California’s endangered middle class

Debate has been ongoing for at least two decades about whether the real incomes of most Californians and the rest of Americans are actually growing. Latest data in this discussion is a new study showing that California’s middle-income job growth and earnings are falling behind, while high-end and low-end jobs have blossomed along with the state’s economic recovery.

The numbers are quite blatant. If the total sum of California jobs were divided into fifths, some 28 percent of new jobs since 1979 went to the lowest fifth of wage earners, and an equal 28 percent went into the top wage bracket. But only 6 percent of new jobs were in the second-highest fifth, while just 14 percent were in the third-highest bracket.

The trend has become even steeper in recent years, with more than two out of every three new jobs between 1999 and 2005 created at either the top or bottom of the pay scale. At the same time, the state lost jobs in the second-highest wage bracket.

As for actual wages, income for workers in the highest-fifth bracket jumped 18.4 percent between 1979 and 2006, while those in the middle brackets saw their wages grow by only 1.3 percent. And the state’s lowest-paid workers lost 7.2 percent in earnings when inflation was factored in, according to the report by the California Budget Project.

California’s statewide income gap is becoming worse than the rest of the country. In 1979, the highest-paid hourly workers in California and the U.S. made 2.4 times as much as their lowest-income counterparts. But by 2006 that gap had increased to 3.1 times in California, while still remaining only 2.7 times wider nationally.

When news broke Wednesday about these ominous developments, the stories quoted spokespersons for California business, labor and education delivering unsurprising suggestions about how best to improve the situation. But at a time when the state budget is again facing increased yearly deficits, solutions that depend on throwing a lot of money at less-immediate problems are essentially not going to happen.

The most practical and realistic way to again begin growing more good-paying, middle-income jobs in California is to ease draconian state regulations that burden businesses struggling to compete in the global market of the 21st century. One California Chamber of Commerce spokesman sensibly called for additional programs such as the “enterprise zone” tax breaks that reward businesses for locating in distressed areas.

And just in case anybody might have forgotten, an expanding and upwardly mobile middle class is invaluable to America in numerous ways: It is a surefire generator for spectacular economic prosperity. It is the best guarantee of a stable and thriving democracy. And its demise would mean the end of the grand American Dream.

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