Growth in Maryland’s Personal Income Remains Below the U.S. in 2014 Recovers from previous year’s decline, but below U.S. for fifth straight year The following are highlights of the personal income data released by the U.S. Bureau of Economic Analysis (BEA).1 
Maryland’s personal income, adjusted for inflation, grew by 2.3 percent in 2014, an improvement over the 1.6 percent drop in 2013, a larger decline than occurred during the Great Recession and the largest loss since the beginning of the data series in 1969.2 (See Tables 1A and 1B.) 
U.S. personal income also rebounded from a 2013 decline (‐0.2%) and grew by 2.9 percent in 2014. The 2014 increase, however, was below rates achieved in 2012 (3.1%) and 2011 (3.7%). 
Maryland’s rate of personal income change in 2014 was ranked 33rd among the 50 states and the District of Columbia, an improvement over 2013 and 2012 when the state was ranked 46th and 45th respectively. Maryland’s ranking of 46th in 2013 was the lowest since 1992. 
Maryland’s personal income growth rate has now been below the national rate for five straight years and for nine out of the last 10 years. In contrast to this recent period, Maryland’s personal income grew more rapidly than the U.S. in the late 1990s and in the beginning of the 2000s, having exceeded national growth rates for seven straight years from 1997 to 2004. 
The only time in the last 10 years that Maryland outperformed the U.S. was during the depths of the Great Recession in 2009 when its personal income declined by 0.3 percent, much better than the 3.2 percent drop for the U.S.3 (See Chart 1.) Prior to 2009, the last drop in overall personal income for both Maryland and the U.S. was in 1974. (See Excel spreadsheet TOTPI for personal income data over the 1969 to 2014 period.) There are three major components of personal income: net earnings by place of residence, investment income (dividends, interest and rent) and transfer payments. Highlights of these components include: 
Maryland’s net earnings by place of residence (essentially income earned through work) grew by 1.7 percent in 2014, a reversal from the 1.7 percent drop in 2013, which was the 1
Release date, September 30, 2015, with revised estimates back to 1976. 2
Unless stated otherwise, all income data is adjusted for inflation by using constant 2009 dollars. 3
What is being termed the “Great Recession” has an official date of December 2007 thru June 2009. At 18 months, this recession was two months longer than the two, 16‐month recessions in the early 1980s, and was the longest recession since the one covering the August 1929 to March 1933 period (43 months). See http://www.nber.org/cycles/cyclesmain.html 1 first drop since the Great Recession year of 2008. The growth in 2014 was the second highest in the last eight years, but was measured against the 2013 decline. The 2013 drop in net earnings was affected to some extent by two special factors: “…the expiration at the beginning of 2013 of the “payroll tax holiday” (a temporary two‐percentage point reduction in the personal contribution rate for social security) and the acceleration of the receipt of income, especially personal dividends and salary bonuses, into the fourth quarter [of 2012] in anticipation of first‐quarter changes in individual income tax rates.”4 The reduction in the contribution for social security was one of the provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and was in effect through the end of 2012.5 (See Chart 2 and line 0045 in Tables 3A, 3B and 3C. Also see file Comp_PI_MD for data back to 19696.) 

