I grew up in California. It was a middle-class place. Where I grew up, Manhattan Beach, is today an enclave for the rich. A home that my parents bought for $8,000 would sell for $1 million today. Meanwhile, the middle-class is fading. It is no longer in the majority in California.
Three decades ago, 60 percent of California families could count themselves in what the Public Policy Institute of California calls the “middle-income” bracket. Not rich but doing reasonably well, the middle class formed a comfortable majority and shared the state’s prosperity.
But the portion of middle-income families slipped to 49.7 percent last year, according to the nonpartisan research group’s study. Using census figures and a federal standard-of-living measure adjusted for inflation, the report defines the middle-income bracket as families who earn $44,000 to $155,000 a year.
This is a trend. It will nor reverse.
Now, however, few are moving up. The downturn reduced the fortunes of almost all groups in California, but families who already earned lower incomes were hit the hardest.
Income dropped for California’s lowest-income families by more than 21 percent from 2007 to 2010 while dropping by just 5 percent for the most affluent families.
The poor are hurting even more.
Underemployment — not enough hours worked — was a bigger cause of declining incomes for working Californians than lower wages, according to the study.
“Employers during this recession were not adjusting wages, they were laying off workers,” she said. “That’s different from previous recessions. We think that the reason is that during this recession, inflation was really low. It’s easier for them to just leave the salary the same and let inflation eat it away.”
College grads suffered the least. This is typical across the nation.
Researchers differ in how they define the middle class or middle incomes, but Thursday’s report is the latest in a flurry of studies to suggest statewide income disparities are becoming more stark.
“Experts on income inequality believe that as income gaps widen, it could be even harder for people who start at the bottom to climb the income ladder,” said Alissa Anderson of the California Budget Project. “Already, rags to riches stories are less common.”
The economy is in bad shape. Unemployment is high. The state budget is a disaster.
What California is, the rest of the nation is becoming. Government debt is on the rise.