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Census Report On Income Ranks State 3rd

By KENNETH R. GOSSELIN, Courant Staff Writer

August 29, 2007

Connecticut's median household income was the third-highest in the country in 2006, but didn't grow as much as the nation's as a whole, according to a report released Tuesday by the U.S. Census Bureau.

The state's median income - behind only Maryland and New Jersey - was $63,422, representing a 4.1 percent increase compared with 2005. The nation's median household income was far lower at $48,451, but saw a boost of 4.8 percent in the same period.

The income figures released Tuesday were part of a larger census report that also included data on poverty and how many Americans have health insurance. The income data differ from the quarterly report on personal income from the federal Bureau of Economic Analysis.

Both are measures of household income but use different criteria and sources of information. The Bureau of Economic Analysis report is more current and draws conclusions about the future, while the census is strictly a look back. Some are critical of the census income statistics because they are dated and have a high margin of error.

In addition to statewide household income, Tuesday's report also gauged income by county in Connecticut. It came as little surprise that Fairfield County had the highest median household income at $76,671. What was more eye-catching was that Windham County - typically the poorest of the state's eight counties - saw the biggest percentage gain, rising by 15 percent, to $55,013. Even with that gain, however, Windham still lags the other seven counties.

The report also showed median household income declines in Tolland and Middlesex counties. Tolland showed the bigger drop - nearly 6 percent, to $69,862 from $73,919 in 2005.

While economists couldn't immediately pinpoint the reasons for the big gain in Windham or the declines in Tolland and Middlesex, they said shifting population within the state may be a factor.

They also said county data are determined from a small sampling and can be subject to big swings from one year to the next.

Although Connecticut's median household growth is behind the nation's, some economists said Tuesday's report paints a "reasonably good" picture of the Connecticut economy in 2006, given steady growth in jobs with population growth that is relatively flat.

"It shows that we are holding our own," said Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven.

But he and others cautioned that the data are from 2006 and Connecticut is now nearly nine months into 2007 and a lot has changed, including a meltdown in the mortgage market and the prospect of a deepening credit crunch.

"This was all before we started seeing those problems show up in the data," said Joel Naroff, chief economist at Naroff Economic Advisors.

Edward Deak, a professor of economics at Fairfield University, said the troubles in the mortgage market are rippling through the financial services industry, particularly hedge funds that invested heavily in subprime loans. If those funds and other financial services firms take a hit, there could be implications for income growth in Connecticut later this year, Deak said.

Household income in Connecticut was boosted in 2006 and early 2007 by lucrative bonuses from those who work on Wall Street and live in Connecticut, he said. If those bonuses, or salaries for that matter, are diminished, there could be implications for income tax revenue coming to the state as well, Deak said.

Beyond the age of the census data, some critics Tuesday said the way the statistics are calculated mask the reality that the income divide in Connecticut is broadening and that many residents, even those considered middle class, are not enjoying the income suggested by the statistics.

Orlando Rodriguez, manager of the Connecticut State Data Center at the University of Connecticut in Storrs, said the census report is based on surveys sent to individuals and ends up being skewed to higher-income households because it is those that most often return the surveys.