Are the Red States the real ‘moochers?’

One largely overlooked dynamic in the 2012 presidential contest is that, amid all the talk about makers vs. takers and the 47 percent who are “moochers,” it is the Red states and specifically the rural areas of the United States that rely more upon government than the rest of the nation.

If you look at a U.S. map, county by county, that details 2008 or 2004 presidential election results, it’s stunning how much of the nation is red – virtually all of the rural and semi-rural areas. But research shows that it is those Red counties where government dependence is significantly higher than the Blue counties and, in particular, the Blue metropolitan areas.

The latest study to highlight these differences has been produced by Michigan Future Inc.

New data to be released later this month by Michigan Future shows that big metropolitan areas lead rural America in generating private sector employment earnings, while rural regions of the nation are more reliant upon government “transfer payments” and government employment for a large share of personal income.

According to Michigan Future, the study results reflect one of several trends running counter to conventional wisdom. Michigan Future President Lou Glazer and his co-author, University of Michigan researcher Don Grimes, have uncovered patterns that demonstrate this: places that attract talent are generating the most private sector employment earnings and the highest prosperity.

The research also shows close correlation between personal income and educational attainment.

The upcoming report uses data from the U.S. Department of Commerce to distinguish private employment earnings vs. earnings from government employers. Those are defined as local, state, federal, public schools and public universities and colleges. Transfer payments are defined as Social Security, Medicare, Medicaid, food stamps, veterans’ benefits, tuition support like Pell grants and subsidies for college loans, the Earned Income Tax Credit, and farm subsidies.

Obviously, farm susbsidies are a factor that exacerbates the differences in the urban and rural numbers.

The results, as reflected in the chart below, show that large regions lead the nation in personal income as well as the share of that income coming from private employment earnings.

Size of region (Combined Statistical Areas and non-CSA Metropolitan Statistical Areas)	Personal Income Per Capita (2010)	Private Employment Earnings	Gov’t Employment Earnings	Transfer Payment	Gov't+  Transfer	Other
3.0 million or more	$45,132	64.5%	12.0%	15.3%	27.4%	8.2%
1.0 million to 3.0 million	$38,070	60.8%	13.5%	19.0%	32.5%	6.7%
500,000 to 1.0 million	$35,460	54.7%	14.5%	21.1%	35.7%	9.6%
200,000 to 500,000	$35,589	52.5%	16.4%	21.5%	37.9%	9.6%
under 200,000	$33,855	51.2%	18.1%	23.2%	41.3%	7.5%
Non-metro counties	$31,619	45.1%	14.0%	27.3%	41.3%	13.7%

The data shows that very large metro areas, those with population of 3 million or more, have a per capita income that is $14,000 higher than rural America.

“A myth has grown in our nation of the ‘self-reliant small rural region’ compared to the ‘government-reliant big metro,’” Glazer said in a press release. “This data suggests that is not true, and that the economies of small town American are reliant in a substantial way on dollars coming from governments, either through government jobs or transfer payments.”

“Big metros anchored by vibrant central cities are increasingly talent magnets, and talent drives private sector personal income,” Glazer said. “Many people thought that the development of the internet and the ability of people to work anywhere would lead to a dispersion of talent. Instead, talent is concentrated in big metros – and it drives prosperity.”

Glazer and Grimes conclude that metro Detroit, metro Grand Rapids and metro Lansing must be the drivers of renewed prosperity in Michigan, yet all three are still struggling economically.