Mikey!, Income Distribution, Living in Cities

After a few friends and I struggled last night in a conversation regarding American poverty-levels and income distribution across our socioeconomic classes, I resolved today to research the issue, and write about it. -- And then e-mail the link to you, Mike. You cared the most. Consider this a shout-out. We had no facts last night. Now, we’re armed with a few.

Before I get started, I must make a quick note about economic data: most of the data released in 2006 refers to 2004 or earlier. There is a serious and persistent lag with financial and population data. Nothing to be done. Also, and quickly, you'll need to understand the difference between "household incomes" (a single individual is a household, and a family of four is also a household) and more specific data points, like four-person families. "Households" are baseline units of measurement. It also seems relevant that "per capita income", which we bandied about last night as something around $30k, isn't a data point that I encountered.

Straight away, I’ll tackle some of the hard data, all of which comes from 2003 Census Bureau reports unless otherwise noted:

1. The median household income in the United States was $43,318. (Report One)
   
2. The median household income in the Western states was $46,820. (Report One)
   
3. The median income of a four-person family in the USA was $65,093. (Report Two)
4. The median income of a four-person Washington state family was $69,130. (Report Two)
5. The median income of males was $40,668. (Report One)
6. The median income of females was $30,724. (Report One)
7. Poverty is defined by the Office of Management and Budget. The poverty thresholds in 2003 were:
   
• Family of four, $18,810.
• Family of three, $14,680.
• Family of two, $12,015.
• Individuals, $9,393.
8. 12.5% of people live below the poverty line. (Census Fact-sheet)

Here is another string of interesting data points from the Census Bureau. All of this data came from the aforementioned Census Bureau fact-sheet. It seems to have been updated in June 2006 despite the data seeming much older.

1. Per capita money income..............1999.............$21,587
2. Persons per household...................2000...........2.59
3. Retail sales per capita....................2002............$10,615

It is interesting to note that "retail sales" do not include service establishments (like restaurants) or other merchants whose primary business isn't consumer retail sales. This quite obviously confirms the notion of eating out as an absolute luxury. The poverty level for an individual is below the retail sales per capita ($9,393), and if you divide two of the above statistics -- the median household income by the people per household -- one can get a bastardized 'median individual income' of roughly $16,000, itself just above the retail sale figure.

I was a little surprised to learn how subjective notions like "Upper Middle Class" are. I spent a few hours trying to nail down a hard definition from a government agency, but I couldn't find anything. A few voices -- like Wikipedia and a blog titled Steve Jackson Games -- created definitions for Upper Middle class that seemed reasonable -- between $75-85k, or above $100k -- but were absolutely arbitrary.

Upper Middle Class, and Middle Class, and other designations don't exist. There is no such thing.

But, if one spends a long while sifting through reports like the Census's "Selected Characteristics of Households, by Total Money Income in 2004" he can build a basic percentile breakdown of the American population. I sifted. Percentiles look something like this:



If 15% of US households earn less than $15,000 a year, and 15% of US households earn more than $100,000/year, then perhaps the middle class is between those two extremes. You could draw up your own definitions of "upper middle" and "lower middle". The data above $100k, I should mention, was grouped together in the intial Census report. It wasn't my idea to conglomerate everything greater than $100k.

There is, however, more specific and sporadic information if you dig deep into, say, the New York Times archive. Here are some figures and links to articles that provided specific and occassionally conflicting data points regarding income distribution among the upper classes.

• Top .1% - "$1,672,726"/yr (Krugman - Feb 27, 2006)
• Top 1% - "$402,306"/yr (Krugman - Feb 27, 2006)
• Top 1% - "$341,773"/yr (Krugman - April 14, 2006)
• Top 1% - "$315,000"/yr (Non-Krugman editorial - July 19, 2006)
• Top 3% - "roughly $150,000"/yr (NYT news article - Dec 11, 2005)

Krugman in particular is unhappy about the consolidation of wealth in Bush's America. Perhaps Mr. Krugman's most scathing commentary reads like this:

"There's a persistent myth, perpetuated by economists who should know better -- like Edward Lazear, the chairman of the president's Council of Economic Advisers -- that rising inequality in the United States is mainly a matter of a rising gap between those with a lot of education and those without. But census data show that the real earnings of the typical college graduate actually fell in 2004," Krugman wrote July 14, 2006.

"In short, it's a great economy if you're a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport," he finished.

A report published by the Brookings Institute last month titled "Where Did They Go? The Decline of Middle-Income Neighborhoods in Metropolitan America" seems to decry a trend that predates today's economy, but definitely validates concerns about the ever-increasing prices in urban America. I suppose the highlight of the study is its initial finding that "Middle-income neighborhoods as a proportion of all metropolitan neighborhoods declined from 58 percent in 1970 to 41 percent in 2000. This dramatic decline far outpaced the corresponding drop in the proportion of metropolitan families earning middle incomes, from 28 percent in 1970 to 22 percent in 2000."

The report found that upper income neighborhoods were growing rapidly, but that lower-income neighborhoods were also increasing. Interesting combination.

