The high price of living in the Golden State
Without a doubt, the pandemic workers pounded in California. The state lost a greater proportion of jobs than the nation as a whole during the worst of COVID-19, and while the economic recovery continues, California’s unemployment rate has stabilized since November at 5 .8% – a huge jump from the 4.1% figure that was recorded for seven consecutive months before the pandemic.
But there is another guideline in this story, and it goes far beyond the simple classification of “work”. For millions of Californians, having a job does not mean security. It doesn’t even mean the ability to afford basic necessities. This long-established truth is increasingly evident now, and it is independent of any other crisis.
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The fallout from the virus has machine-gunned some industries and cost jobs. But many of these positions were basically terrible to begin with, and it’s often because they paid so little that the people working them still lived in functional poverty.
The big resignation? “It was people who were walking away from rotten jobs”, explains Roxana Tynan.
Tynan has spent more than 20 years with the Los Angeles Alliance for a New Economy, the last 10 as Executive Director of LAANE. From his perspective, the COVID crisis has drawn the curtain back on labor issues that are not new. “The pandemic has broadened the awareness of some of the worker issues that we’ve seen for a long, long time,” Tynan said. “We are talking about striking levels of inequality.”
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This reality is at the heart of a new series from Capital & Main. In “State of Inequality,” we’ll take an in-depth look at the forces shaping the California labor market for better and for worse; the powerful industry and interest groups that seek to frustrate meaningful reform; the consequences of the working poor in the state; employers and companies doing it well (or badly); and the politicians who will or will not strive to create lasting change.
The stakes are enormous. By any statistical measure, income inequality—both in California and the rest of the United States—has been growing steadily for 30 years, and its effects are corrosive across all sectors of society. Researchers say those who live in more unequal societies suffer worse health outcomes and live shorter lives. They deal with mental and emotional issues in disproportionate numbers. Their children have more difficulties in school.
Income inequality also holds back economic growth. Those struggling to afford necessities aren’t spending on the big-ticket items billionaires sell, and they often incur debts they can’t repay. Their children are being denied the kind of expensive educational opportunities that could lead them to better, better-paying jobs, allowing them to contribute more to the economy. A cycle of near-poverty occurs, and research shows that it ends up harming society as a whole, leading to a decline in the country’s gross domestic product.
California is the state with both the most billionaires and the highest poverty rate.
In 2019, before the pandemic hit, more than a third of Californians were poor or near poor, according to the Public Policy Institute of California (PPIC) and the Stanford Center on Poverty and Inequality. Researchers from both locations used a “California Poverty Measure,” which incorporates the true cost of living in the state and a full range of family needs and resources, and determined that a family of four people would need $35,600 a year to cover their basic needs.
At the same time, state industries were adding jobs that were nowhere near that threshold. An economist with the state Department of Finance recently told the Cal Matters news site that before the pandemic, most new jobs created in California paid $20,000 or less.
While COVID-era numbers are still being compiled, the jobless rate suggests the outcome could be grim. Economic stimulus efforts, both nationally and statewide, were likely the only thing keeping more Californians from falling into poverty, experts say; but those stimulus payments have dried up. What’s left is a job market that’s still depressed and — as it was before the pandemic — filled with positions that don’t pay enough to live on.
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The result is a growing gap between rich and poor. Over the past two COVID years, low-income Californians have been rushing to pay rent and show up for “essential” jobs — production, catering, farming, and more. — who were exempt from the state’s on-site housing orders, exposing them to the virus at disproportionate levels and putting their families at risk.
Those in the higher economic registers, meanwhile, have recorded staggering gains and expanded their portfolios. In fact, high earners and corporations have done so well that the state has had two consecutive years of massive budget surpluses, despite the pandemic. California is the state with both the most billionaires and the highest poverty rate, as determined by the US Census Bureau’s Supplemental Poverty Measure for the years 2018-20.
In a November 2021 poll conducted by PPIC, nearly 70% of California respondents said the gap between rich and poor in their regions was widening, and 64% expected it to get worse. by 2030. Those who most agree that income inequality is getting worse? Highest income group surveyed: People earning $80,000 or more per year.
Last year, a survey by United Ways of California found that more than 3.5 million families were not earning enough to cover their basic living costs.
Years of budget surpluses provide an opportunity to expand state safety net programs, and trial universal basic income programs are springing up in Los Angeles and other areas. But at its core, a fundamental economic problem for California comes down to this: Can bad jobs be improved? Can workers be paid enough to escape poverty?
Also, it’s fair to wonder how California, a state known for its progressive efforts in so many areas, could continue to support so many of its people living in poverty. At some critical level, has the state experienced a lack of political will in the face of an evident crisis? And who will break this chain of inaction?
Last year, a survey by United Ways of California found that more than 3.5 million families – one in three in the state – were not earning enough to cover their basic cost of living. That’s nearly three times the number of Californians who are considered poor according to the long-outdated standard federal poverty measures. Yet many corporations and large-scale employers continue to believe and act as if their workers should be able to get by on low wages, or that California is reaching a minimum wage of $15 an hour faster than most. from other states means all is well.
It’s not good. The wealth gap, the chasm between those who can afford to live comfortably and those whose hard work year after year puts them even further away, has become too huge to ignore. We live in a state of inequality. This reality has an urgency and an importance that requires investigation, ideas and action.
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