"Pasadena on my mind"

Focus on one city's inequality .

Pasadena officials like to boast about the city’s recent “renaissance,” pointing to the major (and expensive) renovations of City Hall ($117 million) and the Convention Center ($150 million), and the just-approved $152 million facelift for the Rose Bowl. Recently, the City Council voted to allocate its entire $11.1 million allocation of federal stimulus funds to Singpoli Pacifica, a developer, to turn an old building on the corner of Colorado Boulevard and Mentor Avenue into a “boutique” hotel. The developer’s own economic analysis revealed that the average wages for the hotel workers would be $22,000 — below the poverty level. Few of its employees will be able to afford to live in Pasadena on such meager salaries due to the city’s desperate shortage of low-rent housing.

A standard way to measure inequality is to consider the gap between the rich and poor. To do this, we compared the income of households near the top (those at the 95th percentile, where only 5 percent of households have more money) with those near the bottom (those at the 20th percentile, where only 20 percent of households have less money). This way, we avoid measuring the distance between the extremes — the very richest and the very poorest — which may distort the reality. In Pasadena, the income of households near the top ($249,841) is almost 10.8 times greater than the income of those near the bottom ($23,042). Only four of the 37 California cities with more than 140,000 people have a wider rich-poor gap — San Francisco (12.4), Oakland (11.2) Glendale (11), and Los Angeles (10.9). No other cities have a rich-poor gap in double digits.

Another way to measure inequality is to look at the concentration of income among the rich — how the economic pie is divided. The richest one-fifth of Pasadena households — those with incomes over $134,296 — has over half (53.2 percent) of the income earned by city residents. On this measure, Pasadena is in a virtual tie with San Francisco for the title of California’s most unequal city.

At the very top, the wealthiest 5 percent of Pasadena households — those with household incomes above $249,841 — have almost one-quarter (22.7 percent) of city residents’ total income. Only five cities – Los Angeles (25.9 percent), Glendale (25.8 percent), Rancho Cucamonga (25.2 percent) San Francisco (23.4 percent) and Oakland (23.1 percent) — have a higher concentration of income among the richest 5 percent. In contrast, the poorest one-fifth of Pasadena households — those with incomes below $23,042 — combined have only 2.6 percent of all residents’ income. As Table 2 reveals, only in San Francisco do poor households have a smaller share of citywide income. In Pasadena, those in the next poorest one-fifth — those with household incomes between $23,043 and $45,174 — bring home only 7.6 percent of residents’ incomes. Together, the poorest 40 percent of Pasadena’s households have only 10.2 percent of Pasadenans’ total income.

If we looked at wealth (stocks, bonds and other holdings) instead of income, the concentration at the top of the economic pyramid would be even more skewed. (Also, the census data is based on a sample of households in each city, so there is some margin for error regarding the income statistics.)

Over the past decade, gentrification has exacerbated the gap between the rich and the rest. Pasadena’s median household income increased from $46,012 in 1999 to $61,298 in 2009 — a significant 33 percent boost. During that same period, the city’s poverty rate fell from 15.9 percent to 14.1 percent. But this jump in income, and decline in poverty, is not because Pasadena’s existing residents got big pay raises from generous employers or otherwise lifted themselves out of poverty. It is because the people moving to Pasadena are increasingly those with high incomes, while those with low and modest incomes are being pushed out of the city. In other words, the city’s prosperity is not being widely shared, but pitting the affluent against the poor and working class for the city’s scarce housing.

Between 1999 and 2009, Pasadena added 5,523 households — a 10.6 percent gain. But the increase was almost entirely among affluent residents.

In 2009, 30 percent of Pasadena households had incomes over $100,000, compared with only 24 percent in Los Angeles County. Households with incomes over $200,000 comprised 9 percent of Pasadena households in contrast to 5.6 percent in the county.
Since 1999, the number of Pasadena households with incomes above $100,000 increased by 7,046 — a dramatic 69.4 percent gain. During the decade, Pasadena added 2,050 households with incomes between $100,000 and $149,999 (a 38.1 percent increase), 2,779 households with incomes between $150,000 and $199,999 (a 143.7 percent jump), and 2,217 households earning over $200,000 (a 78.2 percent gain).

Meanwhile, Pasadena lost 2,420 households with incomes below $50,000 — an 8.8 percent drop. By far the biggest losses were among households earning under $10,000. The number of these households fell from 5,273 to 4,094 — a 22.9 percent decline.
None of this should be surprising in light of spiraling rents and house prices, the accelerating conversion of affordable apartments to expensive condominiums, the predominance of new luxury units among the condos approved by city officials and the paucity of affordable housing in Pasadena’s development pipeline.

Pasadena is still a city of many renters. More than half (52.7 percent) of the city’s 57,332 units are rental housing and 47.4 percent of Pasadenans rent their homes. But that housing has gotten more and more expensive. Between 2000 and 2009, the number of Pasadena apartments with rents over $1,000 a month jumped from 33 percent of all apartments to 68 percent of all apartments. The number of apartments with rents over $1,500 jumped from 6 percent to 33 percent of all units. The shortage of affordable housing in Pasadena puts a real squeeze on family incomes. (The rule-of-thumb is that families shouldn’t have to spend more than 30 percent of income for housing). But in Pasadena, more than half (51.2 percent) of the city’s 30,241 renter households spend more than that, just to put a roof over their heads. It probably isn’t surprising that among the very poor — households earning below $10,000 — 74.7 percent pay more than 30 percent of their income for housing. But 84.9 percent of households with incomes between $10,000 and $19,999, 76.3 percent of families earning between $20,000 and $34,999, and 69.9 percent of households with incomes between $35,000 and $49,999 pay more than 30 percent of family budgets for housing. This rent-to-income squeeze not only places a burden on many Pasadena families, it also hurts the local business community. When families spend so much of their incomes on housing, they have less to spend on food, clothing, dry cleaning, movies and other goods and services, which hurts local businesses. It also makes it more difficult for local employers to find employees who live in the city. Long commutes into Pasadena exacerbate traffic congestion and pollution.

The reality is that the poor and working-class families are being pushed out of the city by rising housing costs. This is a major reason for the decline in enrollment in Pasadena Unified School District (PUSD) schools. Most of the students who have left the district are those who live in areas with many low-income families and mostly rental housing. PUSD’s declining enrollment and budget woes are due in large part to the displacement of the poor, not the flight of the middle class.

Taken from this article