Another great story guys. I couldn't agree more that this area isn't where the super rich come to live, it's where for the most part people who make a decent living in consulting/service industries live, with some people who make a lot more, and some people who are struggling (especially when considering the housing costs).

by Tysons Engineer on Feb 16, 2012 10:52 am • link • report

These top 10 list type sites need to keep playing with the stats to keep the list fresh and new; or the bored office worker will start ignoring them and drive down their click count.

by RJ on Feb 16, 2012 11:16 am • link • report

What was wrong with the story? It was set up as a comparison--we have a stunningly disproportionate share of the wealthiest counties, by one generally accepted measure.

No, it didn't go into depth on the fact that there are still many poor in this area . . . because the story wasn't about that. What's more, it's disingenuous to criticize that omission without noting that lower unemployment and more disposable income in general benefits, at least to an extent, even the poorer residents.

Sure, housing is cheaper in areas with high unemployment and high foreclosure rates. Those same dynamics also mean households of all income ranges cannot build equity in their homes, as we can.

by Crickey7 on Feb 16, 2012 11:20 am • link • report

wealth, not income.

by charlie on Feb 16, 2012 11:20 am • link • report

" When Rob lived in a group house in Arlington, the household income was about $160,000. That sounds like a lot on paper, and it's definitely above the area median, but 3 entry-level professionals and a grad student shared that income, and none considered themselves individually wealthy. On the other hand, a husband/wife household with no kids and a $160,000 combined income might feel a lot wealthier. "

Uh, what? No offense, but those people combined all have probably a lot more disposable income as the result of pooling income. Not to mention be able to supply such a high potential rental payment that it forces out a lot of families who can't afford to meet the same rent that a 4 person professional group house can pay.

by JA on Feb 16, 2012 11:23 am • link • report

The first part of the post here is correct in a very important way--median income doesn't tell us where the 1% live, or at least not on its own.

However, I simply cannot agree with the central point of this post. The DC area is absolutely richer than most urban areas.

A median is simply a measure of center. It's more resistant to extreme values--high or low--than a simple arithmetic average. Since income tends to be right-skewed, median income will tend to be lower than average income.

This means that, using a widely-accepted measure of average, DC-area residents have greater income than residents of other metropolitan areas. We are richer.

Now obviously there are poor people (note "DC-area residents"). There is poverty, some of it extreme poverty. That doesn't mean the average (or median) resident in the area isn't richer than the average (or median) resident elsewhere. The same goes for employment statistics. It sucks to be unemployed, but it's better to be looking for a job here than in LA.

I think it means that the DC area has greater resources to tackle poverty that, say, Detroit. But that's debatable.

Finally, looking at "housing prices" or cost of living obscures the issue. As Megan McArdle wrote, expensive urban real estate is a consumption choice. This argument was crazy when Denny Rehberg tried it and it's sad to see a similar argument here.

by WRD on Feb 16, 2012 11:24 am • link • report

Good article, but I'm not exactly sure what your problem is with the MainStreet article. They are basing their list on the places in the Atlantic Cities post that had a high percentage of high-income tax returns.

by MLD on Feb 16, 2012 11:41 am • link • report

Median household income doesn't tell us where the 1% live, but it does tell us that there's a lot of high income-earning households in the region.

by Fitz on Feb 16, 2012 11:41 am • link • report

@wrd "Finally, looking at "housing prices" or cost of living obscures the issue. As Megan McArdle wrote, expensive urban real estate is a consumption choice."

Maybe in Hawaii it is. In most places its simply a market adjustment to higher incomes.

Many people in DC have unique jobs and would have to change careers to move elsewhere. Many others could move within the same career, but any savings on cost of living would be offset by lower salaries. Those folks are not living here because of a consumption preference for the area. The only people who are, are those who could attain a better salary/COL ratio by moving, and who choose to stay because of the regions charecteristics. While I am sure there are some in that position, I doubt its a majority, and I am certain it is not all.

