The Contributions of Government Transfer Payments to Personal Income

Contributions to personal income vary widely. Many working-age Americans rely heavily on the income earned from wage and salary jobs, whereas rental incomes or investment dividends comprise a greater share of income for wealthier individuals. Other Americans—particularly many older Americans—rely more on government transfer payments. Government transfer payments to individuals include benefits related to retirement and disability insurance (e.g., Social Security), medical benefits (e.g., Medicare and Medicaid), as well as income maintenance benefits, unemployment insurance compensation, and veterans' benefits, among others.1 These income sources are critical for both individuals and communities. For many older, disabled, and/or disadvantaged individuals, government transfer payments provide them with resources they need to meet their basic healthcare and income needs. For rural communities, these government transfers are often spent locally and can ensure the viability of local grocery stores or healthcare providers. Last November, the U.S. Bureau of Economic Analysis (BEA) released 2022 Local Area Personal Income data.2 This article uses these data to show how government transfer payments contribute to individual personal income, and how these payments are geographically distributed across metropolitan and nonmetropolitan areas of the country.