Nationally, net earnings grew by 3.1 percent, also the second best in the last eight years, and in contrast to no growth in 2013. Like Maryland, the 2013 net earnings by place of residence were also affected by the unique circumstances noted above. (See Chart 2 and line 0045 in Tables 4A, 4B and 4C. For data back to 1969, see line 0045 in Excel file Comp_PI_US.) Dividends interest and rent payments for both the U.S. and Maryland rebounded in 2014 after declines in 2013. For Maryland, investment income grew by 2.8 percent compared to a 3.3 percent decline in 2013, while the 2014 U.S. gain of 2.5 percent reversed the 2.3 percent decline in the previous year. The 2014 gains for Maryland and the U.S., while bouncing back from the previous year, were well below growth rates in 2011 and 2012. The declines in 2013 (and also the higher gains in 2012) were somewhat affected by the reported accelerated dividend payments at the end of 2012. These payments were made in the fourth quarter of 2012 instead of the beginning of 2013 to avoid anticipated higher federal income tax rates beginning in 2013. (See Chart 3 and line 0046 in Tables 3A, 3B and 3C for Maryland, and Tables 4A, 4B and 4C for the U.S.) While the decline in 2013 was an allocation issue, the two year declines in 2009 and 4
U.S. BEA, State Personal Income: First Quarter 2013 5
The 2.0 percent payroll tax cut took effect in the first quarter of 2011. This had the effect of boosting earnings by place of residence in 2011 since employee contributions for social insurance is subtracted from net earnings by place of work (along with the residence adjustment) to yield net earnings by place of residence. The elimination of the tax cut in 2013 reduced earnings by place of residence. 6
Note that components of change are comparable across the SIC system (1969‐2001) and the NAICs system (1998‐
2012) in this file. However, the earnings by industrial sector data that are also in this file are NOT comparable between SIC and NAICs (even for sectors which are named the same, such as retail or manufacturing) with the exception of the government sector. All government sector data (federal civilian, military, state and local government) are comparable across SICs and NAICs. 2 2010 for both Maryland and the U.S. were more consequential and were a product of the financial stress of the Great Recession. It was the first time that Maryland had experienced two straight years of inflation‐adjusted declines in dividends, interest and rent since the beginning of the analysis period in 1969. For the U.S. there was a two‐year period of decline in 2000 to 2002 and a three year period of decline, 1990‐1993. 
Transfer payments, which include many social safety net programs like unemployment insurance, food stamps, Medicaid and supplemental security income payments, mostly move in the opposite direction to the rest of the economy. So it was in 2008, 2009 and 2010 with large percentage increases for both the U.S. and Maryland, with the 2009 increase for Maryland (10.7%) and the U.S. (9.9%), the largest since 1975. The growth in transfer payments moderated between 2010 and 2012 with an overall decline in 2012 for Maryland (‐0.7%) and the U.S. (‐
1.6%) due in large part to the double digit declines in unemployment insurance compensation (which has continued through 2014.) (See Chart 4A for percent change in unemployment insurance payments back to 1992. Also see Chart 4 and line 0047 in Tables 3A, 3B and 3C for Maryland, and Tables 4A, 4B and 4C for the U.S.) Transfer payments picked up again in 2013 and 2014 with Maryland’s 2014 gain (4.6%) much greater than the overall U.S. gain (2.8%). The growth in 2014 for both Maryland and the U.S. was mostly due to the implementation of the Affordable Care Act, which allowed states to expand Medicaid eligibility. While Maryland did expand Medicaid eligibility, not all states did so, or at least not right away, which helps explain why Maryland’s growth rate in 2014 for this segment of transfer payments (18.3%) was increasing at a much more substantial rate than the national average (9.3%).7 (See File TransferPayments_US&MD.xls for components of transfer payments for the U.S. and Maryland over the 1969 to 2014 period in current and constant dollars.) Wages and Salaries are a major component of earnings by place of residence but are collected by place of work through the unemployment insurance reporting system.8 Highlights for this data include: 
Wage and salary disbursements in Maryland grew by 1.9 percent in 2014 compared to a 3.6 percent gain nationally. For Maryland, the 2014 increase followed a 0.6 percent decline in 2013, 7
Coverage under the Medicaid expansion became effective January 1, 2014 in all states that have adopted the Medicaid expansion except the following: Michigan (4/1/2014), New Hampshire (8/15/2014), Pennsylvania (1/1/2015), Indiana (2/1/2015), and Alaska (9/1/2015). (Source: Kaiser Family Foundation.) As of September 1, 2015, a total of 31 states have Medicaid expansion. 8
The wage & salary data, plus “supplements to wages and salaries,” as well as “proprietors’ income,” are all part of the “earnings by place of work” total. (See lines “0050‐0072" in Tables 3A and 4A.) Subtracted from the net earnings by place of work to get net earnings by place of residence are personal contributions for social insurance and an “adjustment for residence” (essentially an adjustment of income based on where workers live as opposed to where their income is earned). (See lines “0035‐0045" in Tables 3A and 4A.) 3 the first inflation‐adjusted drop since the 0.7 percent consecutive declines in 2008 and 2009, at the height of the Great Recession. For both Maryland and the U.S., the 2013 wage totals (and 2012 totals) were affected somewhat by the acceleration of the payment of bonuses to the fourth quarter of 2012 that would normally have been paid out in the first quarter of 2013. This occurred in order to avoid anticipated income tax rate hikes in 2013. 
