Household Income Structure

The outcome of the City’s economic structure and growth is a household income structure that for the most part has shown recent income growth, growing households incomes above $75,00 per year, and moderate, but increasing income inequality. Household incomes in Delray have the following primary characteristics:

Delray’s median household income is right at the middle of the benchmark cohort. At $52,333 per year, it is slightly lower than the Palm Beach County median, at $57,256

Adjusted for inflation, Delray’s median income increased by over 8 percent from 2013 to 2017, again, lower than the County overall (9 percent), and in the middle of the pack for its Florida benchmark competitors.

Median Household Income Change, 2013 - 2017

Source: 2009-2013, 2013-2017 American Community Survey 5-Year Estimates

All Dollar values are in CPI adjusted 2017 Dollars

Delray’s household income structure nearly mirrors that of the County, with two exceptions: 1) less households earning under $50,000 per year, and 2) a higher proportion of households earning more than $75,00 per year. From 2013 to 2016, one of the most striking patterns of change in Delray has been the net loss of households earning less than $50,000 per year (939 households), and the net gain of households earning more than $50,000 (1,949). This pattern is not necessarily driven by the creation of higher income jobs within Delray, but is more likely the result of the in-migration of higher income families and the simultaneous outmigration of households struggling to afford rising housing costs.

Income inequality in Delray is also a mixed bag. Income inequality is most clearly measured comparing the mean household incomes of the City’s residents, divided into even quintiles (fifths). The 95/20 ratio measures the ratio of the mean incomes of households in the bottom fifth of households versus the mean income of households in the top 5 percent of income, expressed as a multiple. Delray’s 2017 95/20 ratio the mean incomes of the top 5 percent of its households is 39 times the mean income of those households in the bottom 5th (20th percentile).

The 95/20 ratio is a reflection of a variety of factors, but primarily reflects the strength of economic opportunity for households at the bottom to move up the ladder, and obtain affordable housing. In this respect, Delray’ 95/20 is higher than the County as a whole, above the benchmark median, and increasing, but at a slower rate than the benchmark cohort and the County. Additionally, Delray’s income inequality has an especially acute spatial geography, with its highest income households concentrated in four census tracts, and its lowest in only three (The NW/SW neighborhood)

The comparative growth of incomes among the City’s income quintiles over the last 5 years shows some gains for households at the bottom, but similar to the pattern across the US, the largest gains in come continue to accrue to those households in the highest income quintile (mean income of $244,366 per year).

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Delray Beach, FL

Boynton Beach, FL

Oakland Park, FL

Deerfield Beach, FL

Tamarac, FL

West Palm Beach, FL

75/50 Ratio

Change in 95/20 Ratio, 2013-2017

Source: 2009-2013, 2013-2017 American Community Survey 5-Year Estimates

Mean Household Income Received by Each Income Quintile Delray Beach, 2013-2017

Benchmark Cities

Benchmark Median

Delray’s poverty rate, at 17 percent, is less than the US, more than the County (13 percent), and at the median for the benchmark cohort, especially its Florida neighbors. The City’s poverty rate is problematic for two reasons: 1) it is persistent, fluctuating around 17 percent for the last decade, and 2) spatially concentrated, with the bulk of the City’s poorest households concentrated in The NW/SW.

The NW/SW: Delray Beach’s Economic Outlier

As noted in the 2017 NW/SW Transformation Plan, The NW/SW neighborhood lags the County on nearly every economic indicator, and has remained in a condition of distress for decades. In addition to the difficulties that structurally distressed neighborhoods create for their residents, they also have broader negative impacts on the local economy. Failing to improve economic conditions within The NW/SW creates a number of difficult issues for the City. First, neighborhoods in long-term conditions of distress create additional public costs, drawing straining public budgets and creating long-term political tensions. Second, wide disparity in housing prices and incomes places the community in danger of gentrification and displacement.

Most importantly, continuing distress in The NW/SW represents tremendous lost economic opportunities for the rest of the City. Low incomes represent lost spending power that could be cycling through the Delray’s retail and housing sectors, further fueling the City’s broader prosperity. Traditionally distressed neighborhoods also don’t capitalize on native entrepreneurial talent within their boundaries. Talented entrepreneurs from places like The NW/SW can’t get attention, capital, or mentoring, meaning that opportunities to create new employment are simply lost. Third, lack of opportunity forces young workers to move away, further exacerbating the loss of talent needed to fuel sustained economic progress.

Research completed by the Metropolitan Center has demonstrated that small increases in income for households at the bottom of the ladder create major positive economic ripple throughout the local economy. Raising the incomes of households at the bottom dramatically increases local spending on goods, services, and housing, tax revenues increase, and interestingly, creates significant demand for new high-wage, high skilled jobs in medical services and real estate.

The irony of the NW/SW is that despite its low overall low economic indicators, the NW/SW has very high labor force participation rate more residents of the NW/SW are employed on a percentage basis than the rest of the City. The problem is that they tend to be employed in lower wage occupations and industries. Additionally, residents of the NW/SW commute further than workers in the rest of the City. This indicates that they aren’t taking the many good jobs that are created in the City, traveling greater distances to work and incurring greater transportation costs.

The City has taken dramatic new steps to improve conditions and create new opportunity within the NW/SW. The implications from this analysis are that a sustained, amplified, effort to improve the NW/SW is not just warranted, but beneficial to the entire City economy. It also points to the fact that considerable opportunity is already within the City’s economy to provide significant upward mobility for families within the NW/SW. Because the City’s economy creates jobs within such a diverse and vibrant set of industries, the key short-term focus should be on strategies to prepare residents of the NW/SW to compete for the jobs created in their own back yard.