Oakland’s Politicians Are in the Top 5 Percent of Income Earners

The top five percent of America’s income earners make roughly $150,000 a year and up. That’s a lot of money compared to what most U.S. workers earn. The median household income in the states is currently $50,000 a year. Other economic inequalities separate the top 5 percent from the bottom half of America, especially the ownership of wealth – assets such as stock, real estate, bonds, mutual funds, and other securities and investments that aren’t strictly income, but which accrue enormous value over time.

In Oakland income inequality is very stark. California trends above the nation with a median household income of about $57,000, but the cost of living is higher too. Oakland’s median household income is still just plain old $50,000, even though the cost of living in Oakland is much higher than in other places in the state, say Fresno, or Redding, for example. The result is lots of poverty amid affluence. One in ten households in Oakland has had to resort to food stamps for nutritional security in the last year. About one in ten adults are unemployed. Oakland’s poverty rate is about 20 percent. Most Oaklanders can hardly claim to be middle class, let alone among the top five percent.

    Source: US Census, American Community Survey, city of Oakland, CA, "DP03: SELECTED ECONOMIC CHARACTERISTICS,"

Source: US Census, American Community Survey, city of Oakland, CA, “DP03: SELECTED ECONOMIC CHARACTERISTICS,”

Some of Oakland’s elected officials, however, can claim to be among the top five percent of income earners in the U.S. The city’s most ascendant politicians are in fact wealthy compared to their constituents.

City Council president Patricia Kernighan had a total city compensation package of $113,942 in 2011, the last year for which the figure is readily available. Kernighan’s husband, Paul Gordon, a lawyer who works in San Francisco, is likely making a six figure salary, and it’s probably not a figure that begins with a one. Even assuming it was a dismal year for Mr. Gordon in 2011 and he only cleared $100,000, that would already lift the Kernighan household at above $200,000 in pre-tax income, putting them solidly in the top five percent of America’s income earners. There’s more though.

kernighangordonIn 2011 Kernighan reported to the state Fair Political Practices Commission earnings of between $26,000 to $180,000 from the sale of stock in Apple Computer, Loopnet, Inc., Diageo, Netflix, Ebay, Netgear, Proctor & Gamble, Rofin-Sonar Technologies, and Toyota Motor Corp. It’s worth pointing out here is that most American’s don’t own direct stock, and only about half own any kind of stock, much of this indirectly through mutual funds. It’s really the top strata of American income earners and wealth holders who own direct, multi-thousands dollar stakes in companies like these, and who regularly trade and sell of these shares to harvest gains such as what Kernighan reported in 2011.

A final stream of income for Kernighan was a $10,000 to $100,000 “trustee fee” paid to her by the Thelma Doelger Trust for Animals in 2011.

If we low-ball all of these sources of earnings and assume Kernighan’s husband took home a meager $100,000 in 2011, it would mean her household’s income was at least $250,000. This puts the new president of the Oakland city council above the 98th percentile of U.S. income earners, meaning only 2 percent of Americans made more money than Kernighan in 2011.

If we assume a more generous flow of income, let’s say her husband made a respectful $250,000 all by himself, and assume their stock sales to be worth half the maximum possible reported amount (for a total stock earnings of $90,000), and let’s say the Thelma Doelger Trust for Animals likes to make its trustees smile by paying them $50,000 for their services, then we might assume that Kernighan’s household income weighed in somewhere around half a million. That’s 1 percent material, putting Kernighan’s family in the upper echelons of U.S. income earners.

Up and coming city council member Libby Schaaf’s household income is decidedly less pillowed by stock earnings, but it’s still enough to easily place her in the top five percent. Schaaf reported her own income as a council member and her spouse’s income. In 2011 Shaaf took home base pay of about $70,000 and another $39,000 in medical and retirement benefits from the city. Her husband, Salvatore T. Fahey, is an employee of Gatan, Inc., an electronics company in Pleasanton. His income was reported as “over $100,000,” but because the Fair Political Practices Commission does not differentiate above that amount there’s no way of knowing if his income was just $101,000, or above $300,000. Even so, Schaaf’s household income is at least above $200,000, putting here in the top 3 percent of U.S. income earners.

