This page has been archived and commenting is disabled.
The Shriveling Middle Class In California
By Wolf Richter www.testosteronepit.com
An ominous trend picks up speed: the middle class is shriveling. In 1980, 60% of Californians lived in middle-income families. By 2010, only 47.9% did, according to a study by the Public Policy Institute of California (PPIC), a non-partisan research organization (24-page report PDF, 2-page summary PDF). Main culprits: declining incomes and disappearing jobs.
From 2007, when the recession began, through its end in 2009, family incomes across the spectrum dropped over 5%. But then, instead of going into recovery mode, they continued to go south for another 6% through 2010—the end of the timeframe of the study. Given the astronomical cost of living in California, the study defined a middle-income family as one that earned between $44,000 and $155,000 in 2010.
But the declines weren’t spread evenly across the income spectrum. Families whose incomes were in the top 10% saw their incomes decline 5%. Those at the bottom 10% of the spectrum, the poorest families in California, saw their incomes plummet by 21%.
In a further indictment of income inequality in California—something that is clearer than daylight if you walk or drive around with your eyes open—the upper 10% enjoyed incomes that were higher than those of their counterparts in the rest of the US, while the lowest 10% earned less than their counterparts elsewhere. And income inequality between to top 10% and the bottom 10% doubled since 1980, to where in 2010, the top end earned 12 times as much as the bottom 10%.
Family income is a factor of wages, hours worked, underemployment, and unemployment. The main culprit for the loss of family income during and after the recession was unemployment which, according to the Bureau of Labor Statistics, peaked at 12.5% from September through December 2010. It has since edged down but still hovers at 11.7% (preliminary, October 2011).
However, the BLS percentages of unemployment are a form of statistical hocus-pocus that distorts and understates the actual unemployment problem. Here are the raw numbers of employed people in California:
Peak employment in California occurred, according to the BLS, in January 2008, when 17,023,322 people were working. At the trough in August 2011—that’s correct, August 2011, that’s not a typo—only 15,830,729 people were working. During that period, 1,192,593 jobs had evaporated. Where the heck is the jobs recovery?
Maybe it’s in the future. Maybe it has started a couple of months ago. But there are certainly no signs of a jobs recovery in California before September 2011—and even that may turn out to be a fluke.
And if there actually is a jobs recovery that would raise family incomes? The PPIC warns:
If previous post-recession patterns repeat themselves, it is likely that lower-income families will recover much more slowly than those at the high end, potentially worsening income inequality that is already at a record high.
A thriving economy based on the American model requires a thriving and growing middle class. However, the current conditions—a shriveling middle class and rising income disparity—mark the transition to a banana republic.
Meanwhile, corporate tax dodging in California and elsewhere in the US puts the finger on the strenuously hushed-up Basic Flaw In The Tax Code.
Wolf Richter www.testosteronepit.com
»
- advertisements -
As Al Green titled one of his albums, "Green is Blue".
CA is likely coming to a neighborhood near you. CA has a bloated public sector, poor public education and crumbling infrastructure but those drinking from the government trough (and funding its “representatives”) don't realize it's about to topple - not terribly different from many cities, counties, states or the nation.
CA continues to lead but, for quite some time, in the wrong direction. Most business platforms are now portable and businesses will respond in predictable ways – they’ll close or move to better circumstances. (The same is true with people but to a lesser degree.) It only takes a fraction of the world’s population to produce the needed goods and services – humans are long humans and long educated humans. Any job not requiring an on-site problem solver is subject to outsourcing.
As a native San Diegan, I’ve seen the changes over time. There are far too many empty storefronts in both high-end and modest neighborhoods. Multiple generations have ridden a largely rising tide of real estate wealth and now they are leveraged and scared. One upside: Lighter traffic in LA - it continues to be easier to drive through the “Valley of Smoke” to the north.
"It only takes a fraction of the world’s population to produce the needed goods and services"
Anyone see a problem/disconnect here?
