The rich really are getting richer.
Since the darkest days of the recession, most households in Erie County have struggled with incomes that have barely budged.
But not the wealthy. Their incomes have grown handsomely, according to an analysis of tax return data from the state Department of Taxation and Finance.
What the data shows is that most of the growth in local incomes has been centered almost exclusively among the county’s highest earners – those with household incomes of $100,000 and up. Those households – which make up about 12 percent of all tax filers in Erie County – saw their average annual incomes rise by more than 25 percent from 2008 to 2013.
It’s an entirely different story for the other 88 percent. Their total incomes rose less than 1 percent during that same period.
“When you look at incomes, there’s a relatively small cohort of people who are doing pretty darn well, said Bruce Fisher, director of the Center for Economic and Policy Studies at SUNY Buffalo State. “When you get to the bottom 90 percent, they’ve been pretty stagnant.”
The data provides strong evidence that the income polarization that has gained voice nationally through the Occupy movement and the Bernie Sanders campaign is absolutely real – and it’s happening in the Buffalo Niagara region.
“The same dynamic absolutely is going on here,” Fisher said.
Those activists often talk about how incomes are concentrated in the top 1 percent or 2 percent of the nation’s households, and indeed, those relatively small number of local households control an outsized share of overall incomes, both here and across the country.
But Fisher also notes that the polarization is much less pronounced in midsized markets, like the Buffalo Niagara region, than it is in money-center cities like New York City. Here, the top 1 percent might earn seven or eight times the median household income. In New York, where big Wall Street salaries and bonuses inflate incomes, the difference might be closer to 50 times the median income.
“Our top 1 percent around here tends to be the mature small business owner, the mature attorney or physician or banker,” Fisher said.
Still, the gap between the richest households in Erie County and everyone else has been growing wider since incomes began rising again following a brief dip during 2007. But households at the middle and lower end of the earnings scale depend largely on wages for their income growth, and since the recession ended pay raises have been fairly hard to come by.
On the other hand, wealthier households are more likely to own other assets, including investments and businesses. And since the recession ended, the stock market has bounced back strongly, with the Dow Jones Industrial Average rising by nearly 25 percent from the beginning of 2008 through the end of 2013, allowing investors to bolster their incomes by selling some of their rebounding stocks or collecting dividend payments along the way, Fisher said.
“Incomes have gone up for people who own capital,” Fisher said.
• The top 2 percent of all households in Erie County – those with incomes of $200,000 or more – make nearly 24 percent of all local income in 2013, up from just under 21 percent in 2008.
But the bottom half of all households – those with incomes of $30,000 or less – earn less than 12 percent of the county’s total income during 2013, down from slightly more than 13 percent in 2008.
Everybody else – that middle 29 percent earning between $50,000 and $200,000 a year – pulled in 52 percent of the region’s total income.
• If you took every household in Erie County with an income of $50,000 or less, their combined incomes would roughly equal the total incomes of the nearly 10,500 households that earned more than $200,000 during 2013. In other words, the combined income of the top 2 percent is roughly equal to the total income earned by the bottom 70 percent.
• For households in the top 2 percent, total income grew by 30 percent from 2008 to 2013. For the households in the bottom 88 percent, which is any household with an income less than $100,000, incomes rose by less than 1 percent.
• Rich people are harder to find in Erie County. Statewide, 3 percent of all households reported adjusted gross incomes of at least a quarter of a million dollars during 2013. In Erie County, the figure was about half as much, with just 1.6 percent of all filers reporting incomes of $250,000 or more.
• A little more than a third of Erie County’s tax filers – 36 percent – reported adjusted incomes between $30,000 and $100,000 in 2013. Those filers, combined, collected slightly less than 40 percent of the county’s total reported income.
What’s interesting is that the size of that middle-income cohort didn’t change from 2008 to 2013, but the share of region’s total income that those households earned took a significant hit, falling from 45 percent in 2008 – another sign of how the middle class has been squeezed coming out of the recession.
Part of that drop is due to the shift in the local economy, as better-paying factory jobs have steadily disappeared, with the region losing almost 11 percent of its factory jobs from 2008 to 2013. In their place, we’ve become more of a service-oriented economy, with a niche in areas like back-office financial services. But the sad reality is that much of our job growth has come from service jobs that don’t pay nearly as well as the factory jobs we lost.