Iowa Income: Who Gets What?

(Thanks to daveswen for this post. Facts don't support widespread beliefs about Iowans allegedly being too dependent on federal programs. - promoted by desmoinesdem)

Depending on where you live in Iowa and who you interact with, you may have some quirky conclusions about how income gets made.  It’s common and correct to conclude that many folks get along with the help of public assistance: many in fact wouldn’t get along at all without public aid.  But most of us don’t have a clue how money gets made in this state, let alone who the recipients of public assistance are.  We go to annual estimates by the U.S. Bureau of Economic Analysis to get the numbers.

Here's how $138.34 billion in 2013 total personal income was divided up: Two-thirds ($91.3 billion) came from total earnings, which are wages and salaries, payments to proprietors, and the value of all employer-supplied benefits like medical insurance and retirement contributions.  Investment incomes (dividends, interests, and rents) made up 18 percent ($24.7 billion).  And transfers – payments by the federal government or, to a lesser extent, state government to individuals either in cash, vouchers, or direct assistance – were 16 percent of state income. 

Stated differently, 84 percent of our incomes came from market activity, and 16 percent came from governmental tranfers.  Market incomes trumped government payments to individuals by a ratio of better than 5 to 1.  

Now to the $22.4 billion in transfers.

Remembering that transfers were 16 percent of Iowan’s 2013 incomes, 64 percent of that transfer slice involved payments to the elderly, survivors, and the very poor disabled under Social Security and Medicare.  Another 17 percent went to Medicaid which serves the health care needs of the disabled and of qualifying low income families or their children.  SNAP, AKA food stamps, represented just 3 percent of transfers, as did family assistance payments (what we once called “welfare” of “AFDC”).  There are more transfers.  Working low income families receiving the Earned Income Tax Credit were 2 percent of subsidies and another 1 percent went to the disabled and very low income elderly in the form of supplemental security income (SSI).  Finally, 2 percent of these transfers went to the unemployed, and 3 percent, respectively, to veterans and to students in colleges or other schools.

For perspective, another number.   In 2013, Iowa farmers received $791.6 million, which was more in federal aid than all but the first three categories of public assistance that were just listed.  And 2013 was something of a lean year in terms of federal subsidies to farmers.

By the way, to arrive at the fraction of the state’s total income each transfer category accounts for, divide the percentages in the paragraph above by 16, which is the percentage of the state’s income made up of transfers. You get lots of very small fractions that seem to nonetheless generate a tremendous amount of rhetoric in coffee shops and on campaign trails.

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