What's Missing from the Latest Census Income Calculations

Congratulations, greater Washington D.C. You're the highest income metro in the nation, surpassing the much ballyhooed Silicon Valley, according to newly released 2010 Census data. The median household income for the D.C. metro area was $84,523, compared to $50,046 for the nation. A report over at Bloomberg credits this to federal spending, public sector employment, government contracting, lobbying and lawyers. The D.C. metro area also has one of the nation's highest levels of human capital, measured either as its share of college grads or workforce in professional, knowledge and creative class jobs, as well as buoyant high-tech industry.

But don't start the party bus yet. Income is a broad measure which captures wages and salaries earned but also transfers, profits, interest payments, capital gains, rents and other forms of earnings. There are lots of resort destinations like Naples, Florida, for example, which have high incomes. This is because they attract people with wealth and incomes generated elsewhere. Wages more accurately reflect local earnings and productivity. To get at this, my colleague Charlotta Mellander examined the ratio of wages to income. Places with higher ratios import less income from elsewhere, depend less on transfers or rents, and generate more of their earnings and income locally.

Wages account for roughly 77 percent of greater D.C.'s income level, putting it in 57th place in the nation on this metric. Silicon Valley (the San Jose metro area) may house a lot of wealthy entrepreneurs and venture capitalists, but wages make up 84 percent of its income, 14th in the nation. Durham, North Carolina, home to Duke University, takes first place in this metric. Boston, Indianapolis, Minneapolis-St. Paul, Columbus and Cleveland, Ohio also best D.C. among metros with more than one million people, while college towns like Ithaca, Madison, Ann Arbor, Iowa City and Lincoln, as well as manufacturing centers like Elkhart, Indiana, Dalton, Georgia and Grand Rapids, Michigan do quite well on this metric. Across the nation, wages make up roughly 68.5 percent of income on average.

Wages make up roughly 75 percent of income in Los Angeles, Chicago, and Dallas; 70 percent of income in New York, Philadelphia, and San Francisco and about 65 percent in Austin and Miami. At the very bottom of the list is the resort area of Palm Coast, Florida, where wages make up just 22 percent of income.

Washington may be the wealthiest metro in the nation in terms of income, but Silicon Valley, with a very similar level of income, generates considerably more of it locally and from wages.