Rebecca Kaplan reported her own pay as a council member ($110,000 in total compensation), her compensation as a member of the Alameda County Transportation Commission (between $1,000 to $10,000), Commission, and her partner’s pay (between $10,000 and $100,000) as income in 2011. A low-ball estimate that assumes her partner made only $10,000 that year would put this grand total at about $121,000. It’s likely, however, that Kaplan’s partner, a successful psychotherapist with an office in Farol Building along Bellvue Avenue near Lake Merritt, made something in the higher reaches of the range, say $80,000? That would put Kaplan’s household income at around $200,000, making her another top 3-4 percenter in America’s income pie, and also doing quite well by Oakland standards.

Oakland mayor Jean Quan reported two real estate holdings in her statement of economic interest for 2011, along with the income of her partner Floyd Huen. Quan’s total compensation as mayor amounted to $204,781. She reported that her husband earned above $100,000, and that two properties under her ownership, a house in Monterey, and an industrial plot in West Oakland, generated between $10,000 – $100,000, and $1,000 – $10,000, respectively.

801 Terry Street, Monterey, California generated between $1,000 - $10,000 dollars in 2011 for Oakland Mayor Jean Quan.

801 Terry Street, Monterey, California generated between $1,000 – $10,000 dollars in 2011 for Oakland Mayor Jean Quan.

A low-ball estimate of her total household income would therefore add up to about $315,000. Supposing Floyd Huen earned the same amount as Quan, and supposing that their real estate investments generated the maximum income within the range they reported, the Quan household would have raked in $514,000 in 2011, putting Quan in the top one percent of U.S. income earners.

Of course none of this is counting taxes, which would reduce these numbers considerably. Then again, the California Fair Political Practices Commission’s rules for disclosing sources of income for elected officials hardly measures all the money a politician earns in a given year. Potentially large sources of income, like diversified mutual funds, need not be disclosed. And none of this is counting wealth, the total assets held by Oakland’s politicians in real estate, stock, bonds, and other instruments, all of which could be in the millions of dollars.

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3 comments
  1. Kit Vaq said:

    Interesting read, but I think it would be better to have a context for this. Certainly if Don Perata had won as mayor he’d be in the millionaire category and probably less responsive to low income earners than the current mayor of Oakland, and yet he seemed to have a problem with handling his own personal budget. Former mayor Dellums certainly had that problem with personal finances in spite of his very high earnings. And then there’s former mayor and current governor Jerry Brown. He’s a millionaire — right?

    A better article would include what all the Bay Area politicians, not just four locals, are earning based on their locations and positions. Bay Area has a very high standard of living so salaries at the executive level will be high. Aren’t there other politicians who earn more than a million a year? How much is needed to run for office and do what politicians have to do for their job? Isn’t running a city far more complex than running a corportion? Didn’t Mayor Quan take a pay cut in her city salary as mayor because she earns enough and ask the other councilmembers to do the same? How much of campaign costs were actual out of pocket from personal earnings for these politicians?

    These and more questions were on my mind as I read your article. Is the argument of your article saying that all politicians must earn only the median income? That would be possible if there was a cap on how much all politicians spend on their campaigns, which is needed in this country on the local, regional, state and national levels.

  2. Hey Kit,

    Thanks for the thoughtful comments. I think all your points are excellent.

    I chose the politicians for this article because they’re either in positions of power (like Quan), or ascendant within Oakland’s political scene (such as Schaaf, Kaplan, and Kernighan). Brooks and Reid don’t have financial statements of interest showing high incomes. The new council members don’t have FPPC 700s on file yet to estimate their incomes. So I wasn’t trying to target any politicians in particular, I’m just showing what’s available.

    I focused on Oakland because this city has an especially pronounced income inequality, with the hills, Rockridge, and Lakeshore residents among the top income earners in America, and the flatlands residents among the poorest. I do think it’s odd when the political leaders of a community are dramatically better off in financial terms than most of their constituents.

    But you’re right to point out that other jurisdictions around here will have similarly wealthy political leaders. Oakland is just a little more unequal when you look at the wealthiest and the poorest.

    The point of this article was to localize the analysis of a trend in politics that’s been observed at other scales of American government; the plutocracy – rule by the wealthy, regardless of their ideologies, policies, and pay as politicians. For examples at the federal level see – http://www.opensecrets.org/news/2011/11/congress-enjoys-robust-financial-status.html

    I will do a follow up though, based on your prompt, and look at the incomes of political leaders in other Bay Area cities. Stay tuned.

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