IS THE industrial heartland of the country, from the steel towns of Pennsylvania across the Great Lakes states, now becoming the nation's poorhouse? Are the big cities of the Northeast now the places most in need of federal help and assistance? Not quite, in either case, and probably not ever. Per capita incomes in the major industrial states, according to the Commerce Department's recently released figures for 1982, cluster around the national average. And increases in incomes in the northeastern states in 1981- 82 were well above average. Nationally, per capita income rose 5.3 percent, just under the inflation rate, but in 14 states it rose more than inflation, and nine of these states were in the Northeast.
To understand why people and politicians in the industrial and northeastern states feel they've fallen behind, you have to take a longer historical view. The industrial states' income levels cluster around the national average now because wages there, for people who have jobs, tend to be well above the national average, but fewer people have jobs than had them last year or the year before. Back in 1940, Illinois' income level was 27 percent above the national average, Michigan's 14 percent above, Ohio's 11 percent. In 1982, Illinois was only 10 percent above the national average, Michigan even with that figure, and Ohio 2 percent below it. Texas, in contrast, had an income level 27 percent below the national average in 1940, but it was 3 percent above in 1982. Back in 1940, Mississippi's income levels were one-fourth those in New York. In 1982, Mississippi still ranked last among states, but its incomes were five-eighths those in New York.
That change in relative position stands for a vast change in standard of living. The United States in the New Deal years was almost two countries: a large part of the nation was a kind of underdeveloped country, where subsistence farming and trade by barter were important. Now Mississippi and New York are recognizably part of the same nation.
There are, naturally, consequences here for public policy. The large northeastern and industrial states are having a hard time supporting the public spending programs they initiated when they were far richer than the rest of the nation. There may be less reason now than there once was for federal programs that, in effect, distribute revenues from rich states like New York to poor states like Mississippi. In practice, the strife over distribution formulas gets more intense: historically rich states suddenly feel needy, while historically poor states are in no mood to relinquish what they're used to. What we need to keep in mind, as we listen to these acrimonious debates, is that they signal not the failure of those federal programs but their success. The industrial and northeastern states have some real problems. But their relative decline is exactly that. It's one result of a benign trend: the nationalization of affluence.