For over a decade, Connecticut had the highest average income per resident across the country. But at the end of 2020, Massachusetts inched to the top and has left Connecticut in the runner-up spot for the last three years, according toquarterly datareleased last month by the U.S. Bureau of Economic Analysis.
Although Connecticut doesn’trank first, it’s not far from it. As of the third quarter of 2023, Massachusetts led Connecticut by about $1,200 in personal income per capita, with Connecticut at $87,300. In the trailing states of New Jersey, New York and California, the average income per resident is between $80,000 and $82,000.
Personal income for each state as calculated by the BEAincludesall income from wages, salaries, government benefits, business ownership and rental properties, among other things, but it doesn’t include capital gains from stocks.
But while one of the richest on average, it’s also one of the most unequal. Connecticut is tied with Wyoming for the highest levels of income inequality in the country as of 2021, according todatareleased a few months ago by the BEA. To get an idea, Fairfield County’s personal income per capita wasmore than doublethat of Windham County. Meanwhile, 2022estimatesfrom the U.S. Census Bureau, whose methodology differs, place Connecticut at second-most unequal in the nation, right behind New York.
Given the financialdisparities, a statistic known as the median household income adds further context into a state’s economic status.
Median household income, derived from census estimates, doesn’t average all income amounts and isn’t skewed by higher or lower extremes, such as in a state where richer or poorer households make up a larger share than the population. It chooses the value right in the middle of the income range. And unlike the calculation from the BEA, the census estimate is derived from a sample andincludessomecategories such as income from government employee retirement plans and private pensions, among others. Given the varying differences, the value isn’tdirectly comparableto the BEA’s personal income calculation but adds context.
In the most recent median household income census estimates released lastyear, which cover a sample from 2022, Connecticut ranked tenth at $88,400, compared to Massachusetts, which ranked third at $94,500. New Jersey led the list at $96,300.
Areportearlier this year from the child advocacy and economic policy group CT Voices for Children argues that high costs of living are slowing down economic growth. The state is alsostrugglingto fill vacant jobs. And among the various initiatives to boost economic development, Connecticut is providing training andfundingto avarietyof industries. Last year, the state announced a new marketing campaign with themessaging“Make It Here” to lure businesses and a younger demographic.
