Sonoma County's widening income gap hits home

On a projection screen inside a Sonoma State University classroom, economics professor Steven Cuellar illustrates the nation's income trends for the past 35 years — a story told in wildly diverging lines.

The American economy has rewarded its upper-income earners with dramatic income gains that seem to climb off the chart, while

real wages for everyone else have been stagnant or fallen.

Cuellar outlined the national story during a recent labor and economics lecture. And federal and state data for Sonoma County tell a similar story.

The county's median household income inched up to $59,055 in 2010 from $57,321 in 2002, according to census figures. But the increase did not even make up for the moderate inflation of the past decade — a household would have had to bring in $69,479 in 2010 to have the same purchasing power of the $57,321 in 2002.

Thus, real buying power for the mid-income household in Sonoma County has dropped sharply.

Meanwhile, the top 1 percent of earners in Sonoma County increased their share of the county's total income by more than 12 percent from 2002 through 2008, according to the latest tax statistics from the California Franchise Tax Board. Tax statistics for 2009, the latest data available, could not be readily used because of specified income brackets do not yield that year's top 1 percent of taxpayers.

In 2008, that group collected about 15.5 percent of the county's $13 billion gross income. Eight years earlier, they collected 13.8 percent of a total income of $10.7 billion.

Further, the county's share of middle-income households has shrunk to well below half of all households, a trend heightened by the recession that hit in 2007. That's because the share of households earning less than $50,000 a year grew by 4 percent from 2006 to 2010, while the share making more than $200,000 grew by 23 percent.

Similarly, the Public Policy Institute of California released a report this week that found that the share of California's middle-income families — those with incomes between $44,000 and $155,000 — dropped from 60 to 47.9 percent during the three decades from 1980 to 2010.

"Inequality is being driven mostly by growth in the wages of those at the top while wages at the bottom have been relatively flat," Cuellar said.

Wage inequality is not a new story. Academics have been studying these divergent lines for years. And anti-poverty advocates have been crying foul for just as long.

But only now with the eruption of the global Occupy movement has the general population begun to pay attention. The recession severely weakened the buffer — home equity — that once shielded lower- and middle-income earners from the pain of decades of stagnant wages.

"There are falling expectations for most of the population," said Marty Bennett, a Santa Rosa Junior College history instructor and co-chairman of the Sonoma County living Wage Coalition. "The upper 10 percent are insulated. The bottom 90 percent, even the upper part of that group, are feeling it."

Linda Kade, an architect who lives in Petaluma, held a a full-time job in 2009, earning more than $90,000 a year. Now she is a part-time contract architect earning about $40,000 a year. She said she now has to pay the share of Social Security, Medicare and other payroll taxes previously paid by her employer and also more than $1,100 a month for COBRA health insurance for her and her son.

In a recent survey, the American Institute of Architects found that architecture firms hit hard by the slump in construction are converting some full-time positions into part-time or contract positions, a trend that has contributed to slipping wages in the industry.

Kade said her son, a high school student, is considering not going to a four-year university after graduation. Kade worked her way through college at UC Berkeley.

"He's a senior and he's not looking at colleges. He says he's going to go to the JC and explore his options," Kade said.

"He says, &‘I don't see it's worth it,'" she said. "It's heartbreaking."

Kade has dropped out of the middle class. And she's not alone.

According to Census Bureau's American Community Survey, from 2002 to 2010 the share of Sonoma County households with incomes between $50,000 and $150,000 fell to 47 percent from 51.

In Sonoma County, those much-publicized 1 percenters currently are those making about $400,000 a year or more. They numbered 1,900 taxpayers in 2008, according to state tax data. These individuals or families had a combined adjusted gross income of $2 billion, up from $1.5 billion in 2002.

The widening income gap has some calling for a heftier tax on wealth. But Jon Coupal, president of the Howard Jarvis Taxpayers Association, warned against the urge to hike taxes on the wealthy.