In Northern California, the software industry is sparking one of the greatest economic booms in human history. In Southern California, the entertainment industry is generating wealth that would have staggered even the expansive imaginations of moguls from Hollywood's first golden age. The riches of California's new millionaires and billionaires should be trickling - cascading - down to the rest of California's population. After all, as a great Californian used to say: "A rising tide lifts all boats."
But in California today, the trickle-down theory has sprung a leak. Jennifer Coleman of the Associated Press writes (September 3):
While income for much of the nation has recovered since the recession of the early 1990s, more California workers earn poverty-level wages now than a decade ago.... A review of state incomes by the California Budget Project reveals a growing gap between California and the rest of the nation, researcher Jean Ross said. "It is a huge disparity," Ross said. "For decades and decades, incomes in California have exceeded those of the rest of the nation." That is no longer the case, she said. Adjusted for inflation, the median income of a four-person family in California declined $1,069 since 1989, while nationally, that figure rose $2,477, researchers found.... "We've had tremendous growth in the number of jobs, but not in wage growth." ...
Home prices and other living expenses are keeping California workers from being able to prosper as their counterparts in other states have, said Bob Gnaizda, policy director of the Greenlining Institute, a San Francisco-based coalition of community groups. "California jobs are more dead-end jobs than anywhere else," Gnaizda said. "Minimum-wage workers of 20 years ago remain minimum-wage workers today. You can't move up." ...
When it comes to the widening gap between rich and poor within the state, California also bucks the trend the rest of the nation is seeing, Ross said. In most states, the growing gap is due to growth at the high end of the income scale. In California, the gap comes from an increase in low-income families and stagnating incomes in the middle class, the report said. There are no signs the trend is reversing, Ross said.
(The CBP report is posted at http://www.cbp.org.)
Hmmmm. What could possibly be causing the number of jobs in California to go up while wages go down?
If I recall my Econ 101 correctly, the supply of less-skilled workers must be going up faster than the demand. How could this happen?
Jennifer Coleman's AP article doesn't offer us a clue. Maybe I can help. The word that's utterly missing from the AP analysis is (sshhhhhh, don't say it too loudly or you'll be Insensitive): immigration.
September 16, 2000