Friday, June 22 , 2018, 12:46 pm | Overcast with Haze 64º

 
 
 
 

In Wake of Recession, Less Than Half of Californians Live in Middle-Income Families

Public Policy Institute of California reports widening gap — largest in 30 years — between those with high and low incomes

In the Great Recession and its aftermath, the percentage of Californians living in middle-income families fell to a new low of less than 50 percent, according to a report, titled “The Great Recession and Distribution of Income in California,” released Wednesday by the Public Policy Institute of California.

By 2010, 47.9 percent of Californians lived in families considered middle income, after adjusting for the state’s cost of living. These are families with incomes of $44,000 to $155,000. In 1980, 60 percent of California families were middle income.

Family incomes declined across the spectrum from 2007 to 2009 — the official years of the recession — and continued to fall in 2010. Median family income declined more than 5 percent in the recession years and another 5 percent in 2010.

Declines were steeper among lower-income families. At the lowest income level — the 10th percentile — incomes fell more than 21 percent from 2007 to 2010. Families at the 90th percentile — those earning more than 90 percent of the population — saw their incomes fall 5 percent during the same period. In 2010, California families at the upper end of the spectrum had higher incomes than those in the rest of the nation, while families at the lower end had incomes that were lower. As a result, the gap between California’s upper- and lower-income families — which has been larger than in the rest of the nation for decades — grew twice as wide as it was in 1980. High-income families earn nearly $12 for every $1 earned by the lowest-income families.

The Great Recession brought higher rates of unemployment than previous downturns, and jobless Californians have spent a longer time looking for work. This stubbornly high unemployment largely explains the decline in family income. However, even in working families income fell for those in the middle- and lower-income groups. Underemployment — a decline in the number of hours or weeks worked — appears to have driven this income drop, rather than a decline in wages.

“Unemployment and underemployment are the hallmarks of the Great Recession,” said Sarah Bohn, a PPIC policy fellow who co-authored the report with Eric Schiff, a former policy researcher at PPIC. “This suggests that policies that create jobs and promote full-time employment — rather than those that target wage rates — are more likely to be effective in raising family income to pre-recession levels.”

Across California’s demographic groups and regions, the Great Recession tended to amplify differences that existed before. Black and Hispanic families, which already had lower median incomes, experienced the largest declines. Median income for Asian families declined the least. Although the recession affected workers at all educational levels, families with more highly educated workers were buffered somewhat from the downturn. College-educated workers had the lowest unemployment rates and the highest median family income.

In most regions of the state, median family income declined from 2007 to 2010, with the largest declines in the Central Coast, at 18 percent, followed by the Sacramento and San Joaquin regions, at 16 percent each. Only in San Diego County did median family income increase. In the Inland Empire, there was essentially no change in median family income during the recession years, but a decline of about 10 percent in 2010.

It is unclear whether incomes will continue to decline or begin to rebound in the near future. However, 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. The most important factor driving this income gap is education. The report concludes that looking ahead, California may need to find innovative ways to promote opportunity through education so that middle- and lower-income families are not left further behind.

Click here to view the full report.

 

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Enter your email
Select your membership level
×

Payment Information

You are purchasing:

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >