Thursday, December 03, 2009

Funny, I don’t Feel That Rich

According to this story in The Huffington Post today, the US Census Bureau, in its latest report on the poverty and income levels of over 3,100 counties in the United States, identified Howard County as the fifth richest county in the country with a median household income of $101,867.00.

What gives?

It was just about two years ago that Forbes magazine named Howard County as the third richest county in the country with a median household income of $94,260.

I suppose it really doesn’t matter all that much. It’s just that most people I know don’t feel very rich these days.

I suppose it’s all relative. The poorest county in the country is Buffalo County in South Dakota where the median household income is $19,182. Then again the cost of housing in Buffalo County is a little more reasonable too. The mean price of a home in Buffalo County in 2007 was $110,588. Given that the county population density is 4 people per square mile you probably get a little land with that house too.

8 comments:

Sarah said...

It's amazing how many of these "richest counties" are in and around the DC area!

But yeah, all relative.

Freemarket said...

Yeah, it's almost like the federal gov't redistributes wealth from other areas of the country to the DC metro area. But that would be silly.

Anonymous said...

We are truly blessed in Howard County. Look at our unemployment rate vs Detroit.
HH

hecker.org said...

While we're on the subject, I'll shamelessly plug my previous posts on income inequality in Howard County; I suspect the 2008 data is pretty consistent with the 2007 data I used for those posts.

In line with that discussion, the reason you don't feel "rich" is because there aren't vast extremes of wealth and poverty in Howard County. Instead there is a large middle group of people who are quite affluent by US standards but not truly wealthy. People in this group are competing with each other in buying the various elements of middle-class life, most notably nice houses in good school districts, and collectively drive the price of those goods to a point where their cost eats up most of people's salaries. Hence the feeling people have that they're barely getting by on $100K+ a year.

Apropos of Sarah's and Freemarket's comments, they're correct that Howard County's relative affluence has to do with being in an area whose economy is driven by the Federal government. However the free market can also produce economic distortions of its own.

Consider, for example, the relatively high proportion of overall corporate profits that went to financial services firms in recent years, and hence ended up in places like New York City and Fairfield County, Connecticut (home to many hedge funds). But those places don't get in the very top of "richest counties" lists because (unlike Federal government salaries) most of the wealth generated by financial services went to relatively few people, and the median (as opposed to mean) income, while higher than average, is still well below that of jurisdictions in the DC metro area. (I discuss Howard County vs. Fairfield County in the posts referenced above.)

Freemarket said...

Hecker.org: while I agree with much of your comment, I am not comfortable with the notion that free market purchases create economic distortions like government spending does. Trade in a free market makes both parties better off. Smith gets access to financial services from Jones that Smith values more than some cash, and Jones gets cash from Smith that she values more than the financial services she provides. This trade has made both parties better off, the entire economic pie is larger. In reality financial services are far from a free market, and the government intervention and regulation played a major role in creating our current economic woes, but that is another issue. My point is that when I purchased my Mac, that purchase made me and Steve Jobs better off even though he is doing far better than myself from an income distribution standpoint.

I would not want to have to argue that federal government spending makes the economic pie larger, especially since many of the people footing the bill are not receiving the services provided. That is a zero sum game where some people win and some people lose.

hecker.org said...

Freemarket: This is getting somewhat away from the point of the post, but: I'm quite in favor of free market principles, I simply think that in practice markets are always going to be vulnerable to distortions of various types, including regulatory capture by powerful economic interests (which I think is equally as much of a danger as the fiscal threat from over-spending on government programs).

Getting back to the subject of this post, your comment on Steve Jobs is an interesting one for two reasons.

First, it's interesting to note that only one jurisdiction in northern California, Marin County, got on the top 15 list, and Marin County isn't really part of Silicon Valley proper. I suspect this is due to a combination of economic dynamism (leading to greater income inequality) and the presence of lower-income areas (e.g., around San Jose, East Palo Alto, etc.).

Second, I definitely think that the privileged economic position of Howard County and other DC-area jurisdictions has suppressed entrepreneurial activity in this region. As I briefly noted in my second post on income inequality (but never got around to expanding on), I personally think that Howard County could benefit from having more wealthy entrepreneurs and the associated income inequality that would bring.

Finally, riffing off your point about the advantages of free trade, if one believes (as I do) that advanced capitalist economies both give rise to and depend upon relatively large and activist governments, then one can see the position of the DC metro area as an example of comparative advantage at work: The DC area is specializing in public policy and regulation just as New York is specializing in financial services, Boston in education and biotechnology, Silicon Valley in IT, etc., to the mutual advantage of all.

Anonymous said...

The reason howard countians don't feel well off is because of debt. People owe big time on those massive SUVs, can't afford to heat and cool those homes some call mcmansions, and are drained of all disposable income just trying to meet debt service on everything in the house, from the rugs to the washer and dryer.

$110,000 is nothing when considering a mortgage of 10k each month (incl tax and ins) going out past your expected survival date.

Anonymous said...

Also, let's not forget that $110k is for two earners in Howard County. That's not really good.