In a sign that middle-class families are benefiting from the improving economy, household incomes increased across the region and state in 2014, according to census data released Thursday.
Median household income – the middle income in a ranked list – in the four-county region was $60,015 in 2014, up by nearly $2,200, or 4 percent, from the year before, after adjusting for inflation. Statewide, median income rose from $60,775 to $61,933. Incomes nationwide barely moved.
Household income in the region fell sharply between 2007 and 2011 and remained relatively flat between 2011 and 2013. Despite the recent gains, median household income in the four-county area is about $8,000 below pre-recession levels, after adjusting for inflation.
The new figures represent “a healthy step forward,” said Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific. “It’s a great measure of household welfare. These households are feeling better about their economic prospects. They have a little more money to spend.”
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Sacramento incomes rose across all levels in 2014 – the poor, the middle class and the wealthy. That’s a reversal of a trend that saw the wealthiest local residents making gains while the poorest residents experienced the losses. Even so, the poverty rate in the region – 16.4 percent – remained roughly unchanged from 2013 to 2014.
The simplest reason for the increase in household income is a corresponding rise in jobs, Michael and others said. The unemployment rate fell by about 2 percentage points from 2013 to 2014 and the number of jobs rose by more than 30,000.
The local retail and restaurant industries have seen particularly big employment gains, separate state figures show. Sacramento-area restaurants employed about 73,000 people in July, up by 10,000 from July 2013.
“People want to work,” said local restaurateur Joseph Waltz. “We want to get out of this economic slump.”
Waltz plans to open Triple Double Sports Bar and Grill later this month at 419 J St. in downtown Sacramento. Within a couple of weeks of posting a help-wanted ad on Craigslist, he had about 500 job applicants.
“We’re going to start with right around 75 employees,” Waltz said, adding that most of the new employees will work full time. “We’ll probably have to put on another 25 to 40 more.”
The arena under construction downtown is bringing businesses like Waltz’s – and more jobs – to the urban core, said Michael Ault, executive director of the Downtown Sacramento Partnership. “We are seeing a real mix of entrepreneurs coming in,” he said. “Really kind of the creative class.”
Rising state worker wages are another major factor in regionwide income gains, Michael said. During the recession, the region was hit hard by flat state hiring and “Furlough Fridays” that bit into thousands of paychecks. About 115,000 local residents work in state government.
Last year, the state’s payroll increased by about $1.1 billion, up by 7 percent from the prior year, according to a Sacramento Bee review of state data.
“The public sector has started to see wage increases after years of nothing or furloughs,” Michael said. “That has certainly given incomes a boost.”
State worker pay raises have a ripple effect. “It wasn’t long ago we were dealing with Furlough Fridays,” Ault said. “We had a lot of businesses barely holding on.”
Several signs point to continued income gains in 2015 and beyond. Construction is starting to pick up. The health care industry continues to expand. Tax revenue continues to increase.
“We’ve seen continued job growth. Some wages are rising. Public-sector wages are improving,” Michael said. “I expect we will see another increase in 2015.”