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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
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californians have wallowed in their socialist, open bordered, granola bowl imbicility for so long that it is no wonder that the flora and fauna of ignorant governance has taken deep root next to the green shoots of the obama "recovery".
how can a state which boasts feinstein, boxer, and pelosi have any other outcome?
a state which boasts feinstein, boxer, and pelosi...
exists because of gerry mandering.
PERIOD.
Votes, like corruption, are expensive to buy. Aren't you proud to help finance Boxer, Pelosi, et al? When was the last time a Cali incumbent got beat? How many are returned year after year? Did you think that was all free? /sarc
~ Alexis de Tocqueville
The American Republic ended with Lincoln's war to prevent American's from voting with their feet. Lincoln no longer had the "consent of the governed" in the southern States.
". . .Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."
That's from the Declaration of Independence of 1776, if you're not familiar with the concept.
Tony, you stole my thunder.
It is an inescapable truism that a given populace receives exactly that form/flavor of governance for which they vote. California illustrates this reality better than no other. I have no sympathy for those slipping down this -- or any -- self-imposed [ socialist ] socioeconomic ladder.
Wrong. *I* get the kind of government that *they* deserve. Big difference.
>californians have wallowed in their socialist, open bordered
"Conservatives love to champion the free market. They often are quick to defend businesses from increased regulation and taxation, and generally oppose intervention in the market place. However, in the case of undocumented workers, these free-marketeers suddenly become ardent supporters of central economic planning." - http://mises.org/daily/5785
When have conservatives run California - Dr. Arsehole? The Dems like Jon Corzine turned CA into a third world toilet.
Reagan wasn't conservative enough for you? Most of third world wants to move to CA still.
Funny that you see red EVERYWHERE except the ton of red arrows you get...
I wouldn't mind illegal aliens here as workers if we had a government that didn't keep sticking its hand into my pocket and taking money I earned to give benefits to the illegals. Come to think of it, I don't like it when the government does that to benefit citizens, either. Do away with food stamps, Medicaid and other forms of free medical care, and education for illegal aliens and I'd let them stay as long as they obey the laws I'm forced to obey. I bet illegal immigration would drop precipitously if we did away with support programs. My wife came here legally, became naturalized, and I later helped her legally bring other family members here. None ever got a dime of support from government. That's how it should be.
"Legally" and "illegally" are just some definitions provided by a bunch of lying, cheating, stealing, and killing politicians and their owners.
Food stamps is a welfare program for big agribusiness. They're the ones that get the big bucks. Before the food stamp program, the government bought ag commodities (with taxpayer money) to keep the prices that the same taxpayers paid for their food up and then paid to store those commodities for a few years and then paid to destroy them so no one could use them.
California "illegal aliens" pick the food you eat and the cotton that your Chinese made Levis contain. Those "illegal aliens", mostly Mexicans' ancestors were in California long before it was part of the U.S. California was the result of an armed robbery in 1846-1848.
WTF is the government doing letting people like your wife, and her relatives too, immigrate when there's so many Americans that are doing without? We don't need no more furriners.
yeah, been here in Cali since 1988, in the Navy stationed at Long Beach, 1990 got out and worked at a power plant, laid off after 3 1/2 years, worked for a Dr. for 6 years then started my own business 10 years ago. 2007 was my last good year and down hill since then, now living out of my office and trading a client food for work. Rent here for a 1 or 2 bedroom, shitty apt. $1k and up.
the jp morgue is rubbing it every americans face!!!!!!!!!!!
http://youtu.be/kBYNmTx_p84
Where the heck is the recovery?
Moving to TEXAS
Texas has higher taxes when you look at real estate vs. income.
Texas loves illegal immigrants too.
STATES DO NOT CONTROL IMMIGRATION POLICY. THE FEDERAL GOVERNMENT DOES.
How often does this need to be repeated? There are alot of illegal immigrants in Texas and California because, well, they are close to Mexico. A law passed here or there by the states doesn't change anything.
