{"id":46321,"date":"2018-03-08T07:00:23","date_gmt":"2018-03-08T15:00:23","guid":{"rendered":"https:\/\/calmatters.org\/?p=46321"},"modified":"2020-06-23T10:23:30","modified_gmt":"2020-06-23T17:23:30","slug":"california-middle-class-decline-despite-states-immense-wealth","status":"publish","type":"post","link":"https:\/\/calmatters.org\/_zh\/economy\/2018\/03\/california-middle-class-decline-despite-states-immense-wealth\/","title":{"rendered":"California\u2019s middle class is in decline, despite the state\u2019s immense wealth"},"content":{"rendered":"
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California\u2019s $2.75 trillion economy makes it the world\u2019s sixth largest. But that ranking disguises an economic fault-line: The decline of the middle class.<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n\t\t\n

California\u2019s lush coastline, balmy climate and post World War II economic promise made it an easy sell as America\u2019s middle class paradise in the 1950s.<\/p>\n\n\n\n

\u201cThe California Dream of two or three generations ago was, `I\u2019m going to move from a place that\u2019s cold and flat to a place where there\u2019s lots of opportunity,\u2019\u201d said Joel Kotkin, a presidential fellow in Urban Futures at  Chapman University in Orange. \u201c`I\u2019ll get a job in an aerospace factory, in an oil company. I\u2019ll buy a house with a pool. I\u2019ll die and go to heaven. And I\u2019ll do it all in good weather.\u2019\u201d<\/p>\n\n\n\n

Today the weather remains. But access to the California dream is being choked off.<\/p>\n\n\n\n

Stratospheric housing costs, the exit of key companies and the failure to replace the jobs that left with them have downsized the state\u2019s middle class.<\/p>\n\n\n\n

Since 1970, California\u2019s share of the middle class fell from 60 percent to just over half the population. That trend almost mirrors patterns across the country. The number of middle-income Americans slipped from 61 percent in 1971 to 50 percent in 2015, according to the Pew Research Center.<\/p>\n\n\n\n

In California, some have risen to the upper class and others have slid down. And some have left the state<\/a>.<\/p>\n\n\n\n

\u201cThe key group leaving is basically in their 30s, 40s and 50s tending to be making about $100,000 to $200,000 a year,\u201d Kotkin said, citing Internal Revenue Service data.<\/p>\n\n\n\n

Between 2007 and 2016, California lost 1 million more domestic residents than have come into the state,<\/a> according to the IRS. Many are moving to Texas, Arizona, Nevada and Oregon.<\/p>\n\n\n\n

\u201cCalifornia opened their doors and basically kicked us out,\u201d Kelly Rudiger said. \u201cWe couldn\u2019t afford to live there with almost half of our income paying for our housing, our property taxes, our utilities so my husband and I both being full-time employees, we could keep up but we could never get ahead.\u201d<\/p>\n\n\n\n

Rudiger and her husband, Tony, moved their two children to Texas last year.<\/p>\n\n\n\n

\u201cWe sold an 1,800 square-foot home in San Diego and now live in a 4,000 square-foot home and are still paying less on our mortgage,\u201d Rudiger said.<\/p>\n\n\n\n

She said her middle class income goes a lot further in Texas than in California.<\/p>\n\n\n\n

The Public Policy Institute of California classifies middle income earners  as those making between $49,716 and $174,006 based on 2017 calculations.<\/p>\n\n\n\n

Kotkin said California families used to pay three times their income for a home in 1970. Sometime over the next decade, it changed and now that figure has jumped to as high as 10 times.<\/p>\n\n\n\n

\u201cWho has got that kind of money?\u201d asked Kotkin. \u201cWhere I live, all the older people keep complaining, `My kids keep visiting me just waiting for me to drop dead so they can have the house.\u2019 \u201d<\/p>\n\n\n\n

Peter Brownell, research director at San Diego\u2019s Center on Policy Initiatives, said the inability of California\u2019s middle class to afford homes, exposes a vulnerability in the state\u2019s economy.<\/p>\n\n\n\n

\u201cEven though as a whole, our economy is successful in terms of what it\u2019s producing and the amount of wealth it\u2019s producing, we\u2019re not seeing that translate into incomes that will support families here in San Diego and across California,\u201d he said.<\/p>\n\n\n\n

And he believes that is not economically sustainable.<\/p>\n\n\n\n

\u201cWhen people have stable, middle-class incomes, it means they have money in their pocket to consume all kinds of goods, whether that\u2019s purchasing housing, buying new clothes, buying cars, buying refrigerators,\u201d Brownell said. \u201cOur economy is driven by consumer spending.\u201d<\/p>\n\n\n\n

Kotkin said California\u2019s middle class started to dwindle when the Cold War ended in the 1990s, devastating the state\u2019s aerospace industry. California has lost 280,000 aerospace jobs over the last 30 years, according to the book \u201cBlue Sky Metropolis: The Aerospace Century in Southern California.\u201d<\/p>\n\n\n\n

Kotkin said real estate and construction jobs also went away. More recently, jobs in the business sector have taken a hit.<\/p>\n\n\n\n

\u201cToyota, Occidental Petroleum, Nissan, companies that employed a large number of middle class people, are going,\u201d Kotkin said. \u201cThese were companies that had a lot of good paying jobs \u2014 $80,000, $100,000, $120,000 \u2014  enough to support a middle class lifestyle.\u201d<\/p>\n\n\n\n

And he said many companies that remain are not expanding because of California\u2019s land, energy, housing and regulatory costs.<\/p>\n\n\n\n

The Center on Policy Initiative\u2019s Brownell said the companies that are expanding are contributing to the state\u2019s income inequality.<\/p>\n\n\n\n

\u201cHere in California, we\u2019ve had great success in creating highly skilled, high paying jobs in the tech industry in Silicon Valley and in San Diego the biotech industry,\u201d Brownell said. \u201cA lot of those really successful and well-paying industries have built into them a structural demand for low-wage work as well, the nannies, the restaurant workers and the drycleaners.\u201d<\/p>\n\n\n\n

Brownell said it is important to note that even people earning more than workers in low-wage jobs are struggling to survive.<\/a><\/p>\n\n\n\n

Sharon Mintz runs a floral arrangement business in San Diego. She said she offers free meals to her employees and has increased their pay from $15 to $20 an hour over the past few years but still cannot hold on to them.<\/p>\n\n\n\n

\u201cIt works and then the rent goes up,\u201d Mintz said. \u201cAnd then we offer a little bit more and then groceries go up. It feels like we\u2019re always trying to catch up.\u201d<\/p>\n\n\n\n

Brownell said a middle class revival lies in the hands of government, strong unions and companies.<\/p>\n\n\n\n

He said policymakers need to encourage the creation of quality jobs in the state. Unions set standards for wage and working conditions. And Brownell said companies with healthy profits should pay their employees more.<\/p>\n\n\n\n

\u201cThe more prosperous a company becomes, the more of an obligation it has to share its success across the company,\u201d Brownell said.<\/p>\n\n\n\n

Without any fixes, Kotkin said California is headed away from the enchantment of the 1950s toward a more primitive time.<\/p>\n\n\n\n

\u201cToday, we have a society which over time is becoming more and more feudal with the very rich, very successful \u2014 some of the richest people in the history of the world \u2014 at the very top, and then a diminishing middle class,\u201d Kotkin said. \u201cAnd what\u2019s more frightening is you have young people, some of them with college educations working at Uber, working at Starbucks, essentially barely making it.\u201d<\/p>\n\n\n\n

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting and the James Irvine Foundation.<\/em><\/p>\n\n\n\n