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28% of all U.S. Income Comes From the Government

June 4th, 2010 Michael McDonough

Source: BEA

Nearly 28% of all income received in the U.S. comes in one form or another from the U.S. government.  As of April 2010, government wages combined with government transfer payments total 27.8% of total income in the US.  Breaking it down further, government wages plus transfers equals nearly 67% of total private sector wages.  These statistics highlight the impact of expansionary fiscal policy and the country’s increased reliance on the government for economic growth.  Eventually government transfer payments will need to be scaled back to converge with its historical norm to reduce swelling deficits, which could reduce national income by nearly $500 billion on an annual basis. This of course would be a negative for the nascent economy recovery turning fiscal stimulus into fiscal drag, and this could occur sooner rather than later.    

 

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