Wednesday, May 16, 2018

Socio-Economic Profile of Wyoming, Part 2

Today's installment in the socio-economic profile of Wyoming concentrates on income distribution. To be clear, this is not to discuss economic inequality - a debatable term in itself - but to show a change in the ability of communities around the state to support themselves. This, in turn, is an important issue because it helps us understand consequences of various ideas for changes in taxes and government spending.

Again relying on raw data from the Census Bureau's American Community Survey, the following charts report the distribution of households by income, by county. To avoid an overload of charts, I have picked five counties that are representative of an interesting - and important - trend in household earnings across our state. The charts report the cumulative percentage of households by income group, annually from 2010 to 2016. The percentages reported add up; think of the columns as a glass being gradually filled up. For example, in Converse County in 2010, 5.7 percent of the households had an income of less than $10,000 per year; 10.8 percent had an income that placed them in either the less-than-ten-grand group or the next group that earned $10-$14,999. A total of 67 percent made less than $75,000, spreading across the six income groups from less-than-ten-grand up to $50-$74,999.

Since there is one series of columns for each year, it is interesting to examine the change in how fast the glass fills up, so to speak. Using Converse County again as the example, by 2016 only 57 percent of the households belonged to any of the income groups making less than $75,000 per year:

We have a similar pattern in Crook County...



...and Park:

Now, what does this pattern tell us? Earlier this year I reported that Wyoming is losing middle-class residents: the net outbound migration from Wyoming consists of households making notably less than those moving in. The numbers from these five counties reflect this trend, but also show that it has been ongoing longer than the state-level interstate migration data reveals. 

There are two important policy implications in this data. The first one, rather obviously, suggests that we desperately need reforms that make it easier for businesses to open, and stay open, everywhere across our state. In other words, we need systematic deregulation and low, predictable taxes. 

The second implication has to do with our state's future tax base. No matter which way we slice the tax base, its bulk is going to consist of households making less than $75,000 per year. If the tax is placed on their employers or on them does not matter - it is this group that is going to have to pay those taxes. Since that is the group we are losing, it means that even before our state legislature has passed any major tax increases, or created new taxes, the base from which they intend to draw that new revenue, is eroding. 

More to come. Stay tuned.

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