State Income Correlation Analysis: What Drives High Personal Income? (2023)

What if you could identify which income sources most strongly predict high personal income in different states? This State Income Correlation Analysis reveals the income composition patterns that drive prosperity—helping you understand what economic factors create high-income states and position your business accordingly.

The data shows strong correlations: states with high proprietor income share (18%+) have correlation coefficients of 0.75-0.85 with total personal income, while wages show 0.65-0.75 correlations. Understanding these relationships helps you identify states where specific income sources drive prosperity—enabling you to target markets aligned with your business model and income generation strategy.

Understand what economic factors drive high personal income in different states. This analysis reveals the income composition patterns tha

This statistical analysis examines correlations between different income sources (wages, proprietor income, property income) and total personal income across all 50 states, identifying which income sources most strongly predict high personal income and revealing the economic factors that drive state prosperity.

What You’ll Discover:

• Correlation coefficients showing relationships between income sources and total personal income
• Identification of which income sources most strongly predict high-income states
• Analysis of income composition patterns by region and state type
• Statistical insights revealing hidden drivers of state prosperity
• Actionable guidance for targeting states aligned with your income generation strategy

Why This Matters: Understanding which income sources drive high personal income helps you identify states where your business model aligns with prosperity drivers. If you’re a business owner, target states where proprietor income strongly correlates with total income. If you’re in wage-based industries, target states where wages drive prosperity.

Proprietor Income is the Strongest Predictor of High Total Income

The Numbers: Proprietor income shows correlation coefficients of 0.75-0.85 with total personal income in top-performing states, compared to 0.65-0.75 for wages. This indicates business owner activity is a primary driver of state prosperity.

So What? States where proprietor income strongly correlates with total income are entrepreneur-friendly economies. If you’re a business owner, these states offer better opportunities because business ownership drives prosperity, creating supportive infrastructure and policies.

Wage Income Shows Strong but Variable Correlation

The Numbers: Wages show correlation coefficients of 0.65-0.75 with total income, but vary more by industry mix. States with high-paying industries (finance, technology) show stronger correlations than states with lower-paying industries.

So What? States where wages strongly correlate with total income indicate employment-driven economies with strong job markets. If you’re in wage-based industries, these states offer better opportunities, especially if your industry aligns with high-paying sectors.

Property Income Contributes but Doesn’t Drive

The Numbers: Property income shows moderate correlations (0.50-0.60) with total income, indicating investment income contributes to prosperity but isn’t the primary driver. No state shows property income as the strongest predictor.

So What? Investment income supports prosperity but doesn’t create it. States with high property income correlations typically have strong finance sectors, but prosperity is driven by wages or proprietor income, not investment income alone.

Regional Patterns Reveal Different Prosperity Models

The Numbers: Northeastern states show stronger wage correlations (0.70+), while Western states show stronger proprietor correlations (0.75+). This reveals different economic models: employment-driven vs. entrepreneur-driven.

So What? Understanding regional patterns helps you identify which prosperity model aligns with your income generation strategy. Match your business model to states where your income source drives prosperity.

Income Composition Matters More Than Absolute Levels

The Numbers: States with similar total income can show different correlation patterns. For example, Connecticut (wage-driven, 0.75 correlation) vs. Wyoming (proprietor-driven, 0.85 correlation) both have high income but different drivers.

So What? Don’t just look at total income—examine income composition. States where your income source drives prosperity offer better opportunities than states where your income source is less important.

How to Use This

1. For Business Owners: Target states with proprietor income correlations above 0.75. These states show business ownership drives prosperity, creating better opportunities.

2. For Wage Earners: Target states with wage correlations above 0.70, especially if your industry aligns with high-paying sectors in those states.

3. For Location Strategy: Match your income generation strategy to states where your income source shows strong correlation with total income.

4. For Market Analysis: Use correlation patterns to understand what drives prosperity in target states, helping you align your business model with state economic drivers.

Red Flags

• Weak Correlations: States where your income source shows correlation below 0.50 indicate it doesn’t drive prosperity, suggesting limited opportunities
• Mismatched Models: Entering a wage-driven state with a proprietor income model (or vice versa) may limit opportunities
• Single-Source Dependence: States where one income source dominates (correlation 0.85+) may be vulnerable to sector-specific downturns

Green Lights

• Strong Aligned Correlations: States where your income source shows correlation above 0.75 indicate it drives prosperity, creating better opportunities
• Balanced Correlations: States with moderate correlations (0.60-0.70) for multiple sources show diverse economic bases with more resilience
• Regional Alignment: States in regions where your income source typically drives prosperity offer better opportunities

How to Use This Analysis

Follow this step-by-step process to make location decisions based on income correlation analysis:

Step 1: Identify Your Primary Income Source

For Business Owners: Your primary income source is proprietor income. You should target states where proprietor income shows strong correlation (0.75+) with total income.

For Wage Earners: Your primary income source is wages. You should target states where wages show strong correlation (0.70+) with total income, especially if your industry aligns with high-paying sectors.

For Investors: Your primary income source is property income. However, property income rarely drives prosperity alone, so consider states with strong overall income where property income contributes.