Not to worry -- Madison Ave's got it covered with the next generation of "must have" implements of civilization. Examples:
http://www.costco.com/Browse/Product.aspx?Prodid=11670029&cm_mmc=BCEmail...
http://www.costco.com/Common/Search.aspx?search=FOOD1209&cm_re=1_en-_-To...|1||P_SignDesc1&N=5000043&whse=BC&Dx=mode+matchallpartial&Ntk=Text_Search&Dr=P_CatalogName:BC&Ne=4000000&D=FOOD1209&Ntt=FOOD1209&Nt&ec=1&cm_mmc=BCEmail_695-_-FeatRow1-_-1-_-MarketingItemName
It used to be "find a need and fill it". Now it's build some expensive but useless device and then hire some expensive Hollywood type ad agency to create the need.
No problem at all. That fraction of the population will increase their productivity exponentially so that we'll be able to solve the real problem: far too many empty storefronts in high-end neighborhoods.
Yes, roughly 60%
If the USA was not a fiscal union (like EU), the 35% CA state spending deficit (lowest bond rating) would never happen and CA would not act and spend like a drunken spoiled teenager. In other words, CA gets billions from Washington (borrowed and paid for by other States) so it can continue to pass anitbusiness laws and drive real businesses out of the state. The State passes insane budgets, promises insane retirement benefits, runs massive budget deficits and then acts like the only problem is that we don't have enough green laws.
@Tempo...
you are trying to blow fucking smoke up every ones ass....
Cal gets about 80 cents on the dollar when it comes to Feds.. Cal is subsidizing all those Red states in the "heartland", In fact you find that the Blue States are subsidizing the Red States...Look it up dip shit...
Start here:
http://www.taxfoundation.org/news/show/22685.html
and
http://visualizingeconomics.com/2010/02/17/federal-taxes-paidreceived-for-each-state/
At least Texas pulls its own weight....
There's some truth to that, but the "big" states pay the majority of revenue to the Feds. NY, MA, CA, TX, FL provide huge tax revenues, and get back less than the citizens there pay.
Small states with low populations tend to get more Federal money in grants and government "business" (like Army bases) than the citizens pay in taxes.
The person who gave this a down-arrow needs to comment.
I live in a state that, last I'd checked (several years ago), paid more out to the Feds than it got back. So, this is a fact that I am aware of. Sadly, the politicians and various "leaders" would still whore themselves for more military installations and projects.
My understanding is that because of progressive taxation and relatively high incomes (think Silicon Valley, Hollywood, corporate agriculture, etc.), California pays more in federal taxes than it receives in federal benefits.
As the most populous state, Cali remains a bellwether and an opinion leader. But its subsidy probably derives more from the debt-friendly attitude that pervades the entire U.S., rather than from any net cash flow from Washington.
Of course, Cali benefits from 'off-book' cash flows, such as the bountiful cannabis crop in Mendocino County. For which we thank you sincerely. More, please, kind sirs!
Also remember the large military presence and defense industry in CA – de facto transfer payments.
On one hand I could see this being presented as a positive cash flow, yet on the other one could see it as a negative one (total impact costs). Would be interested in seeing a study that provides a comprehensive analysis. In my mind I can only see this as netting out in the negative (except for padding a few pockets of the ruling elite).
The question was about net Fed flows to a state, not "total impact costs" but one could do such a subjective study. CA military personnel eat, shop and use services consistent with their compensation and are the lifeblood of many businesses, both big and small.
As is clear, the CA ruling elite are clearly on the left side of the aisle.
"CA military personnel eat, shop and use services consistent with their compensation and are the lifeblood of many businesses, both big and small. "
Sell used cars do you?
Military personnel are paid shit wages. This externalized cost is then borne by everyone else in the form of paying FULL costs for shit.
Disclaimer: I've been in the military. I've been to California. I hate ALL govts. Oh, and I loath party pussies...
