Are Californians Getting Poorer?


A new report out of UC Berkley brings sobering news to the people of California. The Mercury News‘s report headlined, “Housing funk spreads to jobs: Low-Income Workers Fail to Keep Pace With Inflation” details how the economic recovery in California since the dot-com bubble has not truly reached either the middle class or the lowest income citizens.

Although the housing boom has led to growth in construction and other jobs, and many peoples’ net-worth have grown, the average American is not really any better off then before the recent “recovery”.

`During this economic recovery, the rising tide has lifted only a very few number of boats, those at the top of income distribution,” said Jean Ross, executive director of the budget project, a think tank. Inflation has chewed up just about all of the wage gains for middle-income workers and more than erased gains for low-income employees.

Adjusted for inflation, the pay of low-wage workers, those in the bottom fifth of income earners, decreased by 0.9 percent between 2003 and 2005, the budget project reported. Over the same period, the inflation-adjusted wage of the typical California worker increased 0.1 percent. Wages of those in the top fifth rose 0.9 percent.

The cost of transportation, food, and entertainment are all more expensive and the average American is feeling it. If policies are not changed to help out the middle class and poor, inflation will continue to make these people even poorer, while the rich will continue to get richer.

In the long run, it is the middle class that keeps our economy going. The rich cannot alone keep it afloat. If the middle class stops spending their money because they are spending much more of their incomes on housing costs, and other goods and services, the discretionary spending is going to get hit big-time. As a result, so too will the economy.

About Author

Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.

1 Comment

  1. I think you’re right..with the present economic policies the rich gets richer while the poor even poorer. The government should formulate economic policies that would value the middle class and the poor, after all they are the blood of the economy.

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