Pitkin County has the third-highest per-capita personal income in the United States, behind Teton County, Wyoming, and Summit County, Utah, thanks to high-income earners making money off investments and remote jobs, and rising local wages.
Data also shows a widening gap between per-capita personal income, which includes all sources, and the average wage per job in Pitkin County, as well as average earnings that a resident is paid by their job. That disparity tracks with exponential growth over the past 30 years in income paid to county residents from so-called “passive” sources and more workers commuting from nearby counties due to scarce affordable housing in Pitkin County.
The federal Bureau of Economic Analysis (BEA) released 2022 personal-income data in November. All the numbers used in this story and accompanying charts have been adjusted for inflation using last December’s consumer price index. The numbers reflect only full-time county residents, so wealthy individuals who own properties here but pay their taxes from an address outside of Pitkin County don’t figure in.
In 2022, personal income per capita in Pitkin County reached $224,772, while on average a job here — no matter where the worker resides — paid $78,816 per year before taxes. Both numbers are records. Pitkin County residents earned on average $71,178 after taxes from their job, which is eclipsed only by 2000’s inflation-adjusted take-home pay.
That means personal income is about three times the county’s average net labor earnings — or that a very large portion of income in the county isn’t work-related, in the traditional sense. In fact, just under two-thirds of the total income paid to Pitkin County residents in 2022 — $2.4 billion of $3.8 billion — came from passive sources. This gap between residents’ net earnings and personal income has widened over the years, becoming especially pronounced first in the late 1990s.
Historic trends
In 1975, the average gross wage per job in Pitkin County was about $40,419 in today’s dollars while personal income per capita was $49,405. The average net earnings for residents reached $33,439. In other words, most personal income was job-based.
“So that’s maybe the days of a trades person and a billionaire bike riding on the trail or going car to car on Main Street and having a conversation,” Pitkin County management analyst Levi Borst said at a Pitkin County Board of County Commissioners retreat Feb. 6.
This is a well-worn anecdote about 1970s Aspen. Former Pitkin County Commissioner Michael Kinsley, who was in office from 1975 to 1985 and still lives here, recalled that back then, “you really couldn’t tell the rich people from the poor people. They drove the same old Jeeps and lived in small houses.”
In 1990, per-capita personal income started to increase relative to average wages and earnings and by 2000, it was 90% higher, reaching about $138,000, while the average wage per job and net earning per resident were about $72,600 and $71,800, respectively.
The gap continued widening as global capital markets expanded and wealth kept growing. Personal income reached about $177,000 per capita in 2007 before dipping to $123,000 during the Great Recession.
Meanwhile, the county’s average wage per job remained flat, reaching $66,000 in 2007 and dropping to $60,000 in 2011. Average net earnings for county residents dipped to $37,000 in 2010 before going back up in 2014 when the economy started to turn around.
Personal income per capita went from $161,000 in 2014 to $209,000 in 2019. Meanwhile, wages rose at a slower pace, as jobs by 2019 paid on average $68,000 before taxes and county residents earned about $65,000 after taxes.
During the COVID pandemic-influenced year of 2020, personal income dropped by 3% from 2019, while county residents’ net earnings and job wages increased by 11% and 9%, respectively. Personal income bounced back starting in 2021.
Post-pandemic, while jobs have never paid as much — the annual inflation-adjusted salary reached $78,800 in 2022 (net earnings for county residents were higher in 2000) — the gap between wages and personal income has also never been greater.
“I think a lot of the affordability pressures we have been feeling is exactly that gap,” Pitkin County Manager Jon Peacock said at the retreat, adding that it explains the discourse around how much the community has changed.
“This is one of the more telling pieces of demographic information,” Borst said.
Passive income’s aggressive growth
Analysis shows that Pitkin County’s gap between personal income and labor earnings is driven by passive income, also called investment income. The share of revenue coming from dividends, interest and rents in Pitkin County is upside-down compared with the Colorado or national average.
According to BEA, 63.9% of total Pitkin County income came from passive sources in 2022, 31.7% from net earnings and 4.5% from personal current transfer receipts, which include Social Security benefits, medical and veterans benefits, unemployment benefits and corporate gifts to nonprofit institutions.
In that same year, just 22.3% of statewide income came from passive sources, with 63.9% from net earnings and 13.9% from personal current transfer receipts. This aligns with the national average.
As for neighboring counties, about 54% of Garfield County residents’ income came from net earnings while 31.5% came from passive income in 2022. Fifty-three percent of Eagle County residents’ income was brought in via net earnings and 40.8% from passive income.
Although nearly two-thirds of all income earned in Pitkin County comes from passive sources, this has not always been the case.
Passive income revenue generation increased 623% between 1990 and 2022, reaching about $2.4 billion in 2022, while net earnings grew by 106%.
In the early ‘90s, substantially more total county income came from net earnings compared to dividends, rents and interest, but that was about to change. Passive income grew 184% over that decade while wages rose 83%.
The dollar volume in Pitkin County generated by passive income surpassed active income for the first time in 2003, when passive income brought in about $1.03 billion and active income produced $1.02 billion. Since then, the gap has widened. In 2008, passive income generated $1.8 billion while wages and salaries brought about $1.2 billion.
