The Industries Bringing in the Most Money For All 50 States
FiveThirtyEight recently dug into how states differ on their tax income, mapping out which states get their tax revenues from income taxes, sales taxes, sin taxes, property taxes, corporate taxes, or severance taxes. The breakdown is interesting for a few reasons, firstly because it shows what financial areas are of most import to the state’s government and budget, but also because it shows the different emphases placed on various industries depending on the state.
The United States is made up of a diverse set of economies, each facing its own financial pressures and successes. In the same way that FiveThirtyEight examined tax revenue, we’re going to look at industry and GDP. When the economy takes a dip in one industry, it doesn’t hurt all regions equally, and the reason for that is fairly obvious. The same can be said of national policy that is detrimental to a certain industry — states will obviously not all suffer equally from this. Different industries have a different degree of import for different states depending on how important each is to the state’s overall economy and its gross income, and also its effect on growth.
The U.S. as a whole has seen some industries collapse in recent years (the real estate market obviously took a dive) and some have been slower to recover from the recession than others. For example, the construction and manufacturing industry in America has been slower to recover than others, while the health and human services sector is a strong job creator. Within states specifically though, there are more specific dependencies.
For example, the cliche example would be the corn industry in Iowa. How corn is doing would have a much greater impact on Iowa than it would on a state like, say Michigan, or New York. But in reality Iowa’s biggest industry, in terms of how much it contributes to the GDP, is finance insurance and real estate, at 21% of the state’s GDP. Agriculture makes up less than 10% of it, according to the U.S. Department of Commerce’s Bureau of Economic Analysis. It’s still in the top five GDP contributors, but it’s not the top contributor. Let’s take a look at two maps of state GDPs, how they compare, and what industries are most important to the value of that state’s economic output.
The infographics below were constructed by The Cheat Sheet using state specific data on GDP from the Bureau of Economic Analysis. The BEA groups industries into main categories, and to an extent that reduces the specificity of much of this data. You’ll notice many states fall into the “Finance Insurance, Real Estate, Rental, and Leasing” category, and nearly every state’s top industry is labeled “other” — likely to many non-sortable sources of income.
However, the map does give a general idea in particular which states deviate into certain industries at unusual GDP growth rates, compared to fellow states. One example of this would be Alaska and North Dakota. Both show dependence on mining, but by looking at the graph below, North Dakota’s growth has been considerably more impressive. Yet it’s also visible that Alaska’s GDP is higher overall.
The graph above does not show GDP or Government, but instead illustrates whether or not the compound annual growth rate in GDP between 2012 and 2013 (the most recent years that there is data available for) for that state was above or below the average growth rate for the whole of the United States. In other words, it looks at how compound growth rates measure compare for 2012. The compound annual growth rate average was 1.6%.
A majority of states were actually above this number, with a couple either even with it, or just under. But there were also a few that were well under the average. Alaska actually fell into the negative, according to the data from the U.S. Department of Commerce, with a constriction of 2.5%. Virginia’s growth was at a mere 0.1% and Pennsylvania and New York were at 0.7% growth. On the reverse side, the top growth was seen from states like Wyoming, North Dakota, and West Virginia, Oklahoma at 7.6%, 9.7%, 5.1%, and 4.2% growth respectively.
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Follow Anthea Mitchell on Twitter @AntheaWSCS