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Seattle’s narrowing inequality and surprisingly poor Asian and African Americans

Downtown Seattle Credit: Lassi Kurkijarvi/Flickr

You wouldn’t expect to find unexpected revelations about race, class, and income disparities in the city in an official report with the innocuous title “Seattle Economic Indicators.” But that’s exactly what this brief, unheralded report, released in April, contains.

Back to those revelations in a bit; let’s save the best for last, in the way of burlesque, journalism, and other teaser enterprises. The city’s Office of Economic Development (OED) released its first “Economic Indicators” report last August. It plans to make them a twice-yearly rite and, as the years go on, use them to track “how things change over time,” as OED senior policy adviser Nancy Yamamoto puts it.

In the meantime, this second installment does compare the latest data to several other recent years. And it provides a revealing snapshot of how Seattle is faring five years after asset values peaked, four years after the financial bust hit, and three years after the fragile national recovery began.

Total business revenues in the city rose more than 3 percent in 2011 from their 2010 trough, to $52.8 billion. But they’re still well under their 2007 peak of $62.7 billion, just about what Bill Gates is worth now. The demise of Washington Mutual doubtless played a part. But the overall finance, insurance, and real estate sector held remarkably steady through those five years. Manufacturing and businesses based elsewhere were the sectors that suffered the greatest declines.

The estimated number of jobs in the city has meanwhile recovered from its 2010 trough to 478,000, more than what it was in 2009. But it sagged in the last quarter of the year. Among employment sectors, professional and personal services were the biggest job gainers, followed by manufacturing and retail. The public sector was the biggest job shedder, contrary to traditional notions of government’s inexorable growth.

Seattle’s unemployment rate fell from 8 to 7 percent between late 2010 and late 2011, but was still way above the 4.3 percent rate back in the halcyon days of 2000.

That represents a switch in status between Seattle and the suburbs and smaller cities surrounding it: The city’s unemployment rate was 9 percent higher than the broader Seattle-Tacoma-Bellevue metropolitan area’s in 2000. Now it’s slightly lower. In 2011 it was 10 percent higher. Both remain significantly lower than the statewide rate.

Seattle bucks a dismal national trend on one important gauge: business startups. According to U.S. Census data the rate of business creation nationwide has declined steadily since 1977, the first year recorded, from 17 percent of all businesses to a trough of just 9 percent in 2009. (It ticked back up to 10 percent in 2010, the last year tabulated.) The Census Bureau concludes that “the U.S. has become less entrepreneurial as a result of the decline in startups and the lack of activity by young businesses.”

You wouldn’t know that here in Seattle. According to the new city report, business creation in-city surged in 2011, to 9,000 startups, up from 7,900 in 2010 and just 6,700 in 2000.

Hard times often spur entrepreneurship, as laid-off workers and discouraged jobseekers turn to making candles and starting e-commerce enterprises in their garages. Perhaps there’s a year or two’s delay in the process, or maybe more small businesses are getting city business licenses (and showing up in the stats) than previously. Otherwise, Seattle seems to be bucking the trend; startups declined in the bust year 2009, and have climbed since.

Meanwhile, business closures plummeted, from 8,500 in 2009 to just 3,100 in 2011. The result: a net gain of 6,000 businesses last year. That’s a lot of candles and e-commerce empires.

Another popular truism about the bust is that those at the top have thrived more than ever, while everyone else is hurting. That’s probably true for those at the very top, the notorious 1 percent. “The very rich still earn astronomical amounts,” notes Chris Mefford, an economist at Community Attributes, the Seattle-based consultant that prepared the “Economic Indicators” report for the city. Their share of the nation’s wealth (accumulated, compounded income) has climbed to nosebleed levels.

But for the rest of the top 20 percent — households in Seattle earning $125,000 a year or more, not counting investment income — it’s a different story. “Others in the upper quintile” — including the proverbial middle managers – “are more susceptible” to economic shocks, says Medford. “The lower four quintiles are more stable.” Sure enough, the top 20 percent’s share of total income in the city declined from 54 percent in 2008 to 47 percent in 2010. The shares of income going to the middle quintiles, households earning $25,000 to $45k a year, $45k to $75k, and $75k to $125k, rose by about 12, 23, and 8 percent respectively. This would affirm anecdotal reports (we’ve all heard them, or seen it) of more expensive employees  the proverbial middle managers, and older professionals — getting shed, and their duties devolving to lower-grade, lower-paid workers.

The share of total income going to the bottom quintile, those earning less than $25k a year, is so small (at 3 percent) that any changes wouldn’t show in a chart like this. Just because the affluent get less doesn’t mean the poor are getting any more.