“[Aspen] became a mythical place that attracted a lot of people [with external passive income]. The skewed national economy then profoundly affected the local economy,” Kinsley said. “Rich getting richer and the middle-class getting poor, relatively poor, then that was manifested here in extreme terms. And, of course, now we’re seeing that happen in thousands of places — maybe not to this extreme.”
During the Great Recession, income from net earnings dropped from $1.037 billion in 2007 to $641 million in 2010. Passive income dropped as well, from $1.8 billion in 2007 to $1.36 billion in 2010.
In 2014, as the economy began heating up again, investments generated $1.7 billion while net earnings generated $988 million. Passive income then increased from $1.76 billion in 2017 to $2.3 billion in 2019, a 35% jump, before dipping to $2 billion in 2020. Meanwhile, net earnings rose from $1.09 billion in 2017 to $1.13 billion in 2019, setting a record of $1.25 billion in 2020. That year marked the first time since the 1970-80s that net earnings surpassed the local average wage, which could be explained by the influx of people living in the county during the pandemic but not working for a local employer.
Passive income generated $2.4 billion in 2022 — the highest level ever recorded — while net earnings brought in $1.2 billion.
“[Aspen] has gone from being aggressively unpretentious to being highly pretentious,” Kinsley said. “That external economy overwhelmed this little one.”
Stephan Weiler, professor of economics at Colorado State University and co-director of the university’s Regional Economic Development Institute (REDI), said a contributing factor to this increased income could be higher rental prices and short-term rentals generating additional passive income. He also noted that investment income can be skewed by only a few people. “It only takes a few people with a few billion dollars to make that passive income look really good,” he said.
According to the Economic Policy Institute, the majority of the income for most households in the United States comes from labor, but for the top 1% wealthiest households in the country, only 37.2% of their income comes from labor.
Housing and the labor force
In the 1980s and 1990s, Aspen grew as a resort town with luxury appeal. BEA data shows that countywide population increased by 38% between 1985 and 2000, reaching 15,000 residents by the turn of the millennium. (Today’s population is about 17,000.)
Meanwhile, the number of people working in Pitkin County but commuting from nearby counties also grew, with total local jobs increasing from 13,000 in 1985 to 20,000 in 2000. Many of those workers once lived in Pitkin County but moved to Eagle County or Garfield County.
The trend continues to this day. A U.S. Census Bureau estimate of the number of commuters each year on average between 2016 and 2020 showed 5,064 people working in Pitkin County but living in Garfield County, with 3,214 residing in Eagle County. A recent REDI report on Pitkin County economic indicators estimated the number of “commuting jobs in Pitkin County” reaching over 11,000 in 2019. U.S. Census Bureau LEHD Origin Destination Employment Statistics (LODES) data shows that in 2021, 62% of county jobs were occupied by nonresidents, up from 54% in 2002.
“[Pitkin County employers] want those workers, but they can’t afford them,” Weiler said, noting that housing is one of two essential human needs.
“It’s hard to work in Pitkin to make millions of dollars basically [and] to be able to afford [to live here],” he said. “So, they’re bidding up these prices for living in Aspen thanks to passive income and making it more and more difficult for workers [to live there]”
In 2019, 50.8% of the renters in Pitkin County were “burdened” by their housing cost, according to the REDI report, meaning that more than 30% of their income went to rent. That’s up from 45.3% in 2010, which means that the affordability has actually gone down.
When comparing incomes at the top 20% of the population to the bottom 20%, Weiler said, income inequality in Pitkin County is less pronounced than in Colorado as a whole, and it has been trending that way over the past decade. According to his research, the top 20% in Pitkin County made 4.3 times the bottom 20% in 2015, and that dropped to 4.2 times in 2023. In comparison, Colorado inequality dropped from 4.5 to 4.3 in those years, while overall U.S. inequality is currently at 4.9. “So, inequality in some ways by this measure has actually gone down,” he said, at least when looking only at county residents.
“In some ways, residents can’t afford to be poor,” Weiler said, noting the high number of residents of neighboring counties who commute to Pitkin County for work. BEA’s residence adjustment tracks wages paid to nonresidents, offset by income earned by county residents who work for employers based somewhere else. That statistic stood near record high levels in 2022 at $405.7 million, with $570 million leaving the county and $167 million coming in.
Unlike Pitkin County, more money has come into Garfield County than has left. In 2022, $460 million went into the county while $372 million left. Personal income per capita in Garfield County reached $67,800 in 2022, including an average net earnings of about $36,400 per resident. The average gross pay per job in Garfield County was $58,800.
It’s also worth noting that Pitkin County is not only a source of jobs, but a provider of labor, whether it goes to neighboring counties or via telecommuting. The number of jobs located outside the county but filled by Pitkin County residents grew from about 2,200 in 2002 to more than 3,500 in 2021 — the highest level recorded since 2002.
Aspen Journalism is a nonprofit, investigative news organization covering social justice, water, environment and more. Visit http://aspenjournalism.org. Pitkin County supports Aspen Journalism, which is solely responsible for its editorial content, with a grant from the Healthy Communities Fund.