Alternative Measures of Household Income
Three of the most widely used measures of household income are BEA's measure of personal income, the Census Bureau's measure of money income, and the Internal Revenue Service's measure of adjusted gross income of individuals(1).
Personal income, in general, is a more comprehensive measure. Personal income is defined as the sum of wage and salary disbursements, other labor income, proprietors' income with inventory and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and transfer payments to persons, less personal contributions for social insurance. These measures include incomes of individuals, nonprofit institutions that primarily serve individuals, private noninsured welfare funds, and private trust funds. Proprietors' income is treated in its entirety as received by individuals. Life insurance carriers and noninsured pension plans are not counted as persons, but their income (and saving) is credited to persons.
The national measure of personal income differs slightly from the state and local area measure. The national measure includes, but the state and local area measure excludes, the labor earnings of U.S. residents who are temporarily working and living abroad (mainly Federal Government employees).
Money income consists of income in cash and its equivalents that is received by individuals, and it excludes employer contributions to government employee retirement plans and to private health and pension funds, lump–sum payments except those received as part of earnings, certain in–kind transfer payments—such as medicaid, medicare, and food stamps—and imputed income(2). Money income includes, but personal income excludes, personal contributions for social insurance, retirement income from government employee retirement plans and from private pensions and annuities, and income from interpersonal transfers, such as child support.
Adjusted gross income consists of the taxable income of individuals who filed a Federal income tax return. It includes, but personal income excludes, personal contributions for social insurance, gains and losses on the sale of assets, and retirement income from government employee retirement plans and from private pensions and annuities. Adjusted gross income excludes, but personal income includes, the income of the recipients of taxable incomes who, legally or illegally, did not file an individual tax return(3).
In addition, the presentation of personal income differs from that of money income. Personal income at the national, state, and local area levels is presented annually on a per capita basis. Money income at the national and state levels is presented annually both on a per capita basis and on a median basis(4).
As part of personal income, BEA prepares estimates of wage and salary disbursements by state and county. The Census Bureau and the Bureau of Labor Statistics (BLS) also prepare county–level estimates of wages and salaries(5).
The Census Bureau's County Business Patterns (CBP) employment and payroll data are an annual extension of the quinquennial economic censuses; the data are derived from Federal administrative records and from surveys of business establishments. The data exclude agricultural production employees, household employees, and most government employees(6).
The BLS county wage data are received from the Covered Employment and Wages, or ES–202, program, a Federal–state cooperative program; the data are derived from tabulations of monthly employment and quarterly total wages of workers who are covered by state unemployment insurance (UI) and of Federal workers who are covered by the unemployment compensation for Federal employees (UCFE) program. The BLS data include civilian government and some agricultural production employees and household employees. The BLS data account for 95 percent of the wage and salary component of BEA's estimates of personal income. The remainder consists of adjustments that BEA makes to account for employment and wages not covered, or not fully covered, by the state UI and UCFE programs(7).
Footnotes
1. For additional information, see the Census Bureau's annual publication Money Income in the United States; the Internal Revenue Service's annual publication Statistics of Income––Individual Income Tax Returns; and Thae S. Park, "Comparison of BEA Estimates of Personal Income and IRS Estimates of Adjusted Gross Income: New Estimates for 1997 and Revised Estimates for 1959–96," Survey 80 (February 2000): 12–23.
2. For a description of the imputations included in personal income, see table 8.21 "Imputations in the National Income and Product Accounts," Survey 80 (April 2000): 119–120.
3. For additional information, see NIPA table 8.28 "Comparison of Personal Income in the NIPA's with Adjusted Gross Income as Published by the Internal Revenue Service," Survey 80 (April 2000): 122.
4. For local areas, the most recent estimates of money income on a per capita basis are those for 1989, and on a median household basis, those for 1995.
5. For a complete description of the differences between the three sources of wages, see the box "Alternative Measures of County Employment and Wages," Survey 79 (May 1999): 53.
6. The CBP data cover only government employees who work in government hospitals, depository institutions, Federal and federally sponsored credit agencies, liquor stores, and wholesale liquor establishments.
7. See table 8.27 "Relation of Wages and Salaries in the National Income and Product Accounts (NIPA's) to Wages and Salaries as Published by the Bureau of Labor Statistics (BLS)," Survey 80 (April 2000): 122.
