In the five years before the pandemic, low-income Californians had begun to see substantial wage gains, chipping away at the income gap between California’s haves and have-nots that has widened over the past 40 years. But the coronavirus pandemic is “likely stripping away many of these gains,” researchers at the Public Policy Institute of California found in a new report.

The current coronavirus-induced recession has hit low-income workers the hardest, while higher income workers, largely able to work from home, have escaped relatively unscathed. And those acute job losses among low-wage workers — particularly African Americans, Latinos, workers without college degrees and women — have stayed worryingly high through the fall, the researchers found.

This could be “exacerbating that kind of pattern of recession and recovery that’s worse for low-income families,” said lead author Sarah Bohn, the vice president of research at PPIC. “In fact, these unemployment rate differences across income are a bit worse today than they were during the Great Recession.”

The findings were underscored by troubling new estimates of monthly poverty rates in the Golden State, from a group of researchers led by Zachary Parolin at Columbia University’s Center on Poverty and Social Policy.

“The monthly poverty rate in October was actually higher than rates during April and May, despite the fact that the unemployment rate declined over that time,” said Parolin at a live-streamed data release. That’s because the federal CARES Act stimulus checks and expansion of unemployment benefits have mostly expired. With unemployment ticking up as California’s new regional shut down orders go into effect, the picture is likely worse now.

Parolin’s estimates replicate the Census Bureau’s annual Supplemental Poverty Measure, which accounts for safety net benefits and the cost of living, unlike the Official Poverty Measure. It’s a measure that California consistently tops.

Taken together, the two sets of research painted an alarming picture of deepening poverty and inequality that could take years if not decades for California to dig itself out of.

California lawmakers are already mulling solutions, though ambitious proposals made now often get reigned in by fiscal realities later in the spring.

Earlier this month, Assemblymember Phil Ting, a San Francisco Democrat who chairs the budget committee, announced his priorities for the session. They included transitional kindergarten for all 4-year-olds, more financial aid for college students, more money for low-income families through the state’s Earned Income Tax Credit, and making parents who don’t work eligible for the state’s Young Child Tax Credit of up to $1,000.

“Our major priority is making sure we do everything to get money into the pockets of the most vulnerable Californians,” Ting said. “So many Californians are struggling. They’re on the brink of homelessness.”

Matt Fleming, spokesperson for the Assembly Republican caucus, said that Republican lawmakers, too, are focused on getting money into people’s pockets as quickly as possibly. Above all, he said, they’ll advocate to keep businesses open and schools in-person as much as possible in the coming months.

“Governor Newsom’s COVID shutdowns have disproportionately targeted those industries that provide jobs to low-income families,” said Senate Republican Leader Shannon Grove of Bakersfield in a statement. “Democrat policies have left them with fewer jobs, more unpaid bills, and less opportunity for their children.”

The gap between California’s haves and have-nots has yawned open since 1980, with the loss of manufacturing jobs, more automation, rising incomes for highly educated workers, declining collective bargaining power, and rising numbers of less-educated immigrants, PPIC researchers wrote.

In 1980, wages for the 10% of families with the highest incomes were 7.4 times larger than families in the bottom 10%. By 2019, that ratio was 9.8.

Recessions have historically made inequality worse.

The highest-income families generally take a hit of up to 7% then recover within a few years. Meanwhile, the lowest income families often face “much steeper and deeper declines” of up to 20% in wages, PPIC’s Bohn explained. In three of the last four recessions, it has taken them a decade on average to recover their pre-recession wages.

But following the recovery from the Great Recession, things were looking up. A historically long period of economic growth had seen incomes for the poorest Californians rise from $20,000 in 2014 to $27,000 in 2019, a 34% increase that outpaced income growth for the highest earners.

Then the pandemic hit, putting entire low-wage sectors out of work, like restaurants, retail, entertainment, tourism, beauty and barber shops. In the spring, as many as 44% of workers in families with incomes below $30,000 were either unemployed, working part time though they prefered to work full time, or had stopped looking for jobs, according to the report. By fall, the number hadn’t dropped much, at about 37%.

The billions of dollars that the CARES Act pumped into California lifted an estimated 3.5 million Californians out of poverty in April, Columbia’s Parolin said. But that number dropped to 600,000 in October as unemployment benefits dried up.

Another 750,000 Californians stand to lose unemployment benefits on Dec. 26, so if Congress doesn’t agree on a new stimulus package soon, California will see rising poverty rates in January, Parolin said.

Whether California’s short-term poverty rates stay high will largely depend on how Congress and the incoming Biden administration negotiate future stimulus packages. Parolin said the federal government could quickly reduce monthly poverty by increasing the maximum benefit for food stamps by at least 15%, which it did during the Great Recession.

“What is clear to me is we need another round of stimulus last month and the month before, if not right now,” said Amy Everitt, president of Golden State Opportunity, a non-profit that has advocated for expanding the state’s earned income tax credit.


By Kelley Wheeler

Kelley Wheeler is a Metro reporter covering political issues and general assignments. A second-generation journalist, worked with all major news outlet, she holds a vast expeirience. Kelley is a graduate of USC with degrees in journalism and English literature. She is a recipient of Yale’s Poynter Fellowship in Journalism.

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