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County and metropolitan area personal income, 1984-86.

County and Metropolitan Area Personal Income, 1984-86

THIS article introduces a comprehensive revision to the local area personal income estimates for 1969-84, together with estimates for 1985-86, which are presented for the first time. The local area revision reflects the comprehensive revision of the national income and product accounts presented in the December 1985 SURVEY OF CURRENT BUSINESS, the comprehensive revision of the State personal income estimates presented in the August 1986 SURVEY, and the use of newly available or more current source data and improved estimating techniques for many income components at the county level.

The estimates presented here are total and per capita personal income for 1984-86. Table 1 contains estimates for county-based metropolitan areas, as defined by the U.S. Office of Management and Budget. Table 2 contains estimates for 3,105 counties and county equivalents. The separate estimates for the smaller Virginia independent cities (generally those with fewer than 100,000 inhabitants) have been discontinued, because the geographic coding of the source data for these small areas has proved to be unreliable. Instead, the smaller independent cities are combined with adjacent counties in these estimates.

The estimates for 1981-86, including income by major type and labor and proprietors' earnings by Standard Industrial Classification (SIC) industry division, will be presented in the forthcoming five-volume set Local Area Personal Income, 1981-86. A detailed description of the sources and methods used to derive the estimates will be included in each volume. The full set of estimates for 1969-86, in greater industrial detail, is available in several forms (including microcomputer diskette for the first time) from BEA's Regional Economic Information System, as explained on page 49.

The source of the revision of local area personal income consist of definitional and classificational changes (described in the August 1986 SURVEY) and statistical changes. Three of the six definitional and classificational changes were estimated explicitly at the county level and are described under transfer payments. The other three changes, as well as most of the statistical changes made at the national and State levels, involved detailed estimation that could not be replicated at the county level. The changes were extended implicitly to counties through changes to the State estimates. Except for the three definitional and classificational changes estimated explicitly, the revisions discussed in the following sections are statistical changes resulting from the introduction of new source data at the county level. The discussions are confined to the estimates for recent years.

Wages and salaries

The estimates of farm wages and salaries for 1982 and later years are now based on data from the 1982, instead of the 1978, Census of Agriculture.

The improved methodologies for private households and railroads are the same as those introduced at the State level. The estimates for private households are now based on unpublished place-of-work wage and employment data from the 1980 Census of Population, instead of on the place-of-residence employment data used previously from the 1970 Census of Population. The metropolitan county estimates for railroads are now based on Association of American Railroads employment data (now available separately for each railroad company) weighted by Interstate Commerce Commission national data on average compensation by railroad company. The estimates for nonmetropolitan counties are based on the 1980 unpublished place-of-work wage data.

The new methodologies for private education and membership organizations involve the separate estimation of segments of those industries that are not completely covered by unemployment insurance (UI). Wage data from the UI Tax system were previously the basis for the county distributions of the entire industries. In about one-half of the States, the UI coverage of private elementary and secondary schools is broad enough to permit the continued use of the UI wage data as the basis for the estimates of that segment. The estimates for the other States now reflect county employment data from State education departments, where available, or from the U.S. Department of Education. The UI Coverage of religious membership organizations generally extends to the larger organizations only; the resulting concentration of the UI Wage series in the larger metropolitan counties is unrepresentative of the segment as a whole. In the absence of a comprehensive alternative series, the county estimates are now based on the distribution of civilian population.

The county estimates of State government wages and salaries in 43 States continue to be based on UI wage data. For the other States, the use of the employment distribution from the 1967 Census of Governments as the basis for the estimates has been discontinued. Instead, the education segment in all of those States and the moneducation segment in one of them are now also based on UI wage data. In the remaining noneducation segments, because of inadequate geographic coding of the UI wage tabulations, the county estimates of State government wages and salaries are based on unpublished place-of-work wage data from the 1980 Census of Population.

Other labor income

The separate estimates of private sector employer contributions to private welfare funds (except workers' compensation) have been discontinued because separate national estimates by industry are no longer prepared. Instead, the total of employer contributions to private pension and welfare funds for each two-digit SIC industry is apportioned to counties by the distribution of wages and salaries. Previously, employment distributions had been used for the welfare funds portion.

Proprietors' income

Farm proprietors' income.--Those components of farm gross income and expenses that were formerly based on the 1978 Census of Agriculture are now based on the 1982 Census of Agriculture. The defaulters' gain adjustment, which was introduced as part of farm proprietors' income beginning with 1983, is given the same census-based county distribution as farm interest expense.

Nonfarm proprietors' income (NFPI).--The estimates of NFPI were affected by a large increase at the national level in the adjustments for income not reported on tax returns. These "underground economy" adjustments account for almost one-half of NFPI in recent years.

At the State and county levels, the estimates of the income of nonfarm sole proprietors and partners have been improved by the use of source data that are more comprehensive, detailed, and current than those used previously. The new data were drawn from Internal Revenue Service (IRS) form 1065 (for partnerships) and Schedule C of form 1040 (for sole proprietors) for 1981-83. The data used for the estimates are tabulations of net profit less loss (NPLL) and of gross receipts by two-digit SIC industry from the two forms combined.

