As Jed Graham of Investor’s Business Daily reports, government transfer payments and government wages and supplements now represent an unprecedentedly high share of personal income:

In recent months, more than 30 cents of every dollar in personal income came directly from the government, new Commerce Department data show.
That’s equal to about $3.8 trillion of $12.5 trillion in total personal income on an annualized basis.

This, of course, reflects the marked deterioration of the labor market since 2007:

Private wages and salaries remain down 8.4% in real terms since December 2007. Private wages are now just 1.3% off the bottom hit in February, which, sad to say, was the same level first reached in March 2001.
By contrast, government wages are up 3.8% since December 2007.
Meanwhile, real non-salary compensation (both private and government) is up 4.1%, likely reflecting rising health care costs and perhaps some catch-up pension contributions.

As Graham explains, the government’s share of personal income isn’t necessarily the best gauge of government’s role in the economy. He recommends instead focusing on combined government expenditures at the federal, state, and local levels, which he anticipates reaching 40 percent of GDP this year, a level we last approached during the Second World War.

I’d also suggest that the regulatory burden merits close attention. According to The World Economic Forum’s Global Competitiveness Report 2008-9 (the 2009-10 edition will be released tomorrow), the U.S. is ranked 50th in the world on burden of government regulation. Singapore and Hong Kong SAR top the list, not surprisingly, but Japan, Switzerland, Finland, Denmark, Israel, Austria, Canada, Sweden, and, by a nose, Finland also score higher than the United States, among many other countries.