Growth in Maryland’s wages & salaries has now lagged behind U.S. rates for four straight years,
with the gap becoming increasingly wide over the last two years. Prior to the Great Recession,
Maryland’s wages & salaries generally grew above national rates, and the decline during the
height of the Great Recession in 2009 was much less severe in Maryland compared to the nation
as a whole. (See Chart 5 and Tables 5A, 5B and 5C for Maryland data and Tables 6A, 6B and 6C
for U.S. data. Also see line 0050 in Excel file Comp_PI_MD for 1969‐2014 components of
change data.)

There was wage & salary growth in 19 of the 24 major sectors in Maryland in 2014. Percentage
increases were largest for farms (10.4%), transportation & warehousing (7.4%), arts,
entertainment & recreation (5.5%), construction (4.6%), and real estate (4.3%). (See Chart 6.
Also see Excel file W&S_Disbursements_for_MD.xls for data back to 1998.) The increase in
farm sector wages was the third annual gain, which followed four consecutive years of declines
(2007 to 2011). As measured by total wage and salary disbursements, the farm sector in
Maryland is tiny, accounting for only about 0.1 percent of all wages disbursements in the state.
As such, individual years can often be volatile, either up or down. During the last three years
the largest gain was in 2012 (37.1%), which also was the largest in the data series back to 1998. 9,10
(See file AllStates_AllSectors_W&S_98_14.xls for wage and salary jobs data back to 1998.)

Regarding the other top performing sectors, the 2014 percent increase in transportation &
warehousing (7.4%) was a rebound from no gain in 2013 and was the largest percentage gain in
the data series. Growth is this sector was being driven by the 11.4 percent gain in air
transportation, the highest in the data series as well as the 5.4 percent increase in trucking
(second highest in the series) and the 16.7 percent increase in warehousing and storage (highest
in the data series).

The 4.6 percent increase in construction wages in 2014 was the second consecutive increase
which followed five straight years of inflation‐adjusted declines (from 2008 to 2012). However,
since previous year’s losses have been so severe and prolonged, the total wage & salary
9
The 2012 increase in wages & salaries of 37.1 percent was tied to the 1,731 gain in farm payroll jobs, the largest in the data series. It is possible, however, that the large increases in 2012 may have something to do with incorporating relevant data from the 2012 Census of Agriculture. 10
With the revisions to the NAICs data in 2013, comparable sector detail only goes back to 1998. 4 disbursement in 2014 of approximately $8.4 billion is well below the $10.2 billion peak total in 2007 and is about where it was in 2002. 
The three largest private sectors in Maryland (as measured by total wage & salary disbursements) were not among the top performing sectors but did rebound from disappointing growth in 2013. For the professional, scientific & technical services sector (the largest in Maryland), total wage & salary disbursements grew by 2.7 percent, which followed a 1.8 percent decline in 2013, the first inflation‐adjusted decline in the data series back to 1998. While part of that decline may have been due in some part to the shifting of bonuses from the beginning of 2013 to the end of 2012, another probable factor was the federal budget sequestration which began March 1, 2013. This sector in Maryland has historically been the recipient of many federal government procurement contracts and most likely would have been affected by the automatic spending cuts. 
The health care & social assistance sector, the second largest in terms of total wage & salary disbursements in Maryland, grew by 1.9 percent in 2014, up from the 0.2 percent gain in 2013, which was the smallest increase in the data series. Despite the overall growth, overall wage disbursements in the hospital sub sector declined for the second year in a row in 2014. 
Finance & insurance, the third largest Maryland sector as measured by wage & salary disbursements, grew by 1.2 percent in 2014, following a 1.4 percent drop in the previous year. The decline in 2013, however, when viewed in the context of the very large increase in 2012 (7.7%, the largest in 10 years) may well have been due to the forward shifting of bonus payments from the beginning of 2013 to the end of 2012. The rebound in 2014 happened despite an overall drop of 907 wage & salary jobs in this sector, but the losses were all in the lowest paying sub sector (‐1,744 in credit intermediation) and the gains were in the higher paying sub sectors (+480 in securities and +245 in insurance). 
