Debunking the Myth of Massive Wealth : Orange County’s Image Belies Reality of Mostly Average People Coping With High Cost of Living

“Wealthy” seems to be stuck to Orange County like a big, gaudy tattoo.

The county is constantly being characterized as one fat and happy place of Mercedeses, yachts and coastal estates. The bankruptcy has loosened the pens of more than a few pundits who see a quick, easy opportunity to juxtapose the financial catastrophe with what they assume is unbridled wealth.

“Also in Money Paradise You Can Go Bankrupt” was how Germany’s popular Bild tabloid conveyed the bankruptcy filing in December. Read the headline in the Times of London: “Investment Fund Crash Bankrupts Home of the Rich.” USA Today continued the mockery of the county’s wealth and its predicament, proclaiming its residents “rich deadbeats” after voters overwhelmingly defeated a half-cent sales tax increase.

But for the most part, Orange County isn’t “wealthy.” The image is based on a tiny segment of the county that is hardly representative of the area’s 2.6 million, mostly average residents.

Consider the following census, state, federal and private data:

* Orange County’s income per capita was $25,022 in 1993, the latest year for which figures are available. Although that’s higher than the national and state averages, $20,864 and $21,895 respectively, it pales compared to California’s truly high-income counties, such as Marin ($38,310), San Francisco ($32,777) and San Mateo ($31,208).

* Were it not for Newport Beach, Laguna Beach and a couple of other upscale cities, which make up just a fraction of Orange County’s 31 municipalities, the area’s income per capita would barely make the state average.

* More than 200,000 county residents live below the poverty line. And state income tax reports for 1991, the latest year for which such data has been compiled, showed that more than 40% of the filers reported gross incomes of less than $18,000; only 5% had incomes of more than $100,000.

* Deposits with commercial banks in Orange County as of mid-1994 were slightly below the statewide per capita average. Bankers say that is partly because the county is a newer region where most families have not accumulated wealth, as they have in, say, San Francisco County.

“One of the myths about Orange County is that it’s a wealthy county,” said Mark Baldassare, chairman of UC Irvine’s department of urban and regional planning. In reality, he noted, “there are mostly very average people in Orange County, and if you add in the [high] cost of living, they are average people struggling to make ends meet.”

Yet what is often cited in the media and elsewhere is Orange County’s median household income, which was $45,992, according to the 1990 census, compared to $35,798 for the state and $30,056 for the country.

Never mind that Orange County’s cost of living is among the highest in the country. The same census showed that median rent in Orange County was the highest in the nation at $790 a month, nearly double the nationwide figure.

Also, one reason Orange County’s median household income is relatively high is that more members of households in the county are working compared to other counties. The latest census showed that 81% of Orange County residents ages 16 to 64 are employed or looking for work, compared to 76% for the state.

And look at what has happened during the recession: From 1991 to 1994, foreclosures in the county jumped nearly 20-fold, more than in any other area in California; and Orange County lost about 45,000 jobs, many of them high-paying manufacturing work.

Marian Bergeson, an Orange County supervisor, worries that the bankruptcy has perpetuated the image of the county’s wealth.

“We’re looked on with disdain,” said Bergeson, adding that even her friends from the East Coast view her county with the sort of contempt they might show a well-heeled man with his hands out.

Historians suspect that perceptions of Orange County’s wealth took hold in the 1970s as part of a broader image of Southern California’s prosperity.

But the county’s reputation was further magnified by a few places that have become enduring images of the region: Disneyland, South Coast Plaza, Nixon’s Western White House, and Newport and Laguna beaches.

The myth was further spun by rich and famous residents such as the late actor John Wayne (who had a home in Newport Beach); the opening of the well-to-do southern corridor of Orange County starting in the 1970s, and the region’s heritage of being uniquely conservative and white. (The county is actually about 40% minority.)

Stephen Rabin, a New York attorney who represents bondholders of Orange County, says that all he has heard and read about the county indicates it is affluent: “It’s a wealthy county that was well able to pay off the bonds,” he said, a bit hesitantly. “It’s probably one of the wealthiest counties in the country. It’s well-to-do, it’s a high-income county.”

Then, listening to some of the data cited in this story, Rabin said: “Hmmm . . . hmmm . . . really?’

He acknowledged that he has visited Orange County just once. What part? Newport Beach.

Comments such as those from out-of-towners rankle county residents like Al Gobar, a real estate economist who has lived in Fullerton since 1959 and knows better.

“When I travel and I say I’m from Orange County, they immediately picture that it’s Newport Beach,” he said. “They think you live on the beach and you got a boat and it’s tied up in front of your house.”

