PCPI in 2007 was $31,646, or 80.3% of the U.S ($39,430).

Kaza cited tax cuts, commodity prices and improved farm income as key reasons for the PCPI gain.

“Arkansas’ leap in income rank coincides with the biggest tax cut in state history, a two-thirds reduction in the grocery tax under freshman Gov. Mike Beebe. The tax was reduced from six to three cents (2007) and from three to two cents (2009),” Kaza noted in his report.

Because of higher commodity prices — especially in oil and natural gas — in 2007 and 2008, Arkansas improved from 34th in 2005 to 33rd in 2007-2008 in the dividends, interest and rent component of income, sometimes referred to as "investment income" or "property income,” Kaza noted.

Arkansas farm income ranked 9th in 2006 ($1.2 billion) and improved to 7th in 2007 ($1.6 billion), but fell back to 10th in 2008 although at a $1.995 billion level.