Medicare and Social Security are making up an increasing share of Wisconsin residents’ personal income as the state’s population ages, a recent UW-Madison Division of Extension report shows.
The report was written by Matt Kures, a distinguished community economic development specialist with the Community Development Institute.
Over time, the share of total personal income in Wisconsin coming from Social Security and Medicare has risen 5.2% in 1970 to 11.4% in 2022 as the state’s population has gotten older, Kures found.
Also, every county in the state had a greater share of income coming from Social Security and Medicare in 2022 than in 2000. Over the same period, the number of counties with 15% or more of total income coming from those programs jumped from three to 35.
“The biggest increases were found in Burnett County, Sawyer County, and Adams County, which is not unexpected given that these counties have experienced notable rates of net in-migration among retirement-aged individuals over the last several decades,” Kures wrote.
His report breaks down personal income into three main categories: earnings; dividends, interest and rent; and personal current transfer receipts.
The last of these includes payments from various government social benefit programs such as retirement, disability payments and medical benefits through Medicare and Medicaid, income maintenance payments like Supplemental Nutrition Assistance Program payments and earned income tax credits, unemployment insurance, veterans benefits and more.
While earnings are typically the largest source, the breakdown of income can be impacted by economic cycles and local conditions, Kures noted.
“Accordingly, the share of income from earnings may decline during economic downturns with a corresponding increase in the share of income from certain personal transfer payments such as unemployment insurance,” he said.
In 2022, 61.7% of personal income in Wisconsin came from earnings, 19.4% was from dividends, interest and rent, and the other 18.9% was from personal current transfer receipts. Social Security made up the largest source of these transfer payments, at 6.9% of personal income, followed by Medicare at 4.5% and public assistance medical care at 3.3%.
Kures also compared rural and urban areas across the country, finding nonmetro counties on average are “disproportionately dependent” on Social Security and Medicare payments compared to those in a metro area.
“As many areas in Wisconsin and the United States, both metro and nonmetro, are projected to have a growing share of residents over the age of 65, their dependence on Social Security and Medicare could increase as well,” he wrote.
See the report.
