These days, there is a lot of discussion about the “1 percent” and the “99 percent” with respect to the income distribution in San Diego. How much income does each group make, and how has this changed?
Although San Diego ranks in the middle of the spread among large metros in its income inequality, changes in income concentration reflect the trends nationally. Since information about the “1 percent” is difficult to glean from census data, this analysis uses state tax filings. The limitation of this analysis is that these figures do not capture household income or net worth, nor does it include those that did not file state returns with an address within the county.
The top 1 percent had a lower limit of adjusted gross income totaling $400,635 per return in 2009, according to the Franchise Tax Board in California. Based on this approximate cutoff of income of $400,000 per year, there are about 14 thousand returns in San Diego county that count within the “1 percent.” About four in five of these top returns were filed jointly. The average annual income of the “1 percent” was $1.2 million which was about 22 times the average income of the rest “99 percent.” It should be noted that average incomes are skewed by top earners in each group, and those with no income (or negative income) were not included.
In order to understand the rise of income inequality, we need to examine the change in income over the past few decades. Tax returns show that the average inflation-adjusted income of the top 1 percent increased by 47.5 percent between 1993 and 2009. In the same time period, every single quintile (except the top quintile) lost income in real dollars. California Budget Project extended the income data back to 1987, and found that the average income in the middle-income tier (3rd quintile) dropped by 14.8 percent, falling to approximately $35,000 in 2009 — the lowest level since they could track data for more than two decades. Inflation ate up all the absolute increase in income from the middle class.
Within the “1 percent” the income distribution is also unequal, with a higher concentration of income in a steeper few. As we go higher than a threshold of million dollars in adjusted gross income, the number of San Diegan returns is 3,400. These million dollar income returns, without adjusting for inflation, peaked in 2007 and have been falling since. Nevertheless, the average income of this group has been relatively constant through the decade.
These charts elucidate the gradual formation of a teardrop-shaped economy in San Diego, where the middle incomes are being pushed down, and the top of the spindle draws itself apart from the rest.
Murtaza Baxamusa is the Director of Planning and Development for the San Diego Building Trades Family Housing Corporation. He lives in Bird Rock.