ECONOMY: Incomes dropping, costs rising

New report on 2007 wages show residents struggle to keep up with price of gas, food

By ZACH FOX - Staff Writer | Tuesday, August 26, 2008 7:12 PM PDT ∞

North County incomes have failed to keep pace with inflation in yet another indicator that the region has entered a recession.

Rising gasoline prices along with an increased cost of food have pushed up the cost of living, while fewer jobs and weaker consumer spending mean local residents are not earning enough to keep up, according to a release Tuesday by the U.S. Census Bureau.

Further, the release reports numbers only through 2007, and recent jobs reports suggest the economy has weakened further this year.

"This is a story of a grim, stagnant economy between 2006 and 2007. And it's really the best we'll see in this economic cycle," said Murtaza Baxamusa, research director for the Center on Policy Initiatives, a San Diego think tank.

Going back to 1999, wages have tracked inflation, meaning residents can buy the same amount of goods with their income they could nine years ago.

Even more worrying to economists, median household income, where half of households earn more and half earn less, dropped in several North County cities from 2006 to 2007.

San Marcos led all income declines in North County, down 7 percent in a year, or 9 percent after counting for inflation.

Because the numbers carry a large margin of error, about 8 percent for most cities, some of the declines might be a statistical aberration.

But the increased costs in gas and food are very real for residents such as Glenn Saxton of Pauma Valley.

"We're running behind on (utility) payments," said Saxton, a disabled veteran living on a fixed income. "The house, we make sure that payment is made. We can live without electricity or propane, but you have to have a place to live."

Saxton's struggles to pay the grocery bill is not reflected in Tuesday's data release; inflation rose more dramatically over the last five months than it did in all of 2007, according to the Bureau of Labor Statistics.

With more money spent on food, and wages remaining flat or falling slightly, economists said the retail sector, the largest source of employment in San Diego County, will struggle through the rest of the year as consumers cut down on discretionary spending.

"This summer, it hasn't been a complete disaster, but I don't think we'll see a gain from a year ago for consumer spending," said Kelly Cunningham, an economist with the San Diego Institute for Policy Research, another think tank.

Cunningham said he expects the holiday shopping season to be likewise weak.

No income group appears to be immune, as Carlsbad posted one of the biggest drops in income, down 5 percent during that time. Adding in the devaluation of the dollar, households earned 8 percent less.

That could mean more problems for Sacramento, where the state government already faces a $15 billion budget deficit.

"Because we have a progressive tax system where higher-income individuals pay more, if the upper-income households are facing some declines, that's going to more than proportionately reduce the state revenue take," said James Hamilton, an economics professor at UC San Diego.

On the other hand, previous data releases such as job reports indicated that middle- and lower-income residents were suffering even more, as their jobs have disappeared, most notably in construction and retail.

But that did not show up in the census data released Tuesday, as cities with lower median incomes, such as Oceanside and Escondido, posted small drops or nominal gains in wages. Some economists speculated the contradiction might be the result of high foreclosure rates in those cities, forcing residents out of the area or to move in with other family members, adding to the household income.

That conclusion ---- combined with weak jobs reports over the last several months ---- has essentially sunk the argument put forward a year ago that though the national economy might enter a recession, San Diego County would avoid an economic downturn because of its strong tourism businesses.

"We thought we were buffered and we would avoid the weakness the rest of the country was seeing," said Baxamusa, the economist with the Center on Policy Initiatives. "But 2008 has shown us how vulnerable we are."

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at nctimes.com/blogs/minding_your_business.

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Pre-Registration Comments[-]Go to Top

Tuck wrote on Aug 26, 2008 7:22 PM:As far as I can see, many residents in North County still have a lot of expendable income. I see the cars people drive, the clothes they are wearing, and their fancy PDAs/IPODS. Until I see a change in people’s lifestyles, enough with the doom and gloom stories.

To Tuck... wrote on Aug 26, 2008 9:02 PM:My thoughts exactly. I don't see too many people that look real abused. It's the media as usual with the doom and gloom

Jess wrote on Aug 26, 2008 9:12 PM:Tuck has to pull it out and look around. Many stores and resturants are emty.... I know I am not spending any money at a resturaunt when I have no idea whether I will have a job in 3 months.

Nutz wrote on Aug 26, 2008 9:36 PM:This article should be filed under "duh". How obvious can it be that if gas is over four bucks a gallon, our homes are worth 1/3rd less than we paid for them and businesses aren't giving raises then the economy is suffering.