@fitz - well actually it doesnt even tell us, directly, if the top 30% say, earn more than the top 30% elsewhere. All it tells us it that the middling folks here have higher incomes than the middling folks elsewhere. Its LIKELY that the top 30% here earn more than the top 30% elsewhere, but you can't prove that with the median income number.

by AWalkerInTheCity on Feb 16, 2012 12:04 pm • link • report

There's no perfect stat, but median household income is a far better indicator of wealth than mean (or per capita) household income. Ironically, your example explains exactly why this is the case. In your example of a town with 100 households making $20,000 and 10 making $1 million, median income would be $20,000 but per capita income would be ~$110,000. Clearly the median income is more appropriate.

The difference between the two stats is that, unlike per capita income, median income isn't skewed by very high or very low values (outliers) and is a much better measure of central tendency. In some cases, such as comparing wealth across countries, it's extremely difficult to determine median income due to lack of data, per capita measures (in this case per capita GDP) should be used. For a perfectly normal distribution (which doesn't exist in the real world) the mean and median would be the same.

I do agree with your main point about misinterpreting the numbers. The DC Area might be the wealthiest in the nation, but most people who live here certainly aren't wealthy (yours truly included). Your point about cost-of-living expenses is also important.

At the end of the day though, the DC Area is still the wealthiest area in the country and the high cost-of-living doesn't counterbalance that, especially when you consider that many of those wealthiest counties (Calvert, St. Mary's) are exurbs have much lower costs-of-living than the more urban/suburban counties. Just look at the number of high-end retailers here compared to other metro areas.

Trust me if you toured the 3 wealthiest states (by median income)--Maryland, New Jersey, Connecticut--and then the three poorest states--Arkansas, West Virginia, Mississippi--you would *very* clearly see the differences in wealth.

Just look at some of the the topics discussed on ggw: multi-million dollar bike trails and bike-sharing programs, Whole Foods locations, and high end transit-oriented development. Not saying that ggw is elitist or anything (although the "I want to have my cake and eat it too" attitude and "building a perfect utopia" perspective many contributors have is a little disturbing), just that stuff like this would be laughable in any of those states.

by King Terrapin on Feb 16, 2012 12:09 pm • link • report

I missed the part where 100% of the "1%" live in this region.

by selxic on Feb 16, 2012 1:11 pm • link • report

At the end of the day though, the DC Area is still the wealthiest area in the country

If you define wealthiest area as the area with the greatest proportion of 1 percenters, I'd say the NYC area is the wealthiest. Most 1 percenters are wall street types, entertainers, sports stars, entrepreneurs, etc. NYC has a much higher share of those kinds of people than DC.

What makes DC unique is that it is both fairly wealthy and has less income inequality than areas like NYC and the Bay Area. You have a lot more people clustered around the upper-middle-class band and fewer super rich/poor. Anecdotally, you see a lot fewer limos cruising around town in DC than in Manhattan or San Fran.

by Falls Church on Feb 16, 2012 1:28 pm • link • report

The second map on this article would seem to indicate that the DC metro area has a higher percentage of one-percenters than other places:

http://www.theatlanticcities.com/jobs-and-economy/2011/10/where-one-percent-live/393/

by MLD on Feb 16, 2012 1:51 pm • link • report

Yeah, mostly what Walker said. Consumption of expensive housing is only a *neutral* consumption choice, or a choice based on preference, when all other things are equal. For a consultant and writer, their income will stay more or less the same no matter where they live, so, for McArdle, consumption of expensive housing is a preference-based choice. She can do better for herself in a small town where she can buy a relatively "cheap" property and get her groceries at the local Wal-Mart. For some jobs, salaries do "scale" pretty well with location (nurses spring to mind because I happen to know a bunch, on the lower end of the scale a good hairstylist in my hometown probably makes the same as one here, adjusted for the COL difference). These people also decide whether they want the city or smaller towns...they can afford a small, expensive home in the city or a spacious, cheap home in a smaller town on the relative salaries they would earn in each locale, and come out in the same financial situation.

