Income Gain in ’99 Hits a Record 13.8%

Bolstered by economic expansion and the late stages of the bullish stock market, a key measure of Californians’ incomes soared by a record 13.8% in 1999, state officials said Thursday.

California’s big overall gains, however, masked an apparent widening in income inequality between the state’s top-paid and lowest-paid residents.

The new figures from the State Franchise Tax Board also underscored the gap in pay levels between California’s wealthiest and poorest counties.

All told, Californians at the midpoint, or median, of the pay scale reported adjusted gross income of $29,376 in 1999, up 4% from the year before. After taking the year’s inflation rate of 2.9% for California into account, the increase in adjusted gross income amounted to a so-called real gain of 1.1%.

While the average Californian moved ahead economically, analysts said the overall income gain of 13.8% came mainly from the big increases realized by taxpayers in the upper end of the pay scale.

These analysts attributed “the rich get richer” pattern partly to profits from stock options and capital gains enjoyed by professionals and managers, particularly those in technology-related fields.

The Bay Area counties of Marin, Santa Clara, San Mateo and Contra Costa continued their traditional pattern of leading the state in median incomes. Marin County was in first place with median income of $42,879 up 7.3% from the year before.

By contrast, Los Angeles County’s median income was only $25,308, up 3.3% from 1998, and 36th highest among the state’s 58 counties.

The top-income county in Southern California was Orange County, which was ranked 12th statewide with median income of $31,902, up 4.1%. Ventura County was right behind, ranked 13th statewide, with median income of $31,791, up 3.25%.

Even the state’s poor counties showed income increases in 1999. The lowest-income area, Imperial County, which is east of San Diego, had median income of $18,126. That was up 5.8% from its 1998 level.

Second-lowest was Tulare County in the San Joaquin Valley. Its median income was $19,973, up 3.5% from the year before.

Analysts said that when the income figures are compiled for 2000, the gains should be even higher than in 1999, due to the buoyant economy last year. They said the pace of income gains for 2001, however, probably will decline because of the expected slowdown in the state economy, along with the recent stock market slump.

The rise in overall income in 1999 was the biggest percentage increase since state officials began tracking the statistic in 1972.

The adjusted gross income figures released Thursday are probably most useful in tracking the earnings of middle-class taxpayers and the performance of the overall economy. But, analysts said, they are an imperfect measure of the economic well-being of the poor and elderly.

For instance, the adjusted gross income figures exclude income from unemployment insurance and nontaxable Social Security benefits. They also exclude the income of people whose earnings are so low that they don’t have to file income tax returns.

On the other hand, the figures include the income of dependent children who file tax returns. That has the effect of reducing the reported median income levels.

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A Banner Year

The figures below reflect the median levels of adjusted gross income in Southern California counties for 1999. Adjusted gross income is a tax term that reflects gross income excluding such things as unemployment insurance and nontaxable Social Security benefits. Statewide, median income was $29,376 in 1999, up 4% from the year before.

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County 1999 median income % increase from 1998 Imperial $18,126 5.8% Los Angeles 25,308 3.3 Orange 31,902 4.1 Riverside 26,674 3.6 San Bernardino 27,115 2.4 San Diego 28,660 4.1 Ventura 31,791 3.3

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Source: Franchise Tax Board