South Carolina still lags behind the nation in per capita income, according to a central metric for economic prosperity, with the state falling further behind over the last five years.
Though South Carolina’s per capita income figures increased 4.4 percent to $24,222 between 2009 and 2014, that same figure increased by 5.6 percent for the country overall during that period. Since 2009, the state has slipped from 39th highest per capita income to 43rd, and had one of the lowest rates of change in per capita income figures in the U.S.
“When you look at economic development, everybody wants to talk about the number of jobs created and the amount of investment,” Upstate SC Alliance President and CEO John Lummus said. “South Carolina has always lagged the nation in per capita income. … Basically, we’re talking about economic success, and that’s the No. 1 issue that everyone has in terms of making more money to keep up with the cost of products and inflation.”
Non-labor income increasing
Per capita income has been used to measure standards of living in an area, though the metric certainly has its limitations, said University of South Carolina Moore School of Business Research Economist Joey Von Nessen. With a low cost of living, South Carolina routinely comes in below national averages, and the state’s relatively high population of retirees can skew the figure because these individuals are more likely to be on fixed incomes or non-labor wages.
“Certainly in the last five years, the relative share of non-labor income has been increasing,” said Von Nessen, who also noted the state is a popular retirement destination for previous non-residents as well as military veterans. “Here in South Carolina, we’ve seen wage growth that is significantly higher than the U.S. average.”
The levers behind per capita income include the availability of high-wage jobs as well as ensuring firms can fill positions with workers equipped with the appropriate skills, said Joseph Parilla, senior research associate for the Brookings Institute’s Metropolitan Policy Program. Parilla worked on the institute’s Global Metro Monitor report, which ranks changes in GDP and employment per capita for the world’s 300 largest metropolitan economies between 2013 and 2014. Greenville posted 0.7 percent gains in GDP per capita between 2013, and 2014, ranking 111th out of 300. This was up from 253rd between 2000 and 2014.
“GDP is a top-line thing, and it’s a very useful measure of the size of the economy, but I would say that GDP per capita is a better metric that shows that people’s lives are improving as a quality of life measure,” he said. “It controls for the fact that places can boost their GDP per capita by simply adding more workers. … To get gains in GDP per capita, you have to be becoming essentially more productive as an economy.”
3 building blocks for growth
Parilla pointed to three factors as the building blocks behind economic growth: a skilled workforce or human capital; technological innovation; and infrastructure such as roads, bridges, rail and public transportation.
“These all three come to ground in a region and determine the competitiveness of that place, and then become one of the main drivers of things like GDP per capita,” he said. “You do need all three, because if you have a bunch of innovation but people can’t participate in that aspect of the economy because they don’t have the skills or familiarity with that, then you cold have higher unemployment, higher inequality.”
South Carolina’s strategy has been to recruit companies offering high-wage positions, as well as working with companies to improve the state’s business climate and communicate to the technical colleges what skills are needed on the industry side, said Von Nessen. Both work together to wage growth versus non-labor income, he said, which ultimately can influence the state’s per capita income.
“If we look at the past several years, the weak spot in our economy has been per capita income. We want that to be higher because that’s one of the two key metrics that we look at as a measure of economic health, which is number of jobs and wage growth,” said Von Nessen. “Wage growth is typically one of the last things we see to grow in an expansion. … We expect wage growth to improve as the economy expands.”
