San Jose Mercury News, August 29, 2007: San Jose still nation’s richest big city

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By Mike Swift

For San Jose and the rest of California, the nation’sannual income and poverty report card, delivered Tuesday, carried a dollop ofgood economic news.

With an estimated median household income of about $74,000 in 2006, San Jose remained the large U.S. city with the highest medianhousehold income. San Francisco and San Diego, according tonew census data, claimed second and third place respectively among cities of500,000 people or more.

Statewide, median income for all Californiahouseholds grew by $1,310, or 2.3 percent, after inflation, according to theCensus Bureau’s Current Population Survey. The California household at the middle of theincome distribution had an income of about $56,600 in 2006.

The new 2006 numbers indicate that economic growth is percolating throughthe state’s middle and working class, said the chief of an advocacy group thatlast week issued a report warning about the state’s growth of incomeinequality.

“Finally, we’re beginning to see some gains trickle down,” saidJean Ross, executive director of the California Budget Project, a research andadvocacy group for moderate-income families.

Santa ClaraCounty’smedian household income, at about $80,800, trailed only Marin among California counties.Among the roughly 800 largest U.S.counties for which the Census Bureau released statistics Tuesday, Santa ClaraCounty ranked 17th in median householdincome. But there were also concerns by experts that the apparent affluence ofthose income figures masks the struggles of many working-class families.

Reaching equilibrium While census data suggested Santa ClaraCounty’smedian income may be poised for growth, the change in the past year was toosmall to be statistically significant. But the county continued to stabilizefrom its income declines at the beginning of the decade.

“We were hit harder by the dot-com crash, and we’re taking longer toget back to where we were in 2000” than the rest of the state, said LouiseAuerhahn, an associate policy director with Working Partnerships USA, aresearch and advocacy group for moderate-income families in Silicon Valley.

Ross worries that the housing slowdown could dampen statewide progress,however, and the Census Bureau’s annual income release also carried someworrisome trends for Californiaand the nation. Even the relatively low poverty rates announced for areas like Silicon Valley mask significant poverty, experts said,because the federal government applies a one-size-fits-all definition.

Deborah Reed, an economist for the non-partisan Public Policy Institute ofCalifornia, calculated Tuesday that Santa ClaraCounty’sannounced 9 percent poverty rate would jump to 12.2 percent – roughly the sameas the national poverty rate – if the definition of poverty accounted for thelocal cost of housing.

California’spoverty rate, Reed calculated, would climb well above the nation’s poverty rateto 17 percent if the state’s housing costs were taken into account.

Another worrisome trend, experts said, was the continued increase in thenumber of people without health insurance. There are now about 47 millionAmericans without health insurance, the Census Bureau said. In California, the share ofadults under age 65 with job-based health insurance dropped from about 60percent in 1999 to 55.5 percent in 2006.

Income paradox Median household income increased for the nation’shouseholds from 2005 to 2006, but that was combined with a counterintuitivetrend – individual earnings dropped for both men and women who worked full timein the past year.

While households have more collective spending power, the data suggests it’sbecause part-time workers moved into full-time work, not because individualpaychecks are growing. Individual earnings may have dropped because those newfull-time workers were hired at a lower rate of pay, but the Census Bureau doesnot know for sure, said Ed Welniak, chief of the bureau’s income surveysbranch.

The federal government’s poverty definition was devised in the 1960s basedon the cost of food, and is not adjusted to account for regional differentialsin the cost of housing, child care or other primary living costs.

“When you compare what it costs to live in San Joseand what it costs to live in a place like Omaha,the same income will certainly buy you a lot more in Omaha,” Reed said. “In thehigher-cost states, you have families that can’t afford the basic necessitiesat several multiples of the poverty line.”

In Santa ClaraCounty, the federal HeadStart program has turned away as many as 3,500 families in recent years becausethey earn more than the federal poverty threshold – pegged at $20,444 for afamily of four in 2006.

“When you explain it to them, they often get mad, because who can livein Santa Clara County with a family of four on $25,000?” said AdolfoPando, an official with the county’s federal Head Start program, which provideseducational and other services for preschool children.

Many left out Federal Head Start officials are used to turning awayfamilies who cobble together an income from several full- or part-time jobs,but who are far from affluent.

The federal program turns away fewer parents now, Pando said, because theprogram makes a point of publishing its income limits, so people classified as”over income” are discouraged from applying.

There is a state-funded Head Start program that has higher income limits,but Ana Trujillo, director of Santa ClaraCounty’sfederal program, says many children from families who are having trouble makingends meet are never able to take advantage of Head Start.

“There are families where they might be working three jobs, but theirincome is above the poverty guidelines by a couple hundred dollars,” Trujillo said. “Andthose we can’t serve.”


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