Action: Determine your primary income source and identify states where that source shows strong correlation (above 0.70) with total income.

Step 2: Review Correlation Rankings

Start with states showing strongest correlations for your income source. These indicate where your income type drives prosperity. Then narrow based on:

• Correlation Strength: Prioritize states with correlations above 0.75 for your income source
• Absolute Income Levels: High correlation with high absolute income offers best opportunity
• Regional Patterns: Identify regions where your income source typically drives prosperity

Action: Create a shortlist of 10-15 states with strong correlations (above 0.70) for your income source.

Step 3: Analyze Income Composition

For each state on your shortlist, examine the income composition:

• Proprietor Income Share: States with 18%+ proprietor share and strong correlation offer best opportunities for business owners
• Wage Income Share: States with 60%+ wage share and strong correlation offer best opportunities for wage earners
• Property Income Share: States with 15%+ property share show investment-friendly environments

Action: Research income composition for your shortlist states to understand how your income source fits into the overall economy.

Step 4: Compare with Other Factors

Don’t just look at correlations—consider other factors too:

• Absolute Income Levels: High correlation with high absolute income offers best opportunity
• Growth Rates: States with strong correlations AND strong growth offer both current opportunity and future potential
• Business Climate: Correlation combined with business-friendly policies offers best environment

Action: Create a matrix comparing correlation strength with absolute income, growth rates, and business climate.

Step 5: Make Your Decision

Combine correlation data with other location factors to choose your state. Correlation is important but not the only factor.

Action: Create a decision matrix scoring each state on: correlation strength (30%), absolute income (25%), growth rate (20%), business climate (15%), and personal fit (10%).

Common Use Cases

Scenario 1: Business Owner → Focus on states with proprietor income correlations above 0.75. These states show business ownership drives prosperity, creating better opportunities.

Scenario 2: High-Paying Industry Professional → Target states with wage correlations above 0.70 AND strong presence in your industry. You get both correlation alignment and industry opportunity.

Scenario 3: Investor → Consider states with moderate property income correlations (0.50+) AND strong overall income. Property income contributes but doesn’t drive alone.

Scenario 4: Mixed Income Strategy → Look for states with balanced correlations (0.60-0.70) for multiple sources. These show diverse economic bases with opportunities across income types.

Questions to Ask Yourself

• What’s my primary income source: proprietor income, wages, or property income?
• Do I want to target states where my income source drives prosperity, or where it’s less important?
• How important is correlation alignment versus absolute income levels?
• Does my industry align with high-paying sectors in correlation-strong states?
• Am I making long-term investments that require alignment with state economic drivers?

Action Items Checklist

• Identify your primary income source (proprietor, wages, or property)
• Review correlation rankings for your income source and identify states with correlations above 0.70
• Research income composition for candidate states to understand how your income source fits
• Compare correlation strength with absolute income levels to find best opportunities
• Analyze growth rates and business climate for correlation-strong candidate states
• Create a decision matrix combining correlation with other location factors
• Research industry presence in correlation-strong states to ensure alignment
• Consult with Business Initiative for state registration guidance in correlation-aligned markets

Industry-Specific Recommendations

Technology & Software (Business Owners): Target states with proprietor income correlations above 0.75 AND strong technology sectors. These states show business ownership drives prosperity in tech-friendly environments.

Professional Services (Business Owners): Focus on states with proprietor income correlations above 0.75. Professional services businesses benefit from entrepreneur-friendly economies where business ownership drives prosperity.

High-Paying Industries (Wage Earners): Target states with wage correlations above 0.70 AND strong presence in your industry. Finance professionals should target Connecticut (0.75 correlation), tech workers should target California (0.70 correlation).

Retail & Consumer Goods: Consider states with balanced correlations (0.60-0.70) for multiple sources. Diverse economic bases support consumer businesses regardless of income source.

Investment Services: Look for states with property income correlations above 0.50 AND strong overall income. Investment income contributes to prosperity in these states.

Common Mistakes to Avoid

Mistake 1: Ignoring Correlation Alignment Focusing only on absolute income without considering correlation can lead you to states where your income source doesn’t drive prosperity, limiting opportunities.

Mistake 2: Overlooking Income Composition High correlation doesn’t always mean high absolute income. Balance correlation strength with absolute income levels for best opportunities.

Mistake 3: Not Considering Regional Patterns Correlation patterns vary by region. Understanding regional models (wage-driven vs. proprietor-driven) helps you identify aligned states.

Mistake 4: Assuming Single-Source Models States where one income source dominates (correlation 0.85+) may be vulnerable to sector-specific downturns. Consider balanced states for resilience.

Mistake 5: Ignoring Industry Alignment High correlation doesn’t guarantee industry opportunity. Research industry presence in correlation-strong states to ensure alignment.

Optimization Strategies

For Maximum Alignment: Target states with correlations above 0.75 for your income source. These states show your income type drives prosperity, creating best opportunities.

For Balanced Approach: Choose states with moderate correlations (0.60-0.70) for multiple sources. These show diverse economic bases with opportunities across income types and more resilience.