People miss the point of the whole socialist, liberal vs conservative anti union debate. The point is failure of the large corporation and politician has been removed. The stock market has created a situation where mismanaged corporations can exist far longer than they ever could as a private enterprise. It also values making a quick buck off IPOs over sound busness strategy. Facebook worth over $100 billion? really? Angie's list falling from $22 to $10 in a week then catapulting from $10 to $17 a week later? A comapny with no profit and shrinking revenues generates millions for connected insiders while producing no product of real value, and that is OK? Corporations used to fail and that enabled working class people to build new ones and become modestly wealthy. Today a miniscule minority takes all the profit and kills off any competition through buying off politicians. Nearly anyone used to have the chance at starting a company and becoming successful. Today you really don't have a chance unless you already are successful or are related to someone who made it big.
And my favorite equation is?
BIG = FAIL!
What all you fucking retarded "conservatives" fail to recognize is that California remains the place that most people want to live. Why? Because most people recognize that life in a an economically and racially diverse state with more natural resources than the rest of the country combined is superior to life in any other single state. That's why California is the most populous state. Did you "the market is perfect" people think that California's population was the result of anything other than people exercising judgment to live here rather than somewhere else?
No it's not you moron.It's the Hispanic population, and the early days of the Gold rush, and the Grapes of Wrath move in's, and the #1 reason, is the weather,and the ocean.
Outside of the scenery, and and weather, NAME 10 good reasons why it's a haven for so many?, could it POSSIBLY be, for the last 30yrs, the governments there have been giving away free chit to any and all who ask for it?.
Uh yeah..............and that's why their hauling ass.Taxes, the enviro Nazis,and hatred of business that employ,they would rather humans die and starve, than have a healthy economy and business zone,also(now that the water supply is cut off for a freakin minnow, and one of the most productive farm belts of the nation has gone to hell.
Along with that the jobs went too, for the illegals.
California remains the place that most people want to live. Why? Because most people recognize that life in a an economically and racially diverse state with more natural resources than the rest of the country combined is superior...
Baby boomer, born / raised / lived in No Cal, central valley 50+ years. Temp stint Abilene,TX, Central OR.
For all the fool heartiness of CA politics, etc., the reason people move / live here is not necessarily the "racially diverse" populace, but rather the weather. (Even though it actually got down to 32 last night- I know that because there was a slight layer of frost on my windshield this AM)
With the central valley's topography / geography, as well as the same basic temperate climate and elevation, yet 10X the size of "Canaan Land", the thought of not being called to account for the vast blessings thrown at our feet is ludicrous imho.
Not having constructed adequate water storage and corresponding distribution channels for over 40 years to take advantage of these resources is criminal.
All the talk of fertile farmlands being transformed into bedrooms in asinine. No one ever mentions the square miles of never before planted virgin soil cultivated by single ripper Cat 10's that is, can and should be allowed to replace any crop land taken over by families.
What's more, truth be told, the north's victory over the south in the 1860's had more than most will ever care to admit on the fact the PMs spent to overtake the south's paltry (by comparison) 15M in specie, were being drawn out of CA's Mother Lode and NV's Comstock mining regions.
Most of these assets flowed directly through SF directly into NY Harbor to pay for pretty boy war bound stand-ins. Too bad more of these "monied" tyrants didn't end up on lamp posts. (But I digress)
I'm not going to argue that CA politics aren't goofy. They certainly are. The Gerry-(or should I say "Jerry"), Mandering of voting districts is absolutely reprehensible.
Personally, I'm surprised Charlie Manson hasn't shown up as a state legislator. I'm confident he would likely receive the majority votes if placed on the ballet in a few of these districts. I suppose given a little more time, and he too will be allowed to run. Stranger things have happened.
All in all, on a long enough time line, the survival rate of everyone, myself included, drops to zero. My time line exit will likely be 20-30 more orbits. My children and theirs, 70-80 more. Orbits spent in California aren't the worst ones a person could be relegated to.