Having long become impatient with such remarks, Gobar often retorts: “No, I’m from Orange County.”

As he observes, perceptions of Orange County’s wealth originated partly from Southern California’s pricey housing market. Wealth is equated with possessions, and Orange County residents live in relatively expensive homes.

A typical single-family house in Orange County in 1994 had an assessed value of about $176,000, 26% higher than the statewide average, based on an analysis of tax rolls and parcel data by TRW Redi Property Data. Some people cashed out before home prices in the county began their steep decline, but most others remain heavily mortgaged, many having refinanced. So most homeowners are not as well off as their homeownership would suggest.

Said Gobar: “That doesn’t mean we’re wealthy. It means we have expensive homes. Wealth is a high standard of living.”

Certainly, Orange County does have its wealthy communities.

Newport Beach and its 69,000 residents have an income per capita twice the countywide average, according to Claritas, a New York research firm. The median value of a house there last year was about $381,000, nearly double the figure for the rest of the county. The city’s harbor is renowned, as are its many multimillion-dollar estates.

And Newport Beach, which is 92% white, is the home of some of the country’s wealthiest people, including Irvine Co. Chairman Donald Bren, whose personal fortune was recently estimated at $2 billion by Forbes magazine.

“Old, entrenched money has been in Orange County for years,” said Don Soucie, who heads Sanwa Bank’s trust office in Newport Beach. Among others are the Segerstroms, a longtime farming family who turned lima bean fields into South Coast Plaza, a nationally preeminent shopping mall; and the Irvine family, heirs of Irvine Ranch founder James Irvine, whose landholdings stretched from the coast of Newport Beach to the hills of Anaheim.

Soucie adds that the county has a relatively high number of households with incomes of more than $250,000, though an exact tally is not available.

Even so, those households and affluent towns make up a tiny segment of the county. Newport Beach, Laguna Beach and Villa Park, the three highest-income cities in the county, represent just 4% of the county’s population and 3% of its land mass.

Santa Ana, the county’s largest city, with 310,000 people, has a per capita income of $14,860. Its unemployment rate is typically twice that of the county’s, which last year averaged 5.8%.

Anaheim, the county’s second-largest city, also lags the state in income per capita, though the poverty there seems to be overshadowed by Disneyland and the rows of hotels. And some of the county’s other larger cities--Buena Park, Garden Grove, Westminster--are hardly paragons of wealth.

Overall, about 120,000 residents of Orange County are receiving welfare--more than double the number a decade earlier, says the county’s Social Services Agency. Another 56,000 people are on food stamps.

“Orange County has some fairly significant poverty pockets,” said Bill Gayk, the county’s longtime demographer who was laid off because of budget cuts resulting from the bankruptcy. “That segment of the population is growing.”

Indeed, the county as a whole has been in the midst of unprecedented change since 1980, when it was 87% white. Waves of immigrants, mainly from Mexico and Asia, have settled in.

Though some are educated professionals, among the immigrants are many low-skilled workers. That has resulted in the need for more social services and has lowered the county’s per capita income.

Supervisor Bergeson and others said it is difficult convincing state officials that Orange County needs sympathy and aid from state social programs. Many outsiders find it hard to believe that the county has many homeless people--at least 12,000 on any given night.

“We are really suffering from the myth that has been perpetuated over the years,” UC Irvine’s Baldassare said. “There is the notion that we ought to be able to take care of it or that it’s not that big of a deal, that this wealthy and spoiled group of people should be able to take care of this themselves.”

But perceptions of wealth have also had their benefits. The golden tattoo that Orange County officials are now trying to rub off has, in the past, been a badge of honor.

That image has helped attract residents, businesses and investors. Even people who were not wealthy wanted to live near those who are.

Businesses still go to great lengths to get a prestigious Newport Beach address, even if they do not operate near it. Residents and out-of-towners figure that a prosperous region will provide better security, schools and services, and make for sound investments.

Charles Schonfeld, a retired businessman who lives in Hillsborough, an upscale suburb south of San Francisco, admits that he bought $1.26 million worth of Orange County bonds largely on the county’s reputation as a wealthy area. Schonfeld says his salesman sold him on the pitch that “there was nothing better in California than Orange County.”

Schonfeld says he does not regret investing in the county, and he remains hopeful that it will make good on its debts. But many others, shocked that bankruptcy could befall such a place, have all but given up on the county.

That worries Ray Dellerba, president of Eldorado Bank in Irvine, who believes that Orange County’s image of wealth also brought it respect and credibility--benefits that are now in jeopardy.

“The perception was of high value,” Dellerba said. “I think the perception now is one of questionable value.”