Every state experienced an uptick in total personal income last year as historic gains in unemployment benefits, federal aid, and other public assistance drove the sharpest annual growth in two decades. Without government support, most states would have sustained declines in personal income—a key economic indicator—as the COVID-19 pandemic took a toll on business activity.
Government assistance swelled in 2020 compared with a year earlier as policymakers pumped money into the economy to help Americans weather the pandemic, which upended normal economic patterns and left millions unemployed for much of the year. The sharp increase in government transfer payments more than offset a slight decline in inflation-adjusted earnings, which include wages from work plus extra compensation such as employer-sponsored health benefits, as well as business profits. Nationally, the sum of residents’ personal income from all sources rose 4.9% in 2020, the largest annual increase since 2000, after adjusting for inflation.