While not one of the larger sectors as measured by total wages, educational services also rebounded from a 1.6 percent decline in 2013 to expand by 2.4 percent in 2014. The drop in disbursements in 2013 can be tied to a 1.4 percent decline in payroll employment, the first drop in eight years. 
The federal civilian government sector had its first increase in wage disbursements in three years in 2014 (1.8%). Declines in the previous two years were tied to drops in overall employment, but the increase in 2014 came despite a third consecutive decline in overall employment. Because of Maryland’s proximity to Washington, D.C. and the number of federal agencies within its borders, the federal government sector is much more prominent in Maryland than in the nation as a whole. In 2014, wage and salary payments to federal civilian workers in Maryland accounted for 10.5 percent of all payments to workers in the state, compared to a 2.8 federal civilian percent national share. 5 
Among the few sectors to show a drop in wages and salaries, the largest percentage decline was in mining (‐3.1%). This sector, however, is extremely small in Maryland, accounting for 0.05% of total wage disbursements in the state in 2014, and can be volatile. In general, though, the trend has been mostly down with declines in five out of the last eight years. 
More importantly to the state’s economy, though, was the continued decline in wage and salary disbursements in the manufacturing sector. Total manufacturing wages declined by 2.4 percent in 2014, the seventh straight yearly decline. The decline in manufacturing has been long term in Maryland, which unlike the U.S. as a whole, has not experienced a turnaround in the last couple of years. The decline in total manufacturing wages in Maryland is tied to its decline in manufacturing payroll jobs which have now dropped for 14 straight years. This has led total manufacturing payroll to go from 9.0 percent of all statewide payroll outlays in 1998 to 4.8 percent in 2014. 
For the U.S., 23 out of the 24 sectors had positive growth in wage & salary disbursements, compared to 19 Maryland sectors. (See Chart 6 and Tables 6A, 6B and 6C. for U.S. data.) As such, several sectors grew nationally while Maryland sectors declined, and also many sectors which grew both in Maryland and nationally expanded more nationally than in Maryland. In the former category is manufacturing, where wage & salary disbursements grew 3.1 percent nationally compared to the 2.4 percent decline in Maryland, with the national sector having now expanded for five straight years. In the latter category (among major sectors) was construction, where wages & salaries grew 7.1 percent nationally (the largest percentage increase nationally among the major sectors) compared to the 4.6 percent increase in Maryland. The construction sector has been recovering more quickly nationally than in Maryland, with wage growth beginning in 2012 compared to 2013 in Maryland, but the preceding downturn was more severe nationally than in Maryland. (See Excel file W&S_Disbursements_for_US.xls for U.S. sector data back to 1998.) 
The military (‐3.4%) was the only sector to decline nationally in 2014. This decline, which was a bit larger than in Maryland (‐2.4%), was the fifth consecutive drop nationally, compared to only the last two years in Maryland. Per capita personal income 
Maryland’s 2014 per capita personal income of $54,176, in current dollars, is ranked eighth in the U.S., continuing a trend over the last three years of a falling relative ranking. Maryland’s per capita income was ranked seventh in each of the two previous years and ranked fifth in all but one year from 2000 through 2011 (it was ranked sixth in 2007). With this relative decline, Maryland’s rank in 2014 is its lowest since 1981 when it was ranked ninth. 
Despite the drop in its ranking, Maryland’s personal income still is substantially above the U.S. figure of $46,049 in 2014. (See Table 7A.) 6 
Maryland’s 2014 per capita personal income in constant 2009 dollars was $49,655, an increase of $809 from 2013 totals, and an improvement over the $1,170 decline in 2013. The 2013 decrease was the first since 2009 and was one of the larger losses in the nation, with the numeric decline ranked 46th and the percentage drop ranked 48th among the 50 states and the District of Columbia. (See Tables 8A, 8B, and 8C.) The 2014 numeric gain was ranked 25th while the percentage increase (1.7%) was ranked 35th. (See also Excel file PerCapInc for per capita income for all states and regions in current and constant dollars for 1969 to 2014.) 