California, not a bad place to be from.
I was born their, i moved, I am surrounded by ex-Cali libs who fucked up paradise and are spreading like cancer.NV AZ. OR.WA.Coming to a state near you, while you are at work they will be at your city council meeting, voting for ribbons on pigs and bottled water for ducks. free air for lesbian dinosaurs, a demented generation from the pitts of hell.
Much the same in the southeast, with a wave of flotsam and scum from northern states washing over them. People leave the north, then proceed to turn whatever area they go to into a reproduction of the hellhole they left. I agree with the cancer analogy because its essentially what they are.
And I'd be taking your observations seriously? From someone with an IQ of 101? </sarc>
Lots of those "loonies" (not to be confused with Canadian currency) are merely used as tools (read "their energies are used to distort their very aims"). No different than the "other" side: I'm TOTALLY independent (don't play those silly games), in which case I can look at things more objectively.
For what it's worth, the last city council that I was in contact with (gave that shit up years ago) wouldn't have known the difference between a pig and a duck. They did love the big developers though. Oddly enough, many of the "loonies" that I knew DID know the difference between a pig and a duck, and DIDN'T support the big developers. World just ain't as simple as many would make it out (suppose that built-in bias tends to do that).
-1 for not knowing the difference between "their" and "there"
+1 for knowing how to spell dinosaur
-1 for not knowing how to spell "pits"
+1 for being able to spell demented
So, yeah, I guess 101 sounds about right...
If you look at reality apart from either the Hollywood bubble or the right wing blowhards, demographics of California are certainly mixed.
On the good side, alot of hard working Mexicans and Asians. Blacks are being pushed out. Alot of creative, fit and intelligent people. As opposed to say anywhere in the Deep South.
On the bad side, white middle class disappearing, and much of the economy of the Mexicans and Asians might be underground, which impacts public finances.
It's important to understand that California does not control immigration, the politicians in D.C. do. So it's not California's fault if it's overcrowded.
"California does not control immigration..."...true, but some of the biggest backers of easing immigration rules have been various Silicon Valley companies seeking to lower what they must pay for educated engineering talent...if they can't offshore it, then they bring the talent on shore. Having been around SV since 1969 I have seen a tremendous change in the population and it is due to the actions of the various powerful SV based corporations and their political donations to get like minded folks elected in D.C. These companies will try and tell you that there is a lack of talent available, so the need to relax immigration quotas. The reality is it permits them to get cheap employees from India, China, etc. It is detrimental to U.S. citizens and profit making for a few.
Are you by chance engaged in big corporate farming?
"some of the biggest backers of easing immigration rules have been various Silicon Valley companies seeking to lower what they must pay for educated engineering talent...if they can't offshore it, then they bring the talent on shore."
It's been, as is the case in many other ag-heavy states (with crops that require lots of human labor), migrant workers that have been the greatest contributors. All that wealth in the Old South established this way (only, they were year-round migrants, who were forced to stay put and work [read "slaves"]).
Yes- so creative, fit and intelligent that your school system gets its clock cleaned in comparison with pretty much any southern state. Youre legends in your own minds, but noplace else. The rest of the country laughs at you.
I went to college in The People's Republic. If I never step foot in that country...err state again I will be perfectly happy. California sucks large quantities of dead penguin dicks.
Here's one "retarded conservative" who got wise and got the heck out of CA and took his job with him. To hell with CA's 10% income and sales tax rate. (Yes, 10% in some areas if you include city taxes, "pay for the union pensions" taxes, etc.)
CA is the most populous state.. for poor people, illegals, and the soon to be poor. It's also the most populous state for probably the most undereducated youth in America.
CA has a high unemployment rate simply because the folks that run CA companies has realized that they dont' need "overpaid and retarded liberals" to run their factories when they can get much cheaper labor across the state lines.
I haven't even got to the bloated local and state gov't.. but oh well - that's your problem, but soon to be ours if Barack bails out CA.