The methodology used for the revised county estimates is similar to that used for the State estimates, but source data problems, which tend to be more acute for counties than for States, required that less direct source data be used for many industries. The NPLL Data are highly volatile for many industries, indicating that they are unreliable. The gross receipts data for manufacturing industries also proved to be too volatile for reliability at the county level.

For each of 14 nonmanufacturing industries (out of a total of 64 two-digit SIC industries) together accounting for more than 80 percent of total NFPI, the 1981-83 county estimates were prepared separately for two segments. The underground economy adjustments for these industries were allocated to counties in proportion to the distribution of gross receipts, and the rest of NFPI was allocated by NPLL. The county estimates for all of NFPI in each of an additional 26 non-manufacturing industries, together accounting for less than 15 percent of NFPI, were also allocated by the gross receipts series. The 1983 estimates for these 40 industries were extrapolated to 1984 by the relative changes in the number of small firms, as reported in the Census Bureau's annual publication County Business Patterns. The 1985-86 estimates are given the same county distributions as the 1984 estimates.

In the absence of reliable direct data, the estimates for the 21 manufacturing industries, accounting for less than 2 percent of NFPI, are based on the county distribution of wages and salaries for each industry.

For the three remaining industries, limited partners' income presents a special estimating problem. In these industries--crude petroleum and natural gas extraction, real estate, and holding and other investment companies--limited partnerships are often used as tax shelters. Limited partners' participation in partnerships is often purely financial; their participation more closely resembles that of stockholder-investors than that of working partners. Accordingly, the usual assumption that the county from which the partnership files its tax return is the same as the residence of the partners is unsatisfactory. No direct data on the income of these partners by their place of residence are available. The State estimates of proprietors' income for these industries, usually accounting for less than 3 percent of NFPI, are allocated to counties in the same proportion as dividends received by individuals (based on all-industry dividends reported on IRS forms 1040).

Personal interest income

The county estimates of two segments of monetary interest received by individuals were improved by the introduction of more appropriate county-level source data. First, interest paid by money market mutual funds, reported to the IRS as dividends, is now based on the IRS county distribution of dividends rather than the interest distribution used previously. Second, municipal bond interest now reflects the distribution of high-income households by county from the 1980 Census of Population, rather than the distribution of the civilian population used previously.

Transfer payments

Definitional and classificational chages.--Of the changes made explicitly at the county level, two added new components to transfer payments, and the third expanded the coverage of an existing component. Medical vendor payments consist of Medicaid and general assistance medical payments of State and local governments. The county estimates are based on payments data, where available, from the State departments of social services. For the other States, the estimates reflect the county distribution of payments made under the Aid to Families with Dependent Children program. Payments under the Civilian Health and Medical Plan of the Uniformed Services (CHAMPUS) program are for medical treatment at nonmilitary facilities of dependents of active duty military personnel and retired military personnel and their dependents. Payments data are not available below the State level; the county estimates reflect the distribution of military retirement payments. The definition of low-income energy assistance has been expanded to include payments made directly to fuel vendors, as well as those made to individual beneficiaries. The county estimates reflect payments data, where available, from the State departments of social services. In the other States, the estimates continue to reflect the county distribution of the number of persons receiving supplemental security income.

Statistical changes.--The estimates of payments received from railroad retirement, supplemental security income, and veterans pensions and readjustment benefits have all been improved by the introduction of current-year payments data from the Federal agencies administering the programs. Previously, railroad retirement had been based on a 1971 series and the other components on indirect indicators.

Residence adjustment

Almsot all of wages and salaries and of other labor income and most of personal contributions for social insurance are estimated on a place-of-work basis and must be converted to a place-of-residence basis for the derivation of STate and local area personal income, which is defined as the incincome received by the residents of an area. The conversion is made by the addition of the net inflows of commuters' earnings (total inflows less total outflows), termed the "net residence adjustment." Unlike the estimates of the components of personal income, the estimates of net residence adjustment are made at the county level, and the State estimates are derived as the sum of the counties.

The 1980 residence adjustment estimates now reflect detailed estimation of the intercounty flows of communters' earnings, based on journey-to-work data from the 1980, instead of the 1970, Census of Population. The methodology for extending the 1980 estimates of net residence adjustment to later years (using the relative changes in BEA place-of-work wages and place-of-residence wages tabulated from IRS form 1040) is essentially unchanged, but procedures used to screen out anomalous results have been improved.

Data Availability

Personal income by type of payment and earnings by SIC Industry division, as shown in table A, are available for metropolitan areas and counties for 1969-86. An expanded version of this table that includes earnings by two-digit SIC industry is also available. In addition, there are supplemental tables for employment by industry division, transfer payments by division, transfer payments by program, and major categories of farm income and expenses.

These tables are available on magnetic tape, computer printouts, microfiche, and--for the first time--microcomputer diskette. Magnetic tape files are priced at $200 per reel. For each table series except the more detailed two-digit SIC industry income table, all years of data for all the counties or all the metropolitan areas of the Nation are available on a single reel. The county file of the more detailed version of the income table occupies two reels. The tables in forms other than magnetic tape are priced by page, microfiche, or diskette; the cost of an order will depend on the number of table series, areas, and years of data ordered. For further information, write to Regional Economic Information System, BE-55, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, D.C. 20230.
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Publication:Survey of Current Business
Date:Apr 1, 1988
Previous Article:Annual input-output accounts of the U.S. economy, 1982.
Next Article:The business situation.

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