Duh wrote on Aug 26, 2008 9:50 PM:This article tells us what thousands and thousands of us already know- we are having trouble making our bills and paying our taxes. We are the eroding middle class edging toward poverty. Thank you Republicans for screwing up my life and making it so difficult to be a prosperous American. Oh I forgot..the bigwigs don't have the same problems of me. It's time to kick the bums out of office! And I mean all of them, from the local offices up to the White House!

Old Timer wrote on Aug 26, 2008 11:06 PM:Wages have been flat for many years, housing and retirement wealth falling, jobs leaving the country, costs rising etc. Welcome to the reality of trickle up economics. Something very similiar happened under Coolidge/Hoover. The wealthy folks are doing just fine, but most people are in a struggle to break even. During the past few years, the middle class wealth has been redistributed with no end in sight. Unless wealth in this country is more fairly distributed, looks like it is time for Southern California to learn how to be poor again.

NSShirlock wrote on Aug 27, 2008 3:47 AM:Some of us are old enough to have lived through this before. We, the more humble, sit it through while the 'keep up with the Joneses' types take the hit. Slow and steady still wins the race. Your move... I'll pass.

Native wrote on Aug 27, 2008 6:58 AM:There is no Law or Constitutional Right to live in California. Just because 40 million people want to live here doesn't mean that the resources can handle it. no water. no jobs. Remember 2 Economic rules next time you agree with that "Tax the Rich and all will be fine" line.
1: You can only steal the rich guys money ONCE!
2: Tax the rich only means that the Rich won't stop doing and buying what they want , when they want. They will just stop buying it HERE!
We tried that and it put all the boat , airplane , and jewerly people out of business.
Those that refuse to learn from history are condemned to repeat it.

Tuckered out wrote on Aug 27, 2008 7:23 AM:Looks like Tuck is up to his 'please disperse, there's nothing to see here' schtick again. Nice to have you back, buddy. Several of my friends have lost their jobs in the last year, some with modest severance payments, some with little or nothing. I'm not saying they're being 'abused,' as Tuck might scoff, but it seems like a lot of us are working for the economy even though it isn't working for us. I'm college-educated, work my butt off in a middle-class job and save pretty aggressively, but it'll be at least another five years before I can afford a house.

Wages ARE going down wrote on Aug 27, 2008 9:00 AM:because GREEDY business owners hire ILLEGAL immigrants for less money. We are paying the price in lower home values, loss of jobs, crowded schooling, closing hospitals... when are the stupid politicians realize they are giving our country away?

Scooter wrote on Aug 27, 2008 10:36 AM:Hey "Duh"; You're blaming the Republicans?! What do you suggest to change the "damage"?! Democrats and new taxes? Wow, that makes sense!

Sounds like you are a bit overextended and looking for a scapegoat. Maybe a trip to the nearest mirror is in order........

Oh well.... wrote on Aug 27, 2008 11:02 AM:I am guessing my next years state income tax return is going to be a BIG butt plug... It seems a whole lot of us will be getting one as well !!!

To Scooter... wrote on Aug 27, 2008 1:36 PM:Things for sure can't be any worse than they are now. And who's in office now but a republican!!! Wow, now you really make sense. Go figure!!

Bullet Proof wrote on Aug 27, 2008 1:44 PM:Read it and weep. Tri-city, and now the EUHSD are floating bonds in this economy? Anyone with a brain won't vote to increase their property taxes when they aren't sure that they will have a job to pay the mortgage.

To Duh wrote on Aug 27, 2008 2:20 PM:Two years ago the democrats gained control of both houses of congress. This renders the White House a lame duck. Both california senators are democrats. California has been a liberal democratic state for many years.If the demo. party could give us a better economy, we should not be in a down economy now. Regardless of politics ,a strong economy requires good jobs with good pay. As consummers we always want lower costs. to get these lower prices we import goods from low cost labor countries. It comes home as lost jobs

Scooter wrote on Aug 27, 2008 2:33 PM:"To Scooter...[-] wrote on Aug 27, 2008 1:36 PM: Things for sure can't be any worse than they are now. And who's in office now but a republican!!! Wow, now you really make sense. Go figure!!"

Well, I hate to be the bearer of bad news, but it ain't even close to bad yet! See "To Duh's" post above for a quick explanation, and brace yourself for more of the same (and worse!) if the Dems somehow get in. Socialized medicine, higher taxes, more hand outs for the "poor", etc; it's the Democratic way!

