Bloomberg News

Plummeting Income From Investments Shaves U.S. Household Cash

December 09, 2011

(For more stories on the census, {TOP CENS <GO>.)

Dec. 8 (Bloomberg) -- The housing market collapse, historically low interest rates and corporations stingy with dividends helped cut the median household income in two of every three U.S. counties, the U.S. Census Bureau reported today.

The number of American households that made money from rent, interest or dividends fell by one-third to 24.2 percent in 2010, including residents of counties that encompass New York City and San Francisco.

The census figures capture the lost financial opportunity experienced by Americans during a decade that saw the dot-com bust and then the worst recession since the Great Depression.

“We were expecting back in 2000 that our 401(k) would grow 4 to 6 percent a year,” said Gayle Thompkins, 68, a resident of Green Valley, Arizona, whose husband used to work for Dow Chemical Co. when the couple lived in Michigan. “Right now, if we break even, we’ll feel lucky.”

The plunge in the number of households with dividend, interest or rental income spanned the country, falling to 29.8 percent from 39 percent in 2000 in Manhattan; dropping to 13.1 percent from 23.5 percent in Miami; and declining to 50.3 percent from 69.6 percent in Anchorage.

“Over the last decade, income provided by financial market returns has declined, and pretty meaningfully,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “Consumer incomes are beginning the decade off at a lower starting point.”

Alaska Cushion

The census figures were released as part of the five-year version of the American Community Survey, an annual poll of 3.5 million U.S. households that replaced the decennial census long- form survey.

In 2000, 16 counties with more than 100,000 households had a majority report they received income from interest, dividends or rentals. Anchorage, where full-time residents last year received an average $1,281 dividend from a state fund created by oil revenue, was the only one in 2010.

Nationwide, median household income fell to $51,914, a $2,678 drop over the decade when adjusted for inflation. Black households lost the most, with median household income falling 8 percent to $35,194. Hispanics reported $41,354, a 5.5 percent drop. The figure for white, non-Hispanic households fell to $56,466, a 4.3 percent decrease over the decade. Asian households reported $68,950, a 2.2 percent gain.

Impact on Affluent

Households in traditionally affluent areas, such as the New Jersey suburbs of Hunterdon, Somerset and Morris counties -- the sixth, ninth and 10th-wealthiest in the nation -- showed median income losses over the decade. Incomes fell in Westchester County, New York, to $79,619, a $3,037 drop; Putnam County, to $89,218, a $4,744 decline; and $82,534 in Rockland County, a $5,828 fall.

The greatest declines occurred in Great Lakes states and southern Appalachia. People in 82 of Michigan’s 83 counties reported their household incomes dropped between 2000 and 2010. Households in Livingston County, a Detroit suburb, registered the largest drop in the nation, with incomes falling to $72,129, a $15,491 decrease from the 2000 real median of $87,620.

“This is the absolute nadir for us,” said Lou Glazer, president of Michigan Future Inc., an Ann Arbor-based non-profit research group. During the last decade, 94 percent of the state’s income growth came from government payments rather than private-industry sources, Glazer said.

Declining Dividend Payouts

Dividend payouts declined for the broader U.S. market between 2003 and 2010. The amount of dividends paid out as a percent of net income declined to 55.5 percent from 80.5 percent in that period, according to Russell 3000 Index data compiled by Bloomberg.

Prices for existing U.S. homes fell over the decade in one of five U.S. counties, according to data compiled by Bloomberg. Pitkin County, Colorado, homeowners were hardest hit. The median value of a home in the central Colorado county, home to the Aspen/Snowmass ski complex, fell $304,800, almost 10 times the decline in Oakland County, Michigan, the second-biggest loser.

The median sales price was $1.2 million for the 63 homes sold during the third quarter of 2010 in the Aspen area, said Ryan McMaken, chief economist for the Colorado Division of Housing. During the third quarter of 2011, 68 homes were sold with a median sales price of $637,000, he said.

“There aren’t a lot of fire sales, but there hasn’t been the sort of demand that existed prior to the financial crisis,” McMaken said. “It’s pretty clear there have been some declines.”

Real-Estate Hangover

Even counties that gained the most during the real estate boom didn’t end the decade much better. The median value of a home in Maricopa County, Arizona, climbed to $238,600 from an inflation-adjusted $167,960 in 2000, a 4.2 percent annual return over the decade.

The next decade isn’t starting well for the next generation of workers, the census data showed. Civilian unemployment among 16 to 24 year olds rose to 16.7 percent in 2010, almost double the November U.S. jobless rate of 8.6 percent and a 23.7 percent increase from a decade ago.

In 2000, two counties had a young adult unemployment rate that topped 50 percent. Ten years later, 18 counties reported a majority of unemployed among 16 to 24 year olds. Carroll County in Mississippi’s Delta region reported the nation’s highest youth unemployment rate in 2010, rising to 81.7 percent from 22.4 percent in 2000.

The Bureau of Labor Statistics reported in June 2010 that younger workers made up 13.9 percent of the total labor force and 19.5 percent of all workers unemployed for 27 months or more.

“The fact that a huge portion of the unemployed have been out of work for more than a year really suggests that the income stagnation is a long-term phenomenon,” said LeBas of Janney Montgomery Scott.

--With assistance from Sharon Lynch in New York, Jennifer Oldham in Denver and Scot McClintic in Princeton, New Jersey. Editors: Flynn McRoberts, Mark McQuillan

To contact the reporters on this story: Frank Bass in Washington at fbass1@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Flynn McRoberts in Chicago at fmcroberts1@bloomberg.net


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