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Untraditional Indicators Reveal Laguna’s Economic Pain

Economists who rely on traditional job and consumer price indexes say the recession ended in summer 2010. Other indicators more relevant to Main Street reveal that more local families are still experiencing economic hardship.

A telling indicator, for example, comes in family applications for free and reduced lunches for students in Laguna Beach schools, up a surprising 60 percent over the last five years.

The number of students eligible for free or reduced-price lunches in the town’s public schools climbed to 299, or 10 percent of enrollment in the current year, compared to 180 or six percent of the student population in the 2006-7 school year, said Norma Shelton, the district’s assistant superintendent of financial services.

In February, just 5.73 percent of students were served subsidized lunches, compared to 4.91 percent of the student population in February 2010, said Shelton. Those statistics reveal that eligibility may not reflect use.

Even so, the fact that more families within the community qualify for aid suggests that some locals remain mired in recession even as other local economic indicators rise and others point to an uneven recovery.

The upswing in students eligible for subsidized lunches locally mirrors similar statistics nationwide, up 17 percent in the last school year to 21 million. Fueling the trend are formerly middle class families availing themselves of the safety net for the first time, having lost jobs or homes during the recession, says a recent New York Times story. Local anecdotes seem to bear this out, too.

The city’s treasury, filled in part by sales and hotel bed taxes, reflect slow growth, ascending for the second consecutive year, though they still have not eclipsed 2007’s peaks, according to figures provided by finance director Gavin Curran. Both figures represent patronage growth in the hospitality industry and among some merchants, and perhaps even growth in low-wage jobs.

Some artists are also seeing good times. Sawdust Winter Fantasy exhibitor Marjorie Horner said sales of her hand-made hats and scarves were more than double last year’s and the best in six years.

Even so, a rising indicator among Coast Highway hotels and some merchants apparently lacks lift elsewhere in town.

Accountant Michael Kinsman, president elect of the Laguna Beach Chamber of Commerce, said empty storefronts and the abundance of small-plate menu offerings at restaurants indicate local businesses are still hurting. Kinsman also suggested that rising home foreclosures paint a grim economic portrait at present.

Sales of 73 distressed properties so far in 2011 comprise 24 percent of total sales in Laguna Beach, a new peak in the previous three years, according to data that Surterre Properties broker Michael Gosselin, culled from the Multiple Listing Service.

Local unemployment figures from the state Employment Development Department have risen apace with foreclosures. At a low of 2.5 percent in 2006, the unemployment rate in Laguna rose each successive year and was reported at 7.1 percent in 2010, the most recent figures available.

About 30 percent of Boys & Girls Club families now qualify for aid, said Pamela Estes, the club’s executive director, who relies on the school district’s subsidized lunch data to qualify families. What’s more, she said the club is experiencing “the highest average daily attendance we’ve ever had,” at about 350 kids a day. Anecdotally, Estes reported that the club’s staff has definitely seen an increase in families who used to be able to afford full or partial program fees, but who are no longer able to afford anything.

Eligibility guidelines for subsidized lunches are based on region, household size and income that is 185 percent of a federal poverty guideline for reduced-cost lunch and 130 percent of the base level for free lunch. For instance, a family of four qualifies for free meals if they take in $29,055 or less.

Even so, due to the higher cost of living in Orange County, the local United Way uses its own “self-sufficiency” guideline rather than the federal poverty rules because many families who don’t qualify for various aid programs still can’t make ends meet. For example, under federal rules, a single parent with two children requires an income of $17,600. The United Way figures such a household needs an income of $60,000 to remain self-sufficient in Orange County.

Local Marsha Bode, who with Sande St. John throws an annual holiday party for low-income families and sponsors an adopt-a-family gift program, said they have seen a similar trend with an increased number of previously middle class families seeking help. Likewise, Andy Siegenfeld, chairman of the Laguna Resource Center, said that trend was echoed in new middle class families mixing with the working poor, who traditionally have come to the center for groceries.

In another uniquely Laguna indicator, Horner suggested a mutual recognition of tough times among artists and customers may have contributed to the success of the Winter Fantasy. Many artists were keeping their prices as affordable as possible and patrons genuinely showed an interest in supporting “the little guys.” She described the festival mood as upbeat and joyous. “For the first time I felt an altruism that I have never felt here before, coming from both sides of the cash register,” she said.

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