The Effects of Industry-Mix and Wage Rates on per Capita Income in Kentucky

Abstract

Kentucky per capita income payments to individuals, as reported by the Department of Commerce, were $911 in 1950.1 After interstate situs adjustments, the per capita income payments were $939. And over 60 per cent of the total is income from wages and salaries. This proportion is somewhat less than the contribution of wages and salaries to the national per capita income payments (65 per cent in 1950). The analysis here will be devoted wholly to the type of industry and average wage. The percentage of total income represented by wages and salaries will not be considered, but the relative amounts received by industrial employees, farm proprietors, and other receiver groups are no doubt important factors in explaining per capita income levels.2 In the first part of this analysis only the wages and salaries of employees covered by the state unemployment insurance laws will be considered. Covered wages and salaries in Kentucky in 1950 amounted to 65 per cent of all wages and salaries earned in the state.3 For the nation as a whole, covered wages and salaries were 72 per cent of the total.4 If all the workers covered by the Kentucky Unemployment Insurance law in 1950 had received annual wages equal to the average for all workers covered by unemployment compensation laws in the nation, average covered income in Kentucky would have been about $417 per year higher for the average worker and Kentucky per capita income about $55 higher. Covered wages and salaries in Kentucky, if employees had been paid at the national average compensation rate, would have been $1,277.1 million or $163.2 million more than they actually were, as shown in Table 1. This difference divided by the state's population is $55.6 The problem here is to determine whether this $55 per capita is the result