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The shrinking of Morgan middle class
Numbers of rich, poor increasing, while mid-range earners decline

By Eric Fleischauer
eric@decaturdaily.com ∑ 340-2435

The top 20 percent of income producers in Morgan County earn 15 times as much as the bottom 20 percent, and the number of people in between is shrinking.

As median household income in the county plummets — down $4,200 in a single year — the ranks of those making high incomes and those in poverty are increasing. The population growth at the extremes comes at the expense of the middle class.

Oft-cited average (as opposed to median) income in the county has remained fairly steady despite the jump in poverty, only because of corresponding increases in the top income brackets.

Many segments of the Morgan County economy are stable or improving, but distribution of income is increasingly polarized.

Start with the rosy picture.

Gross domestic product. Look at Decaturís gross domestic product — the value of all goods and services produced in Decatur in a year — and the picture is bright. After a dip between 2001 and 2002, the GDP has grown every year, according to the U.S. Bureau of Economic Analysis. From 2003 to 2004, it jumped a remarkable 11 percent. That suggests a thriving economy.

Savings. Data released this month by the Federal Deposit Insurance Corp. is positive. Morgan Countyís 36 bank offices held deposits of $1.53 billion in 2007, up from $1.30 billion in 2000. Deposits increased more than 2 percent from June 2006 to June 2007.

As a percentage of statewide deposits, Morgan County deposits are trending down slightly, but not nearly as fast as the poverty rate is increasing.

Average income. Adjusted for inflation, average wages are basically flat, showing a slight dip in recent years. Adjusted for inflation, average individual income dipped from $22,517 in 2000 to $21,646 in 2006. Nothing to brag about, given the steep growth in average individual wages in many neighboring communities, but not precipitous.

So Morgan Countyís economy is not wowing anyone, but from those numbers it would seem to be stable.

Problems

The first sign that this picture of stability is framed in gloom comes from data accumulated by Decatur City Schools.

Free/reduced lunch. More than half of Decatur students were eligible for free or reduced-price lunches last year. Between 1997 and last year, the percentage of students eligible for free or reduced lunches climbed from 34 percent to 51 percent.

In less than a decade, the number of students living in households with incomes that qualify for free or reduced lunches in Decatur City Schools increased by 1,564.

Free lunch eligibility is calculated at 130 percent of the federal poverty level, with reduced-price eligibility capped at 185 percent. The federal poverty level this year, for a household of four, is $20,650.

Most of the increase has been in the free lunch category. Between 1997 and 2006, the number of students eligible for free lunches increased by 1,376.

The problem reflected in the dramatic increase in those eligible for free and reduced lunches is not limited to the schools.

Poverty rate. From 1990 to 2000, the poverty rate for all individuals remained a constant 12 percent. The family poverty rate also was stable at about 9 percent.

From 2000 to 2006, according to Census data, the poverty rate was climbing. The individual poverty rate rose by half to 18 percent; the percentage of families in poverty rose from 9 to
13.

Morgan Countyís 2006 population was 113,124.

In 1990, 11,825 Morgan County residents lived in poverty. In 2000, that number had climbed to 13,476. By 2006, there were 20,351 Morgan County residents living in poverty.

How is this possible, with other economic indicators stable?

Average household income in Morgan County, adjusted for inflation, is basically flat over the last decade. To calculate average income, the Census Bureau divides total income by the number of households.

Median income, however, is falling.

Median income. To calculate median income, the Census Bureau effectively lists every household income in order of amount and selects the middle one, which is the median. In 2006, the median household income was $38,276, meaning half the households in the county made more than this amount and half made less.

Between 2000 and 2006, the median household income in Morgan County, adjusted for inflation, dropped by $6,000.

Most of the decline was reflected between 2005 and 2006, the most recent Census compilation. In one year, the median household income dropped by $4,200.

Polarization

The data shows an increasingly polarized economy. The middle class is shrinking as those at the income extremes grow more populous.

In 2006, the top 20 percent of the population had an average income (excluding capital gains) of $133,253. Thatís 15 times the average income of the bottom 20 percent of wage earners, who averaged $8,331.

The top 5 percent of income producers averaged $230,022 in 2006, 28 times as much as the bottom 20 percent.

The polarization likely is more extreme than Census records indicate. Census data does not include capital gains income, which accrues to the wealthy.

The increasing gap between rich and poor in Morgan County is demonstrated by Census figures that divide the population by income levels.

Between 2000 and 2006, the number of Morgan County households grew by 2,472. All of that growth was reflected in households with annual incomes below $25,000 or above $100,000.

The number of households making between $25,000 and $100,000 actually dropped between 2000 and 2006, despite the growth in total households.

The fastest rate of growth was among households making between $150,000 and $200,000. Between 2000 and 2006, this number tripled.

During the same period, the number of households with a combined income of between $15,000 and $25,000 increased by almost one-third.

There are more rich people and more poor people, but fewer in between.

Sixty percent of Morgan County households made between $25,000 and $100,000 in 2000. That percentage had dropped to 52 percent by 2006.

The trend toward increased income inequality is not abating, according to the most recent Census data.

In a single year — between 2005 and 2006 — the number of households with an income below $25,000 increased by 10 percent. The number with incomes between $25,000 and $100,000 decreased by 8 percent the same year. The number with incomes over $100,000 (not including capital gains) increased by 2 percent.

In that one year, the number of households with less than $10,000 in income increased by 1,188; the total number of households increased by only 696.

The disturbing trend is an increasingly divided Morgan County. The number of households mired in poverty is burgeoning, as is the number enjoying high incomes.

Between the two extremes is a dwindling middle class.

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