Bookish Baltimore consumers spend on education

Metro area consumers spend 82 percent more on education, 45 percent more on reading than national average

September 13, 2014|By Natalie Sherman | The Baltimore Sun

Baltimore may have abandoned its "City that Reads" slogan too soon.

Federal consumer spending data released this week by the Bureau of Labor Statistics shows that Baltimore-area residents spent an average of $154 annually on books, newspapers, magazines and other pleasure reading — about 45 percent more than the $106 national average.

That's just a tiny fraction of area expenditures, but it's consistent with the profile of the wealthy, middle-aged average consumer revealed in the BLS data. And it's one sign of the ways the Baltimore region is different. The region also spends more than most on education and retirement savings but less as a share of overall expenditures on food and transportation.

"This will surprise some people around the country, who have a certain impression of Baltimore as being a Rust Belt community and a largely blue-collar community," said Anirban Basu, economist at the Sage Policy Group, a Baltimore economic consulting firm. "The fact of the matter is that we're very much a white-collar community. … We are among the nation's largest, most affluent and educated metropolitan areas, and this fact is reflected very neatly in our spending patterns."

The BLS consumer expenditure surveys, compiled from two years of quarterly surveys of nearly 1,000 households in the region and more than 125,000 nationwide, measure spending by average "consumer units."

In the case of the Baltimore metro area in 2012-2013, that's a household of 2.5 people, headed by an almost 52-year-old, with a total income before taxes of $90,429 — about 40 percent more than the national average of $64,686. (Averages can skew higher than the median, which was $66,970 in Baltimore-Towson in 2012 — the fourth-highest in the nation.)

Annual expenditures for the region, which includes Baltimore City and six nearby counties, were $62,012, about 21 percent more than the national average of $51,229.

"This is just more expensive," said Jadie Hunt, 25, of Nevada, who was visiting Baltimore this week with her family and said a child's meal cost double what it did in her hometown. "Restaurants — we were shocked!"

Consumer spending accounts for about 70 percent of economic activity and is a closely watched indicator of growth. Over the past 10 years, the Baltimore region's income gains outpaced those nationwide, with average income increasing 55 percent, versus 29 percent in the U.S.

Those gains translated into more consumer spending: The average annual expenditure in the Baltimore region also grew 55 percent from the 2002-2003 survey, compared to the 26 percent national average.

"The region has done dramatically well," said Daraius Irani, chief economist at Towson University's Regional Economic Studies Institute.

The area's strength in sectors such as health care, education and information technology, industries that withstood the effects of the recession better than most and tend to have higher-paying jobs, drove the spending surge, economists said.

"Looking at the numbers for other areas, you realize how well off we are," Irani said.

As in other parts of the country, Baltimore-area spending patterns showed that housing was the single largest cost to families — accounting for about a third of annual expenditures, or $20,165. That share was similar to national patterns, despite being about 18 percent more in dollars.

But as incomes increase, essentials such as shelter, transportation and food, tend to consume a smaller share of spending.

The area's income gains could be one reason why the share of spending devoted to reading — about 0.2 percent — has remained fairly steady and grown in dollar figures over the last decade, while shrinking nationally.

"I am one of those book nerds. When I was little, my biggest dream was to have a library," said Imani Harvill, 22, of Baltimore. Harvill works two retail jobs and pays $850 each month for rent, but she said she still buys books when she can. "We are quote, unquote, 'The City That Reads.' "

In other categories, Baltimore's spending patterns also set it apart.

For example, Baltimore area residents spent an average of $2,131 annually on education in 2012 and 2013 — roughly 82 percent more than the average consumer in the country; triple levels in Miami ($586); past Boston ($1,921) and San Francisco ($2,062); and nearly on par with New York ($2,280) Washington ($2,160) and Chicago ($2,150).

The category, which includes college and pre-college tuitions, test prep, and other school expenses — but not student loans — represented about 3.4 percent of expenditures in the Baltimore region. It accounted for 2.3 percent of average consumer spending nationally.

Households with higher incomes tend to be more educated and more willing to spend on education, but the Baltimore figures likely also reflect the area's wealth of colleges and tradition of private schools, Irani said.

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