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Wage gap in state widens, study says

August 23, 2007|Leslie Earnest | Times Staff Writer

The divide between rich and poor in California has been growing for decades, with most of the jobs created in the state paying wages at opposite ends of the spectrum and the top earners pulling down the biggest gains, according to a report from a nonprofit research group.

The California Budget Project said in the report, to be released today, that wages for people toiling at the bottom of the pay range dropped 7.2% over the 27 years studied, while Californians at the other end of the range saw their pay rise 18.4%.

Most of the jobs that will be added to the economy well into the next decade probably will pay either quite well or relatively little, the report said, at either about $83,000 a year or $21,000 a year.

The findings underscore "the extent to which inequality in California exists," said Jean Ross, executive director of the Budget Project, which focuses its research on matters that affect low- and middle-income households. "A significant fraction of the California workforce is falling behind."

Most of the new jobs that have been generated in recent years have been for engineers, executives, lawyers and scientists at the highest tier -- paying more than $22 an hour in 2006 dollars -- and for store clerks, cashiers, nurses' aides and farmworkers at the lowest tier, paying less than $11 an hour, the report said.

In fact, from 1999 to 2005, according to the report, 43% of new jobs paid less than $11 an hour.

Jobs have been relatively scarce for factory workers, bookkeepers, secretaries and other middle-level earners, the report said. Many of those kinds of positions were lost when 464,700 manufacturing jobs in the state disappeared from 1990 to 2006, accelerating a shift to a more service-sector job economy. The contraction of the aerospace industry in the early 1990s cut deeply into local payrolls.

"It concerns everybody when you're living in a society that is increasingly bifurcated, and that's definitely true of Southern California," said Lisa Grobar, a Cal State Long Beach economist.

But Sung Won Sohn, an economist and chief executive of Hanmi Bank in Los Angeles, cautioned against drawing "alarming conclusions." Although there may be an expanding wage gulf, he said, "net worth has gone up significantly even for people at the low end of the income spectrum," because homeowners have seen the value of their houses increase.

The report, titled "A Generation of Widening Inequality: The State of Working California, 1979 to 2006," also carried some positive news.

The value of a college education, in terms of wages, is greater now than it was three decades ago, and the disparity between what women workers and their male counterparts earn has diminished. Asian American workers have seen their wages skyrocket, and the percentage of households living at the poverty level has remained relatively flat.

But many findings weren't upbeat. To stay financially afloat, many Californians have had to work harder and longer while receiving fewer benefits from their employers, the report said. And despite the economic recovery that began after the recession ended earlier this decade, advantages that some workers might have expected to "trickle down" never did.

"Typically, such trends provide ripe conditions for broad-based increases in living standards," the report said. Instead, soaring productivity gains led to "skyrocketing corporate profits."

The report didn't attempt to explain the causes but pointed to factors that may have played a role, including globalization, immigration and technology.

The effect has been that "the gap between the top and the middle has emerged more strongly over time," the Budget Project's Ross said. "I think most of us believe that the middle is probably a good benchmark for society as a whole and that broad middle is not doing well in California."

Education can make a difference. The hourly wage of a typical worker with at least a master's degree jumped 34.4% over the 27 years studied while the typical worker with less than a bachelor's degree failed to keep pace with inflation. Those who didn't graduate from high school saw wages sink 23.7%.

Viewed from a different time frame, the findings varied significantly.

Between 2000 and 2006, California workers who didn't graduate from high school saw their hourly wages rise 8.5%, more than triple the increase of the typical worker with at least a bachelor's degree and more than twice the increase of the typical worker with a master's degree or more, the report said. That was because the minimum wage increased, and workers with relatively low levels of education tended to work in sectors that experienced strong growth in California during the first half of the decade, such as retail and the leisure and hospitality industries.

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