The data concerning Seattle suggests that the Puget Sound region has protected its middle-income neighborhoods remarkably well. You'll need to click the graphic to view its larger form, but notice that both Tacoma and Seattle/Bellevue/Everett crack the Top 10 list for middle-income neighborhoods.



I wonder if a collapse of Seattle's strong median household income would precipiate a push for ubanization, or if our medium-income housing is tied more closely to cultural issues pushed by the Lesser Seattle movement and its hero, Emmett Watson.

I don't know. Maybe you can tackle that one.

Seattle, Oklahoma City, and the NBA

Professional sports in the United States, it is popular to say, are out of control. The salaries, the ticket prices, the unbelievable television revenues -- everybody seems to agree that the Business Of Sports is no longer grounded in any sort of reality.

Taken from a particular angle, however, today's news that the Seattle Supersonics were purchased by a group from Oklahoma City is a return to sanity. The leader of the new group, Clay Bennett, wants to bring a professional sport to Oklahoma City. That's it. He's an Oklahoma City guy, and he wants an Oklahoma City professional sport. Period.

"We are acutely interested and very focused on bringing a team to Oklahoma City. It's a tricky spot to be in because you don't want to overstep your boundaries ... but the Sonics, yes, are a possibility," Bennett told the Seattle Times in a February 2006 profile. At the time of the article, Bennett had not even contacted the Sonics, he said.

Bennett does have experience in the NBA in San Antonio. He once sat on their board, Oklahoma City's Oklahoman newspaper reported today. But, "Bennett is a die-hard Oklahoman. He spoke passionately that day last fall when the Hornets announced they were relocating to the city. He loved the idea that his state, his city, his home was getting a major-league franchise that he long thought it deserved," wrote columnist Jenni Carlson.

Of course, the Hornets were only temporaily displaced, and once Katrina's effects have receeded, the NBA plans to move them back to New Orleans. The NBA has said they expect New Orleans to reclaim the team full-time by 2007-2008. So Bennett went looking elsewhere. There's no harm there, no inordinate greed. During the press conference annoucing the sale, members of Bennett's group indicated that they had even looked at bringing the Washington Nationals baseball club to the city. Mr. Bennett was trying everything. He wanted a professional sports franchise. End of story.

Sort of.

The people from whom Mr. Bennett purchased the Sonics, though, seem dirty. Seattle's ownership group, a hodge-podge of 58 local millionaires and billionaires, purchased the franchise five years ago for $200 million. Since then, the Sonics claim to have lost $60 million, because of what has been called the worst-stadium lease in the NBA. Nevertheless, despite the public protestations of losses and the futility of going-forward, today's sale was for $350 million. Something doesn't jive.

The Sonics have been in Seattle for 40 years, and throughout the 1990's was Seattle's only respectable sports franchise. In many ways, Seattle was a Sonics town. Gary Payton. Shawn Kemp. Detlef Schrempf. To this day, the fans still support the team. The capacity attendance figures from the past four years surprise even me. (Record in parentheses)

2005-2006 - 95.3%, 9th in the NBA, (35-47)
2004-2005 - 96.9%, 8th in the NBA, (52-30), playoff berth
2003-2004 - 92.0%, 11th in the NBA, (37-45)
2002-2003 - 91.0%, 14th in the NBA, (40-42)

The team has been bad. The fans have come anyway.

ESPN.com is asking whether or not Oklahoma City deserves an NBA franchise. With 72,293 votes in, the split is 50/50. I don't think there should be any split. Oklahoma City has supported the Hornets in a way that many cities do not support their franchises. I voted Yes. But, OKC does not deserve one more than the Seattle. Seattle supports the Sonics. Seattle is a bigger city, whether counting within city limits or metropolitan district. If The Business of Sports takes this team away from this city, then Sonics fans have been done wrong by.

Most every news article discusses how unhelpful the city government has been in satisfying ownership complaints about losses. The team has demanded that their stadium lease be reworked, but the city has refused. Sort of. As news of the sale leaked, the mayor's office released three proposals it offered the Sonics. I don't understand the in's and out's, but the Seattle Times tackles the proposals briefly in bullet form.

"They never did respond to us on those three offers," said Seattle Deputy Mayor Tim Ceis said in the Times article. "It was pretty clear at that point they were looking at different options."

Some of those options have been well-publicized in the Seattle press. Most promising were proposals by the local cities of Renton and Bellevue. Very interesting summary by the Seattle P-I.

I should note before closing the storyline that the old ownership group and the new one pitched in their joint press conference this afternoon. There aren't any articles on the web, so I cannot link to anything, but both groups said the sale did not necessarily mean that the Sonics would move to Oklahoma City. The new owners have pledged, or perhaps written into the sale agreement, to spend 12 months pursuing a suitable arena agreement in the Seattle area. The old owners suggested that they took less money from Mr. Bennett's group in order to secure this promise. We'll see.

Lastly, the Sonics switched away from their long-time radio partner, KJR. Excellent review about that move, and what it might mean, and an excellent blog generally by local radio DJ Lisa Wood.