The most striking chart in the new report is the last one, which compares the median household income of various racial and ethnic groups, in Seattle and nationwide. To smooth out anomalies that might compromise any single year’s data, the Economic Opportunity Office and Community Attributes used a five-year weighted average from the census’s American Communities Survey.

Seattle is of course an affluent city — overall. Its median household income in 2010, more than $60,000 a year, was 21 percent higher than the national media. Individual income in Seattle probably outpaces the national median even more, since households here are on average smaller. But that affluence hasn’t spread equally. Seattle households with a non-Latino white householder had a median annual income of more than $66k, 27 percent higher than the national median. Seattle’s Latino and mixed-race households likewise earned well above the national median.

But the median earnings of Seattle’s African American and Native American households, less than $34k and $31k respectively, weren’t just low in absolute terms. They’re lower —in the case of African Americans, 8 percent lower — than their national medians. And those of Seattle’s Asian and Pacific Islander households are dramatically lower. Nationwide, Asian American households’ median income was nearly 30 percent higher than whites’. But in Seattle that ratio is reversed: Asian median household income, at $51k, lags white by the same margin.

What could explain such stark, counterintuitive disparities? Immigration seemed an obvious explanation, to me and to Chris Mefford: Seattle, an immigration magnet, must have a higher share of recent Asian and African immigrants, refugees in particular, whose incomes still tend to be low. I asked Chandler Felt, King County’s staff demographer, if he had any thoughts, and any comparable county data.

“That’s really fascinating,” Felt declared — enough so to get him crunching numbers on his day off. “I’m surprised how low the [Asian] Seattle number is.” Especially when compared to the rest of the county.

He assembled rough estimates of median income by race in (taken together) Kent, Renton, and Federal Way, the largest cities in South King County, and in Bellevue and Redmond, the largest Eastside cities. In the former cities, white and Hispanic household incomes are somewhat lower than the Seattle medians. But black median income there is nearly 30 percent higher than in Seattle, and the Asian median is nearly 20 percent higher.

The differences between Seattle and Bellevue/Redmond are even more pronounced. Everyone earns more money over there (and needs it to live there): Overall and white median household incomes are about $85k a year. But Asian and African American households earn a lot more, nearly twice as much: about $95k and $70k respectively.

Immigration doesn’t explain the differences. About a quarter of the households labeled African American in both Seattle and the county are African immigrants, versus just 3 percent nationwide. A smaller share of Asian residents in Seattle – 65 percent – are immigrants than in King County and the United States.

And foreign-born doesn’t necessarily mean low income; the whopping Asian median income in Bellevue and Redmond reflects all Microsoft’s engineers and other software workers from India, China, and neighboring counties.

So why is Asian income so low in Seattle? Perhaps a larger share of immigrants here are refugees just starting to get a stake? But resettlement agencies now tend to place new arrivals in the south county, especially Kent, Tukwila, and Sea-Tac, where rents are lower. And according to Felt’s rough numbers, median incomes are higher there.

Length of time in the United States doesn’t seem to explain it either. Similar shares of Seattle and U.S, Asians arrived pre-1990,and in the ’90s and ’00s. 

When I asked her, city staff demographer Diana Canzoneri uncovered a few other possible factors deep in the census data. Only half of Seattle’s adult Asian residents are married, versus two-thirds nationwide. A larger share in Seattle — though still just 17 percent — are divorced, separated, or widowed. More than a third again as many – 37 percent – are “linguistically isolated.” Larger shares are younger than 25 or older than 65. More of them are in college or grad school — 15 percent in Seattle versus 11 percent nationally though their effect on income indices may be minimal. (Students living in dorms aren't counted in the households survey.)

Put these all together and a composite portrait starts to emerge: More of Seattle’s Asians are students or just out of college, or elderly, or perhaps single parents. A larger share have limited English proficiency.

But most of these cohorts are fairly small, and together don’t seem to explain the gaping disparity in income. Comparable data from the rest of the county are not so readily available. And one other factor is less quantifiable: the centrifugal effect of economic mobility.

As immigrant groups gain more income and wealth, they’ve tended to move out from city to suburbs, seeking more space and safety and better schools. (Then their offspring or descendants move back seeking urban amenities.) Vietnamese, Ethiopian, and other newer groups are no different. Those unable or unwilling to move from the modest, often subsidized, housing where they first landed stay behind; they’re also more likely to be unable to work, or to make much money when they do.

There’s much yet to be explored in these demographic and economic faultlines.

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