IMPACT: The Impact on Personal Income.

IF the educational gaps remain as they are (Projection 1), then personal income per capita in the United States is projected to decline from $21,591 in 2000 to $21,196 in 2020—a drop of $395 or 2% (in inflation-adjusted dollars; see figure 8). In contrast, according to the Bureau of Economic Analysis, personal income per capita had grown 41% nationally during the two decades prior to 2000. One consequence of such a decline in personal income would be a decrease in the nationís tax base.

Under Projection 1, over one-third of the states would experience a decline in personal income per capita, including many currently with the highest levels, such as California, Colorado, Connecticut, Massachusetts, and New York. In these states, the decrease in income would be much more substantial than the U.S. average and could significantly affect their tax bases. For example, the projected decline in personal income per capita from 2000 to 2020 in Colorado would be $662, in New York $1,182, and in California $2,475.

In contrast, IF states are able to close the educational gaps between whites and racial/ethnic minorities, then personal income per capita is projected to increase in the United States, as shown in Projections 2 and 3 in figure 8. In terms of total personal income across the United States, Projection 2 represents an increase of $298 billion over Projection 1 (status quo), and Projection 3 represents a gain of $425 billion over Projection 1.


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