It's the massive group of professionals for whom city-versus-smaller-town is not a neutral choice. I know of one smaller city I could do my job in, for a 50% drop in income. Because a 50% reduction in my income would make it difficult to afford a decent home, reduce my ability to save for retirement, reduce my disposable income, cause me to incur other expenses (car, gas) that would further limit my spending power, AND eliminate my access to the wonderful things that DC has to offer (an opportunity to commute by transit, entertainment, cultural events, social activities), I'll pass. I would be substantially worse off if I moved to a smaller city, as would many other people. So I suppose I have made a choice, I would rather live lean and have fun in the big city than live leaner and be miserable in a smaller city. Pretty rational, if you ask me.

by Ms. D on Feb 16, 2012 1:58 pm • link • report

@Falls Church:
"You have a lot more people clustered around the upper-middle-class band and fewer super rich/poor"

I entirely agree with your post, but having a large proportion of upper-middle class/$250K a year households (thanks to fat federal govt/contractor paychecks) says "wealthy" to me more than having a smaller proportion of top 1% households/millionaires. While the DC area is by no means at a perfect level of income equality social equity, the former situation is significantly closer to this ideal.

When every other car is a Lexus, Mercedes, or BMW (as seems to be the case in most of MoCo) the impression of wealth is greater than when you see a Ferrari or Rolls every once in a while. Outside of the Beltway nearly every town has developments of McMansions. This is definitely not the case in the New York Area. Outside of Northern New Jersey, wealth is fairly concentrated in multiple communities with very high income levels. In the DC Area only Potomac (DC's Beverly Hills), Bethesda and McLean are like that.

by King Terrapin on Feb 16, 2012 2:25 pm • link • report

@ king

The discussion of the 20% can distract from the big shift of income to the very top

http://krugman.blogs.nytimes.com/2012/02/04/the-one-percent-versus-the-twenty-percent/

by AWalkerInTheCity on Feb 16, 2012 2:44 pm • link • report

I entirely agree with your post, but having a large proportion of upper-middle class/$250K a year households (thanks to fat federal govt/contractor paychecks) says "wealthy" to me more than having a smaller proportion of top 1% households/millionaires.

Let's be clear here: $250K/year is NOT upper-middle class. ("Upper-middle of what, exactly?") It is upper class. It's not quite in the top 1%, but you're somewhere around the top 2% or 3%.

As to the housing issue, you guys are almost making my point for me. Sure, you earn more money here, but you chose to. You act like moving is a luxury but it isn't. To quote further from McArdle:

Perhaps we should offer such a perceptual discount to the small number of people who really couldn't make anything like their current incomes in any other place--investment bankers, some securities lawyers, a handful of entertainers and creative types. But in most cases, this is ludicrous. For starters, not everything costs more--online purchases, to name just one obvious example.

But more to the point, if you own a $795,000 one-bedroom apartment that you are eventually likely to pay off, you own a very expensive asset far beyond what most ordinary Americans could ever hope to accumulate. You can sell that place and move to a red state and live very well, any time you want. Most red-staters can't do the reverse.

by WRD on Feb 16, 2012 2:48 pm • link • report

interestingly the NYT, in showing examples to match the numbers, shows single incomes. if they showed dual incomes, from high COL metro areas, that might indicate something else.

It is entirely silly to say that only i bankers, entertainers, etc have income dependent on place. businesses hiring all kinds of talent offer different salaries in different cities, local service jobs pay different amounts, and of course the federal govt pays differently in different areaa. McCardle is simply wrong, and does not understand the way metropolitan labor markets work in this country.

and yes, not EVERYTHING costs more. thats taken into account in COL calculations. However housing is dramatically different, and that is a large cost for most people.

Her RE thing is also poorly thought out. It basically means that if you engage in SAVING (ie building up equity in RE) than your money need not be discounted when you leave. But that would be true for a renter as well, IF they put the diffeerence aside in a savings account. But for most people savings, including equity build up, is a small part of total income. Between someone earning 300k in NY and someone earning 200k in Des Moines, the chance to build up savings in Des Moines is quite significant.

Is someone earning 300k in NY likelier to have an easier time building wealth than someone earning 50k in Des Moines? of course. but they will also have an easier time than someone earning 80k in NY, and someone earning 200k in Des Moines will have an easier time than someone earning 50k in Des Moines.

Yes, most ordinary americans can accumulate what a NYer owning a an 800k unit can. But most ordinary NYers dont live in 800k units.

by AWalkerInTheCity on Feb 16, 2012 3:04 pm • link • report