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February 28, 2005
Personal Income Fell by 2.3 Percent in January

The personal income of Americans took its biggest plunge in more than a decade in January, though it had farther to fall than usual because of a large stock dividend payment the month before from the Microsoft Corp., the U.S. Commerce Department reported on Monday.

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Personal incomes fell by 2.3 percent in January. In December, they had jumped by 3.7 percent, thanks in large part to a $3-per-share dividend payment that Microsoft made on Dec. 2.

Without the huge $32 billion dividend payment from the computer giant, personal incomes would have shown gains of 0.6 percent in December and 0.5 percent in January, according to the Commerce Department's Bureau of Economic Analysis.

The government reported that private wage and salary disbursements increased $22.3 billion in January, compared with an
increase of $28.4 billion in December. Goods-producing industries' payrolls increased $0.2 billion, compared with an increase of $4.4 billion; manufacturing payrolls increased $1.0 billion, compared with an increase of $3.3 billion. Services-producing industries' payrolls increased $22.1 billion, compared with an increase of $24.0 billion.

Government wage and salary disbursements increased $8.5 billion in January, compared with an increase of $1.3 billion in December. Pay raises for civilian and military personnel added $5.9 billion to government payrolls in January.

Employer contributions for employee pension and insurance funds increased $7.1 billion in January, compared with an increase of $3.7 billion in December.

Employer contributions for government social insurance increased $6.7 billion in January, compared with an increase of $1.9 billion in December. The January increase reflected an increase in the tax rate paid by employers to state unemployment insurance funds and an increase in the social security taxable wage base (from $87,900 to $90,000); together, these changes added
$4.1 billion to January. (Changes in employer contributions for government social insurance do not affect personal income, because employer contributions for government social insurance are also included in total contributions for government social insurance, which is a subtraction in the calculation of personal income.)

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