News Column

Census: Household Income Still Below 2007 Level

Sept. 20, 2012

Ronald Campbell

Three years after the Great Recession officially ended, Orange County and California are still suffering from the hangover.

Incomes have yet to bounce back to pre-recession levels, according to newly released census figures.

"This points to how bad this recession was," said Esmael Adibi, an economics professor at Chapman University.

Median household income, the broadest measure of earning power, declined during 2011, according to the U.S. Census Bureau's American Community Survey.

The median, the midpoint for the county's million households, was $72,793, off 0.3 percent from 2010 and down 8.4 percent from the pre-recession peak in 2007.

The statewide median, $57,287, was down 3.8 percent from 2010 and off 11.9 percent from 2007.

"The story on the income side is dismal," said Anil Puri, dean of the Mihaylo College of Business and Economics at California State University Fullerton. The downturn in income "explains the continued subdued spending on housing and consumer spending."

"Inflation is still outpacing wage gains," said David Shulman, senior economist at the Anderson Forecast at UCLA. He pointed to the growing prevalence of part-time jobs and the increase of people on disability or taking early retirement as factors driving down incomes.

The one bit of good news, Adibi said, is that we may finally be seeing the bottom.

"We're creating a decent number of jobs," he said. That in turn should create "a decent upward pressure" on incomes. Adibi pointed to increased hiring in the health care, accounting and finance sectors.

"For the economy as a whole we should see much better numbers" in 2012, he said.

But a comparison of the 2011 numbers with 2006 and 2007, before the bottom fell out, makes for grim reading.

Since 2006, California has lost 200,000 middle-class households earning between $30,000 and $100,000 a year. Meanwhile the number of households earning less than $30,000 has grown by 180,000. And there are now 350,000 more households earning over $100,000 annually than there were in 2006.

It's the same story in Orange County: erosion in the middle class with an expansion at the bottom and the top of the income range.

Between 2006 and 2011, about 26,000 households left the $35,000-to-$100,000 income bracket in Orange County. The low-income bracket grew by 14,000 while the $100,000-plus bracket swelled by 34,000.

The economy has played favorites.

"The construction industry got hit very hard," Puri said. "They were doing very well in the boom."

"You go from a well-paid construction worker making 80 or 100 (thousand)," Shulman said, "and all of a sudden you're making, if you're lucky, 20 (thousand)."

But the past five years have been a very different story at the top. The booming stock market has pushed thousands of households into prosperity, Puri said.

Shulman said the expanding upper bracket is an old story: "People in general on the high end have been doing better for the last three decades."

"But the middle group," Puri said, "is squeezed."



Source: (c)2012 The Orange County Register (Santa Ana, Calif.). Distributed by MCT Information Services


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