Skagit County Trends Newsletter

DIFFERENT INCOME INDICATORS: WHAT ARE THEY AND WHY SO MANY? -

Gold Coin Stacks graphic

Means, Medians, and Per Capita's - oh my! Sometimes with all of the different income measurements on the Trends site, they can start looking all the same.

When unsure of the definitions behind numbers, data, and statistics, you might think they make as much sense gathering insights from a bowl of goulash. Thankfully, a course in statistics is unnecessary to understand the differences. Once a few definitions are better understood, it becomes easier to know what is being measured in an indicator simply by looking at the title.

The "mean" is simply the average and is most commonly referred to on the Trends site as an "average". A drawback of an "average" is that it can be thrown-off by outliers. For example, consider a group of 99 random Americans with incomes somewhere within a few thousand dollars of the U.S. average. The "mean" income of this group will be much less if the 100th person also had an average income. On the flip side, if Bill Gates was added to the group as the 100th person, his income would most definitely be an outlier, skewing the "mean" income of the group.

The "median" is the midpoint where half of the numbers are larger and half are smaller. Take the same 100 households, which still includes Mr. Gates. When the midpoint, or "median" value is calculated, Mr. Gates will still be at the top, but the midpoint will not be skewed by Mr. Gates's income as the "average" income, because the other 99 incomes are still somewhere within a few thousand dollars of the U.S. average, better representing what the typical income of the group actually is.

As a result, to be a good consumer of numerical information, you will want to know both the "mean" and "median" as together they provide more insight than either is able to individually.

The "per capita" is the average per person while "household" refers to all persons living in the same household, related or not.

Looking at a few indicators on the Trends site:

Per Capita Personal Income (PCPI) represents all sources of income - wage & salary, investments & rents, proprietors' income, pensions, transfer payments and other sources - divided by the total population. It represents income before any taxes are paid. In short, PCPI is the average income of all individuals in a given area. In Skagit County, PCPI has gone up 2.2% per year since 2008, about the same rate as in the state and the U.S.

Median Household Income (MHI) also represents all sources of income as well - brought in by everyone in a household. However, unlike PCPI, the median household income of Skagit County is the value which 50% of its households are below and 50% are above - concentrating on the middle value of a distribution. In contrast to PCPI, it is expressed in inflation-adjusted terms. In Skagit County, MHI has gone up 1.7% per year since 2008, essentially the same as in the state in the U.S.

Since the largest source of income comes from wages, it is helpful to understand how they stand in Skagit County.

Average Annual Income in Agriculture is the overall yearly average wage for individuals who are employed within the agriculture sector. The average agriculture wage in the county has been higher than its counterpart in the state, but has increased every year at a slightly lower rate since 2008 than in the state: 2.3% versus 2.6%.

Average Annual Wage in Top-5 Employing Sectors is the average wage in each of the top-5 employing sectors as ranked of employed persons. Manufacturing pays, by far, the highest annual average wage in the county, coming in at nearly $64,000 in 2016. The lowest paid among the top five employing sectors is the food service and accommodations sector, with an annual wage of nearly $18,000. Both, however, have grown every year since 2008 at about the same rate - 2.8%.

We enjoy answering any questions or explaining the data behind the indicators on the Trends site. Please feel free to email (srichter20@ewu.edu) or call (509-828-1211) the project manager, Scott Richter, with any questions.