It's not as if the white liberals in New England "hate" illegal immigrants. There are just not that many up there. In fact, almost all politicians, liberal or conservative, support endless immigration, including of the illegal variety.
States have no authority over enforcement?
And for the record, we're talking about illegal immigrants (legal immigrants are, just that- LEGAL).
http://4.bp.blogspot.com/_L2yi20l2PRU/TFJ3A56ESMI/AAAAAAAAESM/LUVlQ9P0WK...
More than you think...
Add NY + NJ + MA you got almost as many as Texas.
ever been to the back of the restaurant?
and yes politicans love overpopulation.
but you can pass laws against businesses hiring if they contract with state government.
instead of encouraging them by giving away driver's licenses like in NY.
And quit passing shit like NAFTA!
Aldous,
Texas has higher taxes when you look at real estate vs. income
Maybe so, but give me the ratio of Cost of living in Texas v.s same in Cali,then we can stop that conversation quickly.
Also, we love immigrants, we do not APPROVE of Illegal anything, an Immigrant is semi legal(in the process of becoming legal), an illegal is an alien.(never meaning to become legal,unless it's a gimme.)
Sooner or later you left wingers will get it.
Well, I'm not a RIGHT-WINGER (heaven forbid), but I DO get it. I don't think that you get how the RIGHT-WINGERS have profited off of illegals.
But, anyway, please stay in Texas. I can't wait to see how you do when your (imitation) Berlin Wall is knocked down.
I'd argue that cost of living is not entirely accurate. When things are cheap, people end up just buying more.
When homes are cheap, people just buy bigger McMansions in Texas with bigger TVs, more stuff to decorate, more lawn to take care of....so total cost of living may only be slightly cheaper.
And to be happy about your status you always have to buy more than your neighbor. So when some gas station attendant has a house, a Doctor is not going to be happy living in a small condo. They end up buying a ever bigger home. Whereas in Manhattan they'd be just as happy with a condo in upper west side because everyone else lives in a even smaller shittier place out in NJ or some shit hole like that.
Well, now that we know Aldous has a problem with how OTHERS spend their money in legal endeavors, we can safely know him for what he is. Only a busy body has time for such big heartedness to shed the light on the benighted free.
That's fucking nonsense! Everything's relative.
I don't get it now, that's for sure. You make it sound like the place is great.
My parents live in Austin, and my longtime Republican father hates the place. He's pissed about some rail project, the traffic, the zoning policies, the educational system (he's been teaching for the past 10 years or so), the property taxes, and all the Spanish-speakers.
I think he likes it better than Philly, though. Too many blacks in Philly.
Texas is a lot more business friendly but they think their illegals are "friendlier" than CA's illegals. California is a lib tard paradise. California loves the muslim too.
Given the differences in attitudes towards guns in those two places, it makes sense to be less hostile when the odds go up of eating a bullet. There probably aren't 3 armed civilians walking the streets at any time in the whole state of Cali. Meanwhile, in Texas...
Interesting how civility and a well-armed society go hand in hand.
An armed society is a polite society...
The ones doing the armed robberies, and there's lots of them now in California, usually aren't all that polite.
you shouldn't have gun restrictions in Texas ranches and you shouldn't have easy guns purchases in south central LA.
When you have city full of entire generation of gangbangers who'd kill for your Nikes, gun rights is not a good idea. Rights are not a good idea when some dumbasses are clearly going to abuse it.
NRA fighting "rights" for these loons:
http://i232.photobucket.com/albums/ee227/vechzl/Gangway.jpg
When you have an open field with wild animals with sport hunting as your economy, outlawing guns entirely are not a good idea.
http://kdwillis.files.wordpress.com/2010/08/alaska_bear_04.jpeg
What's needed is different policies for different cities.
But it is the politicians who divide and conquer so that they can win elections and live off of bribes.
NATO has been spotted dumping arms into the center of a region that TPTB want turmoil in so that they can come in and "keep the peace."
Drugs have also been identified as achieving similar results: so Gary Webb and Catherine Austin Fitts concluded.
Like different policies on freedom of speech for different cities.
Touché, Tio Remusito.
