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Low-income Southland households had biggest recession losses

New census data show people of all income levels suffered losses during and after the Great Recession, but the lowest fifth of households took the biggest hit.

September 19, 2012|By Rebecca Trounson and Sandra Poindexter, Los Angeles Times
  • A Moreno Valley home in foreclosure in late 2008.
A Moreno Valley home in foreclosure in late 2008. (Francis Specker / Bloomberg…)

People of all income levels across Southern California suffered losses during and after the Great Recession, but the lowest fifth of households took the biggest hit, new census data show.

Los Angeles County households whose earnings put them in the lowest fifth for income in 2011 earned 12% less, on average, than the incomes of that same group in 2007, when the recession began.

The declines for low-income households in other Southern California counties were even larger, according to a Los Angeles Times analysis of newly released census data. From 2007 to 2011, average earnings for the lowest fifth of households dropped 18% in Orange County, for example, and 27% in Riverside County. All incomes were adjusted for inflation.

The 2011 estimates released Thursday showed that the declines were most severe in the early years of the recession. But they continued in 2011 for all but the highest earners in two Southern California counties: Los Angeles and Orange. Earners in the highest-paid fifth of the population saw their incomes climb to about $207,000 in 2011, up 1.5% from the previous year. But the difference was within the survey's margin of error.

The losses for households at the lowest income level appeared to reflect a number of factors, including lower wages, the eventual loss of jobless benefits for many long-term unemployed workers and a reshuffling of those at the bottom as job losses pushed households down the income scale.

"These are not classes of people with permanent membership" in income groups, USC demographer Dowell Myers said. "Especially in a volatile situation like the recession, there could be a lot of movement" among various groups.

Although wealthier households at the top of the income ladder also lost income over the period, their greater resources often allow for a faster recovery as the economy picks up, Myers said. For example, investors can benefit by buying foreclosed homes at deep discounts, then profiting by selling the homes as prices rise, he said.

The trends apparent in The Times' analysis began well before the 2007-09 recession, said Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy in Palo Alto.

"The changes in the world economy and domestic economy have favored highly skilled workers," Levy said. "It's harder for people with just a high school education to keep up — they're more affected by the slow economy than anyone else."

In Los Angeles and Orange counties, the analysis showed that African Americans were hit hardest by the income losses from 2007 to 2011. But in Riverside County, whites and Latinos lost the most, and Asian Americans had major income losses in San Bernardino County, although not as much as African Americans.

The new numbers are from the 2011 American Community Survey and reflect an average of conditions during that year. The survey samples more than 3 million U.S. households annually, collecting social, demographic and economic data. It is used to help distribute more than $400 billion in government funding each year.

The new survey found that median household income for the nation, adjusted for inflation, dropped 1.3% in 2011 from the previous year to about $50,500. (The figure varies a little from that in another census survey released last week. The two surveys cover slightly different periods.)

The latest estimates found that median household income for California fell 3.8% in 2011 from a year earlier, to about $57,300. Among other states, Nevada showed the steepest decline in median household income, with a 6% drop for 2011, followed by a 5.2% decline for Hawaii.

Thursday's release of census data provided a one-year snapshot of cities and counties with populations of 65,000 or more. Later in the year, the Census Bureau will add three-year estimates for smaller cities and five-year snapshots for areas as small as census tracts.

rebecca.trounson@latimes.com

sandra.poindexter@latimes.com

Times staff writer Doug Smith contributed to this report.

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