Don't give me this crap about CA being a racially diverse state. It's not a melting pot - just another state where if you drive far enough, you'll see a bunch of the same race hanging out with each other.
Bottom line: you're the retard if you think CA remains the place that most people want to live. It's population is shrinking, not growing simply because the companies aren't going to hire overpaid retards and union workers.
Bitter, party of one- table ready...
It really does come down to fight or flight. That you picked flight is your decision. And, I suspect, that if you really had all that much to begin with, as pertains to something that's a REAL going-concern, that you might have stayed.
Sometimes a person will take whatever to help motivate them in a particular direction...
But, when you view everyone as your enemy then that's how your interactions work out. Maybe your business was destined to fail based on how you viewed people?
California has better weather than any other place in the U.S. except Hawaii. That's why I live there.
I have never understood the claim that racial diversity is, per se, good. Cultural diversity at least gives us different types of music from which to choose, different types of food with which to experiment...but just what does racial diversity bring other than a more colorful sea of faces? My wife, born in Shanghai and raised in Taiwan, introduced me to some great Chinese food and introduced me to some aspects of Chinese culture. If she had been U.S.-born, to a family here for several generations, I doubt she would have learned that style of cooking. But her race had nothing to do with it. Personally, I don't care what one's race is. I do care about character, talents, things that bring needed diversity.
On the other hand, some types of cultural diversity are not good in my sight: too many Latins I know, for instance, prefer socialism to free markets. Some others I know, mostly exiles from Cuba, prefer economic freedom. At least that diversity leads to interesting conversations.
"too many Latins I know, for instance, prefer socialism to free markets."
Could you clarify to the readers here what the term "Latins" means?
Also, by "too" I'm assuming you mean too many, that this is unacceptable to you?
Just wanting to have some things clarified.
And unless your grandparents moved out to CA and bought a home in 1955 that remains in a good area and left it to you, there is virtualy no chance for a normal midwestern family to ever buy a home in California. That is unless you can get a venture capital firm to float you a couple hundred million for a crap internet idea.
There are areas in the central valley, all within a couple hours of diverse destinations, from Monterey, Santa Cruz, San Francisco, Napa/Sonoma, Sacramento/Delta waterways, Reno, Lake Tahoe, Yosemite, etc., etc., that have dropped over 75% in price over the last 30 months.
There are currently very little differences in purchase price of these houses from their counterparts in areas of the US that are basically paralyzed for surface dwelling for the next 3 months.
I'm beginning to think it's been the plan to reduce these prices to encourage people from these inhospitable climes to begin the next influx.
I only hope they next wave will be by people that will take a more active role in preventing government seizure of people's rights and the dismantling of the torturous bureaucracies foisted on us in the last 30 years.
CA population is now dropping not rising, and I've yet to meet anyone that's move here because it is "an economically and racially diverse state". The Golden State is tarnished and needs to get its act together. The current circumstances are unsustainable.
"A thriving economy based on the American model requires a thriving and growing middle class."
Yes, but it requires more than that. It requires an educated and involved populace.
And sound, incorruptible money. (redundant, I know, but there's that lack of educated populace that might require a clue)
I really hate articles like this (truthful and accurate as they may be). To those of you outside of CA, the "state" is always painted a certain way so that it appears that all 37+ million of us are tea drinking, sprout eating socialists. Nothing could be further from the truth. Just like the U.S. itself has been co-opted by the liberal left political powers, California as an individual state has as well. This is because there are really three distinct California's: The highly populous inner cities (primarily L.A., San Diego, and the SF Bay Area, with Sacramento slowly creeping its way into this limp wristed metro-sexual gaggle as well); the central valley- farmers, ranchers, agriculture business- now mostly illegal alien entrenched territory; and the rural north, the upper 1/3 of the state that is pretty much as conservative as a redneck at the pearly gates. While its easy to group all of us into the socialist left faction, trust me there are A LOT of conservatives here. You think Ron Paul has a media blackout? Try being one of the MILLIONS of conservatives in CA that get NO airplay whatsoever. Between the clueless liberals and the alien invasion that has been occuring in CA for at least 30 years, unfortunately THEY have the numbers. But not by as wide a margin as the media leads everyone to believe. Case in point: Barbara Boxer - the princess of the left, barely and I mean barely won her last re-election. This state absolutely needs to be cut into thirds as every aspect of life between the three territories is as different as night from day. Maybe when SHTF we will find a a way to chop this state up once and for all.
