Greater Cleveland's Slowing of Per Capita Personal Income Growth

Personal income growth is an important leading indicator of local economic vitality. In many ways, it is more important than employment growth because income is what makes jobs important. Greater Cleveland lost ground in personal income growth between 1993 and 2003. I am concerned about this fact.

In 2003, the Cleveland-Elyria-Mentor metro area had a per capita personal income (PCPI) of $33,196. This PCPI ranked 54th in the United States and was 105 percent of the national average, $31,472. The 2003 PCPI reflected an increase of 3.0 percent from 2002. The 2002-2003 national change was 2.2 percent. In 1993 the PCPI of Cleveland-Elyria-Mentor was $23,320 and ranked 36th in the United States. The 1993-2003 average annual growth rate of PCPI was 3.6 percent. The average annual growth rate for the nation was 4.0 percent.

In 2003, Cleveland-Elyria-Mentor had a total personal income (TPI) of $71,050,860. This TPI ranked 24th in the United States. In 1993, the TPI of Cleveland-Elyria-Mentor was $49,914,731 and ranked 20th in the United States. The 2003 TPI reflected an increase of 2.9 percent from 2002. The 2002-2003 national change was 3.2 percent. The 1993-2003 average annual growth rate of TPI was 3.6 percent. The average annual growth rate for the nation was 5.1 percent. Read the BEA report on Greater Cleveland here.

Likely culprits for this personal income decline are: 1) loss of good-paying jobs, especially in manufacturing, but also in services; 2) slower growth of wages and salaries in the region; and 3) aging of the population base. All three are likely candidates that we should investigate further in the future.

These personal income performance numbers reinforce the need for Greater Cleveland's ED organizations to give even greater attention to the future growth of wealth-building industries and entrepreneurship.

There are three components to the "new economy:" 1) innovation; 2) productivity; and 3) prosperity. I think Greater Cleveland is doing a better job with the first two than the third. Much greater attention must be given to squeezing more prosperity out of our local and regional economic development strategies.