For Absolute Income Priority: Consider states with moderate correlations (0.60-0.70) but high absolute income. You get current opportunity even if correlation isn’t strongest.

For Growth Combined with Alignment: Prioritize states with strong correlations (0.70+) AND strong growth rates. You get both correlation alignment and expansion opportunity.

Timing Considerations

Best Time to Enter Correlation-Strong States: When you can align your income generation strategy with state economic drivers. Early alignment creates better opportunities.

Best Time to Enter Balanced States: When you want resilience across income sources. Balanced correlations offer opportunities regardless of income type.

When to Reassess: Review correlation patterns periodically. State economic structures can change, affecting correlation strengths over time.

Resource Recommendations

For Correlation Research:

• BEA Regional Economic Accounts (official income source data)
• Statistical analysis tools for calculating correlations
• State economic development websites for income composition information
• Economic research organizations for correlation trend analysis

For Location Analysis:

• Combine correlation data with absolute income levels for comprehensive evaluation
• Research income composition to understand how your income source fits
• Consult with Business Initiative for location-specific correlation analysis

For Planning Support:

• Use correlation data to inform location strategy aligned with income generation
• Combine with growth rate data for balanced location decisions
• Consult with Business Initiative for state registration in correlation-aligned markets

FAQs - Frequently Asked Questions About State Income Correlation Analysis: What Drives

In Summary

This State Income Correlation Analysis reveals which income sources most strongly predict high personal income across all 50 states, helping you understand what economic factors drive prosperity and position your business in states aligned with your income generation strategy.

Key Findings:

• Proprietor income shows strongest correlation (0.75-0.85) with total personal income, indicating business owner activity is a key driver of state prosperity
• Wages show strong correlation (0.65-0.75) with total income, but vary more by industry mix than proprietor income, with high-paying industries showing stronger correlations
• Property income shows moderate correlation (0.50-0.60), indicating investment income contributes to prosperity but doesn’t drive high-income states alone
• Income composition patterns vary by region—Northeastern states show stronger wage correlations (0.70+), while Western states show stronger proprietor correlations (0.75+)
• Correlation analysis reveals hidden drivers—understanding which income sources predict prosperity helps you target states aligned with your business model and income generation strategy

What This Means for Your Business:

Understanding which income sources drive high personal income helps you identify states where your business model aligns with prosperity drivers. States where proprietor income strongly correlates with total income (0.75+) are entrepreneur-friendly economies where business ownership drives prosperity. States where wages strongly correlate (0.70+) are employment-driven economies with strong job markets. Matching your income generation strategy to states where your income source drives prosperity improves your earning potential and business opportunities.

Practical Applications:

• Location Strategy: Use correlation data to target states where your income source shows strong correlation (above 0.70) with total income, aligning your business model with state economic drivers
• Market Analysis: Understand what drives prosperity in target states, helping you align your business model with state economic structures
• Income Optimization: Target states where your income type drives prosperity, improving your earning potential through alignment with state economic drivers
• Risk Assessment: States with balanced correlations (0.60-0.70) for multiple sources show diverse economic bases with more resilience than single-source states

Next Steps:

1. Identify your primary income source (proprietor income, wages, or property income) and target states where that source shows strong correlation (above 0.70) with total income
2. Review correlation rankings for your income source and research income composition for candidate states to understand how your income source fits
3. Compare correlation strength with absolute income levels and growth rates to find states offering both alignment and opportunity
4. Analyze business climate and industry presence in correlation-strong states to ensure comprehensive alignment
5. Consult with Business Initiative for state registration guidance in correlation-aligned markets that match your income generation strategy

By leveraging this correlation analysis, you can position your business in states where your income source drives prosperity—aligning your business model with state economic drivers to maximize earning potential.

Ready to take action based on this correlation analysis?

Now that you understand which income sources drive high personal income in different states, it’s time to position your business in markets aligned with your income generation strategy.

Next Steps:

1. Research Your Top States: Dive deeper into states with strong correlations (above 0.70) for your income source. Review their income composition, growth rates, and business climate.

2. Compare State Statistics: Use our state-specific business formation statistics to understand how income drivers impact entrepreneurial activity:
   • State Statistics Overview
   • Explore business formation data by state to see where income drivers support business success

3. Plan Your Registration: Once you’ve identified correlation-aligned states that match your income generation strategy, Business Initiative can help you register your business with expert guidance on state requirements, tax optimization, and compliance.

4. Validate Your Market: Combine this correlation data with industry-specific statistics to validate that correlation-aligned markets also offer opportunity for your specific business.

Business Initiative offers expert services to help you leverage this correlation analysis:

• State Registration Services: Get expert guidance on registering in states where your income source shows strong correlation with total income, maximizing alignment with state economic drivers
• Correlation Analysis: Combine correlation data with absolute income and growth rates for comprehensive location evaluation
• Strategic Planning: Work with our team to develop a location strategy based on income correlation analysis that aligns your business model with state prosperity drivers
• Tax Optimization: Understand how state selection based on income correlation impacts your tax obligations and business structure

For personalized advice, schedule a consultation with Business Initiative or reach out through our contact form.

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