California is rapidly become a classic example of a place where the rich get richer and the poor continually get poorer.
That’s been true for a decade or more when it comes to employment, where pay for high-end jobs requiring college degrees or higher has grown rapidly, while wages for unskilled labor in fields, carwashes, restaurants and hotels have risen only slightly.
Now the real estate market is creating even more severe inequalities. Example: In one ZIP code area of southern Santa Monica, there were two foreclosures on houses during the second quarter of last year and two again for the same time period this year. Meanwhile, in another ZIP code almost 100 miles east in the Riverside County city of Moreno Valley, there were 23 foreclosures during the second quarter of last year and 296 this year. Guess where prices are still about three times higher? Statewide, foreclosures were up from about 20,000 during that time period last year to 53,000 this year.
Strikingly, property values in most neighborhoods are down this year, but they are actually up in high-end areas where home prices average more than $1 million.
So the rich are still getting richer, and the poor – even the not-so-poor and the middle class – are getting much poorer, seeing whatever equity they’ve built up over years of making house payments disappear in a price slump and then often having to abandon their homes when monthly payments on some sub-prime mortgages rise after three or five years of requiring only interest.
But that kind of inequality occurs every time there’s a real estate recession like the one in which the entire nation is mired today.
Even more serious and permanent is the widening difference between economic classes in this state, spawned by the ongoing wave of immigration from Latin America, both legal and illegal.
“By slow degrees, California has changed from a state where opportunities abounded and prosperity was more broadly shared to one with an increasing divide between the rich and the poor,” reports Jean Ross, executive director of the Sacramento-based California Budget Project, a non-partisan analysis agency. “It makes it harder for working families to succeed and to give their children a decent start in life.”
A new report from the Budget Project finds the gap between low-wage and high-wage workers has widened more in California than other parts of America.
One reason for this, the study found, is that job growth in this state has come mostly at the high end and the low end of the wage scale, while the middle ground remains largely stagnant.
What the report does not say is that these conditions are largely the result of buildups in the high technology sector and the steady stream of immigration, both legal and illegal.
High-technology jobs require education and skills, unless they are simple assembly line posts. Companies like Intel, Google, Yahoo!, Qualcomm, Cisco Systems and Oracle, which employ many thousands of workers, offer higher pay and better working conditions than normal. Fortune magazine lists all of them among the 50 best employers in America to work for. That’s partly because their highly skilled workers are in constant demand, with headhunters calling many of them almost daily. The high pay and free gourmet meals some of these firms routinely provide are ways of hanging onto their best employees.
But no one would rank any car wash, restaurant kitchen or vineyard in that category. Jobs there pay exponentially less than those in high-tech. No free meals here, either. Not even a taco is gratis.
The low-end jobs stay in that category for two reasons: There is little or no competition for workers because these positions require few skills. The immigrants who fill most of them are among the least educated to arrive in America in the last century. Especially the illegals, who undergo no screening for education, disease, criminal record or anything else, as legal immigrants must.
As a result, the Budget Project reports about two million California families with incomes below 200 percent of the federal poverty level of $13,690 per year. These families can offer their children few resources, often need children to join them and help at their jobs, and they produce a large number of high school dropouts. One result: school achievement tests show a continuing gap between Latino children and whites. All those factors mitigate against future success for the children.
The danger in all this is that extreme distance between economic classes has often been a harbinger of social unrest. It was one of the underlying causes of riots like those in Watts and other parts of Los Angeles in 1965 and 1992.
This state’s government appears utterly oblivious to the problem, but continuing to ignore it can only lead to future trouble as rage builds gradually among many millions of have-nots.