As a recent resident of both states you have completely lost your mind.
The taxes and regulatory burden are not even in the same universe.
Well said Xkwisety. I too have lived in both states but prefer neither now. But CA is now a joke and third world country. What they pay for a run down home in crime infested Watts, I can buy a 4000 sq ft mansion where I live. Just nuts out there now. Visited my father and family living in Venice Beach still and went to Home depot only to have all the illegals stop to ask for work it was nuts.
CA real estate will be falling in price for a long time with our new normal minimum wage jobs flipping burgers!
So, you live in a mansion. Your parents live in Venice Beach. And all those people at Home Depot were "illegal."
I think that I get the picture...
Venice - $1+MM homes next to gang-banger apt projects.
I am leaving Cali. I have my spot picked out in NV. My daughter does some work for me digitally - she is away at univ. She gets a 1099 from me. The City calls and says she has to get a biz license for our home addy and pay biz tax and licensing in the City - but she does not live here. There has been talk of the FD inspecting home offices - it will be free at first, but eventually they will charge an inspectoin fee and levy fines for just about anything they want... speaking of inspection - I was noticed by the FD that a palm leaf was within 13.5 feet of my driveway surface. I was ordered to provide a 13.5' airspace. and I had planed to build addition units on a property, but the city wanted a 25' dedication and another 25' setback and they wanted me to do the streets and redo a T-intersection and install UG utilities, curbs, gutters and sidewalks - maybe $200k; not sure. When I chose to add only 25% to the existing bldg area, which did not require off-sites and dedication, they said that the unit location would require me to provide a 24' fire lane essentially around like 80% of the perimeter of the site - essentially a "taking" of maybe 1/2 the land area. I hold stocks as a LP - the city wanted me to pay a biz tax on my stock purchases - the State of Cali and the City are linked via my tax returns. I get a 1099 from the brokerage account. Crazy.
So I choose to vote with my feet. BTW, most of the skools being built and for latinos and the costs are born by Californians, not the Feds. Adios
You sent your own daughter a 1099?
tax write off-- geezz i thought everyone knew that
GCT
I too have lived in both states but prefer neither now
Why, Texans too friendly, too hot, too many bootiful women,housing too inexpensive,not enough EPA shitheads,not enough smog, not enough cops bothering you,not enough freeways and room to grow, or move around to,on?.
Dos if I had to pick between the two it would definitely be Texas. I prefer a rural lifestyle and Texas was not the place for me. I move to Arkansas to take care of my mother and still take care of her. I prefer Arkansas to Texas.
As a lifelong Texas I can definitely say your assumptions are way off.
It's not a paradise, far from it. But it's not too bad either. Sort of in between.
that's as good as it gets.
congrats, you found contentment.
Lots of fire sale properties coming on line in the 90210
http://www.doctorhousingbubble.com/beverly-hills-real-estate-loan-balances-shadow-inventory-in-great-detail-luxury-housing-markets-in-trouble/
looks like jungle....
great blog BTW!
Liberals = usually banking or real estate elites wanting to grow the base of the ponzi scheme.
California is expensive, so no sane American wants to start a family in a Latino gang infested cardboard box for half a million in debt slavery. So they welcome illegal immigrant labor who doesn't know any better.
Things are expensive because of productivity but gains are not shared, so elites price out middle class and bring in new batch of slaves from India and Mexico to prop up their investments in real estate and business.
They give some jobs to their friends and family via government (fire, police, college executives) and call it good.
no wonder Nancy Pelosi's husband's business is .....real estate development.
Hey! Nancy helps out hubby with sweet IPO deals(8 so far) on companies with pending legislation before the house. She is so for the little guy. Haven't you heard?
The singer/songwriter Phil Ochs had the perfect take on liberals back in the 1960s: "Ten degrees to the left of center in good times. Ten degrees to the right of center if it affects them personally." That was an introduction to a song named something like "Love Me, I'm A Liberal".
Phil Ochs?? the same Phil Ochs who claimed he was John Butler Train, a CIA operative, shortly before he 'took his own life'?