To Scooter... wrote on Aug 27, 2008 3:04 PM:Well, if you are the bearer of bad news and it ain't even close yet let's thank GWB for that. Go Dems!!

To Scooter wrote on Aug 27, 2008 3:09 PM:A bigger problem on the political side of the economic nightmares are all these idiots who think it's a Republican or Democratic problem, issue or fault. When will the sheep learn to give up the parties and just pick the right guy for the job?

In the meantime, you should face the reality that people are by and large so fed up with the last 8 years of Republican rule that Obama has a better chance than you may want to admit.

local osider wrote on Aug 27, 2008 4:38 PM:Scooter...I think its interesting how ideas like taking care of the poor, having affordable health care, and closing loopholes for the rich are thought of so negatively. That sounds like a great world to live in to me. Taking care of the poor means less crime, affordable medical care for all means hospitals will get paid to stay open, and people making over 250k a year will pay for it! Whats wrong with that?

To Native wrote on Aug 27, 2008 5:25 PM:Excellent post; could not have said it better myself.

Scooter wrote on Aug 27, 2008 6:24 PM:I will admit that the last several years haven't been a cake walk, but there is no candidate that can be held directly responsible, nor is there one who will "fix it". My point is that you just can't blame "W" (especially with a Democratic Congress!), nor can you expect one individual to make it all better. There is no one person who can make us all happy.

Currently I have a "Jimmy Buffett for President" sticker on my car. Ironically, he may just be the best choice..........

To Scooter wrote on Aug 27, 2008 6:33 PM:I'm no Obama fan, but what exactly do you think McCain has to offer?

McCain is another 4 years of Bush that no one can afford.

Obama is 4 years of all talk no action.

Now what?!

HAPPY ONE wrote on Aug 27, 2008 6:39 PM:Kepp the prices on stocks and realestate dropping its great when we can invest more money and pennies on the dollar. Anyone with common sense knows you pay for "stuff" with cash not credit! Im loving these times and they only come around every 10 years or more. If you missed this one, get smart for the next one.

To Tuck wrote on Aug 27, 2008 6:44 PM:You sound like you're basing your opinion of how well people are doing today on purchases they've made in the past ... which is inaccurate, short sighted and just plain stupid.

Odds are the car a person is driving today is simply a lease that hasn't expired yet. The clothes have probably been in their respective closets for some time now. Electronics ... same as clothes.

I know that I have a car that I'm just waiting for the lease to expire on so I can move onto something smaller (I don't need today what I needed 2 years ago). I haven't purchased clothes in months and my PDA is roughly 2 years old & going strong. I don't have an IPOD, but then there's really no music worth listening to these days anyway.

I also own a small business and can certainly see a change in the tides, as can other small business owners I know.

You just go ahead & keep you head in the sand while you judge on things you know nothing about and wait for the big bad wolf to tell you what the rest of us already know is here.

To the last post... wrote on Aug 27, 2008 7:48 PM:I agree with you on that. But they are all politians and they are going to tell the public what they want you to hear. So you just pick one and hope it's the best candidate.

To Scooter wrote on Aug 27, 2008 8:46 PM:RE: 6:24pm ... Sipping my martini I have to say ... Jimmy Buffet's starting to sound pretty darn good. Lord knows he couldn't be any worse.

inflation wrote on Aug 28, 2008 8:32 AM:Neither the article nor any of the commenters mentioned what I suspect are the two biggest factors in the current inflation: 1) Bush's enormous budget deficit, which the Democrats are only starting to rein in and 2) American consumers' own reckless overspending. Both have helped to erode the value of the dollar because investors are steadily losing faith that the we'll pay them back. And that's why we're having to pay more (in dollar terms) for everything that comes from overseas. I partially agree with 'To Scooter' that we're too quick to point fingers at one political party or the other for what is mainly a problem in the private sector. But I suspect that if you go back through history, you'll find that deficits and inflation have been worse when the same party controlled both the presidency and Congress because presidents have been more likely to veto bloated spending bills from the other party than bills from their own party. Things were great from 1994 to 2000, when Clinton was in the White House and Republicans controlled the House. Things have been mostly bad under Bush with Republicans controlling Congress for most of his time in office, and they were bad under Carter, when Democrats controlled Congress for his entire presidency.

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