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The middle class has shrunk to include less than half of all Californians, according to a new report from the Public Policy Institute of California (PPIC).
In 1980, 60 percent of Californian families were considered middle-income, a figure that had shrunk to 47.9 percent by 2010. After adjusting for the cost of living, the definition of “middle-income” was determined to include families earning between $44,00 and $155,000.
Incomes, the report reveals, have fallen across the spectrum. During the official recession of 2007-2009, median income in the state fell by five percent, but the figure dropped another five percent in 2010, even though the nation was officially in recovery.
Things are much worse for the poorest Californians, however. Households in the bottom ten percent of earners lost 21 percent of their income from 2007-2010. While Californians in the top ten percent earn more than their counterparts in other states, those on the bottom earn less, even though the cost of living here is higher. PPIC reports that high income families now take in $12 for every dollar taken by the lowest earners, making the income gap between rich and poor twice as wide as it was in 1980. Even then the income disparity in California was greater than in the rest of the country.
“Unemployment and underemployment are the hallmarks of the Great Recession,” says PPIC policy fellow Sarah Bohn, who co-authored the report with former PPIC policy researcher Eric Schiff. The findings indicate that a decrease in hours worked, from those that are unemployed or unable to find full-time work, is a larger cause of falling income than low wages themselves. “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,” Bohn continued.
San Diego County somehow seems to have bucked the negative trend, at least to an extent. It was the only region in the state that actually saw a growth in median income in 2008-2009, though wages here were falling again by 2010.
The middle class has shrunk to include less than half of all Californians, according to a new report from the Public Policy Institute of California (PPIC).
In 1980, 60 percent of Californian families were considered middle-income, a figure that had shrunk to 47.9 percent by 2010. After adjusting for the cost of living, the definition of “middle-income” was determined to include families earning between $44,00 and $155,000.
Incomes, the report reveals, have fallen across the spectrum. During the official recession of 2007-2009, median income in the state fell by five percent, but the figure dropped another five percent in 2010, even though the nation was officially in recovery.
Things are much worse for the poorest Californians, however. Households in the bottom ten percent of earners lost 21 percent of their income from 2007-2010. While Californians in the top ten percent earn more than their counterparts in other states, those on the bottom earn less, even though the cost of living here is higher. PPIC reports that high income families now take in $12 for every dollar taken by the lowest earners, making the income gap between rich and poor twice as wide as it was in 1980. Even then the income disparity in California was greater than in the rest of the country.
“Unemployment and underemployment are the hallmarks of the Great Recession,” says PPIC policy fellow Sarah Bohn, who co-authored the report with former PPIC policy researcher Eric Schiff. The findings indicate that a decrease in hours worked, from those that are unemployed or unable to find full-time work, is a larger cause of falling income than low wages themselves. “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,” Bohn continued.
San Diego County somehow seems to have bucked the negative trend, at least to an extent. It was the only region in the state that actually saw a growth in median income in 2008-2009, though wages here were falling again by 2010.