The problem we have is that the urban populations in Sacto, LA, and SF control the state. I too have worked with the ag biz in the central valley and they are pretty similar to any folks you'd meet in Wyoming, Montana (excluding Ted Turner), Idaho, etc.
Personally, I think we should divide the U.S. at around the Miss. River. The western Canadians may want to also throw in with us as they hate their east coasties as much as we do and for pretty much the same reasons.
Dividing CA into 3 states or 2 is also a good idea. Those of us in the north can then make LA pay for all the water they have taken for free from us over the past 50 years.
Great post. I lived in LA years ago. Knew lots of valiant liberty-minded souls.
Uchtdorf
I am in Texas, most of them have come here.
When I meet someone from Ex Kalicommfornica, I ask them their politics.
If their Libtards,I tell them please go back, or something bad will happen to you,sooner of later.Plus, WE do not want you HERE.
As for the gent dividing up Kali, I am all for it, the Northern third IS supporting the entire slut hole hellish south.
The reason you cannot separate is because your outnumbered come voting time by illegals and libtards,and numerically they just suck YOUR wallets dry.
outnumbered come voting time...
The reason for this is because of gerry mandering. This "legal" method of ballet stuffing, class warfare has been honed to a fine art by career politicians unable to live productive lives in a free society. Unfortunately, this deviousness is in their DNA. This is the antithesis of the DNA the president belittled earlier this week in... wait for it,... KANSAS.
And by the way, illegal aliens by definition are still not allowed to actually vote in official elections.
Texas, isn't that that State that harbored that terrorist, Bush?
Same one that proudly fought Mexico in order to protect US slavery?
"As for the gent dividing up Kali, I am all for it,"
STFU if you're in Texas. Really, whining about social programming and here you are doing the very same!
DISCLAIMER: tossing labels at me WON'T work (no, I don't reside in CA, have no connection to it either [other than serving time in the military there]).
Bush was a Connecticut Yankee carpetbagger that moved to Texas so he could steal some of that oil money too. At the top of the food chain, theft is very profitable and prolific in Texas. At the bottom, not so much.
California has become a typical liberal Democrat arsehole. Just like Camden, NJ, Detroit, Chicago spreading through more of Illinois. Those Demo union cops loved beating on those OWS kids in Oakland. They love the muslim too in CA.
The irony here is that California has all the things that are supposed to support a prosperous middle class according to liberals: unions, regulations, high taxes, and big government. It even does all these things to the extreme.
Yet the end result is the precise opposite!
And so did Detroit! Social Justice up the Yin Yang. Every conceivable programs for pre-natal, post natal, early childhood, free community healthcare, day care, food stamps, wic, jobs training, GED, section 8, housing projects, high taxes, high regulation - everything our fresh & articulate Kenyan Moon Cricket et al says are the very cornerstones to a healthy country. Just listen to his articulation of how talking care of yourself is bad, and the Statists like Bawney, Rangel, Tmmay, Alcee Hastings, Rod Blogojavich, Krugman, Freidman, Hillary and her cattle futures, are so good for us!
Democrat Jon Corzine, Democrat Buffett and people of Mexifornia love the Chicago muslim. Moonbeam is finishing off the looting of CA like Corzine looted New Jersey and MF Worldwide.
The Republican administrations of California enjoyed looting just as much as the Democrats do.