U.S. per capita income in 2014 increased by $896 dollars, or 2.2%, in constant 2009 dollars, making the national performance better than Maryland for the fifth consecutive year for the first time since 1969. On three previous occasions the U.S. growth has been better than Maryland’s for three consecutive years: in 1973‐1975, 1977‐1979 and 1994‐1996. 
Since 2009, Maryland has had an average annual gain of just $183 in per capita income in constant 2009 dollars, only 32.3 percent of the $566 average annual national gain. (See Chart 7.) As a result, Maryland’s per capita income went from 23.8 percent above the U.S. in 2009 down to 17.6 percent in 2014, the closest the U.S has been to Maryland since 2001 (when it was 16.7 percent above). The 2009 difference between Maryland and the U.S. was the largest in the 46 years of the analysis period. At its closest point, Maryland’s per capita income was 12.1 percent above the U.S. value in 1979. 
Over the last 46 years, the greatest numeric growth in per capita income in Maryland occurred during the 1999‐2009 period, with average annual gains of $817 (or 1.9%) in constant 2009 dollars. (See Chart 7 and Chart 8.) The greatest annual percentage gains were during the 1979 to 1989 period, at 2.8 percent per year. Much of the 1980s was a period of very robust growth for Maryland, as it benefitted from the large increases in national defense spending and the expansion of the financial services sector. This period of robust growth was followed by the second slowest period of per capita income percentage gains during 1989 to 1999 when Maryland’s average annual gain was 1.7 percent. Much of the 1990s was characterized by a relatively weak economy in Maryland as the state was hit harder than the rest of the nation by the 1990/1991 recession. In addition, it took longer for Maryland to recover from this recession than most states. The 1999 to 2009 period saw Maryland’s growth rate again exceed the U.S. by wide margins (1.9% versus 1.1%) as Maryland was less affected by the 2001 recession and the Great Recession of 2007‐2009. Since the end of the Great Recession, however, Maryland has been slower to recover than the rest of the nation, with average annual gains since 2009 of just 0.4 percent. 7 Per Capita Disposable Personal Income 11 
Maryland’s disposable per capita personal income was the ninth highest in the nation in 2014, the same as in 2013. As with total per capita income, however, Maryland’s relative ranking as been on a downward path of late, having been ranked as high as fifth 10 times between 1999 and 2009. (See Tables 9A, 9B and 9C for data back to 2004 and file DispPerCapInc.xls for data back to 1969.) At $46,900 in 2014 (in current dollars), it was 15.9 percent higher than the national total ($40,471), down from 21.3 percent higher in 2009 and 2010, which was the largest differential during the last 46 years.  Maryland’s disposable per capita income increased by $633 (1.5%) in 2014, a large improvement over the $1,516 (‐3.5%) decline in 2013 (measured in inflation‐adjusted constant 2009$). (See Tables 10A, 10B and 10C.) However, the 2014 gains extended to five years the period in which U.S. gains ($692, 1.9%) outpaced Maryland’s growth.  As with total per capita income, the largest average annual numeric gains for Maryland for disposable per capita income was in the 1999 to 2009 period. (See Chart 9. Also see File DispPerCapInc.xls for data back to 1969.) In this 10‐year period, the average annual increase in the disposable per capita income ($881) actually exceeded the average gain of total per capita income ($817). The greatest average annual percentage gains for disposable per capita income were in the 1979 to 1989 period, 2.8 percent, the same as the total average annual per capita personal income increase. (Compare Chart 10 to Chart 8.) In the 2009‐2014 period, however, both the average annual numeric and percentage changes for disposable per capita income were below the total per capita income changes, with the average annual changes for real disposable per capita income showing small declines (‐$46, ‐ 0.11%). Maryland’s annual average changes in disposable per capita income in this period were well below national gains ($294, 0.8%). For more information, contact Mark Goldstein at mark.goldstein@maryland.gov
11
Disposable personal income is personal income minus personal current taxes. Personal current taxes is tax payments (net of refunds) that are made by persons and that are not chargeable to business expense and certain other payments by persons to government agencies (except government enterprises) that are treated like taxes. Personal current taxes include taxes on income, including realized net capital gains, and on personal property. Also included in personal taxes are personal licenses (including motor vehicle licenses). Contributions for government social insurance are not included. Sales taxes also are not included in personal tax totals. 8