Opinion: High living cost, persistent poverty fuel California’s economic divide

A homeless man sleeps in the Gaslamp Quarter of San Diego File photo by Chris Stone Times of San Diego This column was originally published by CalMatters Sign up for their newsletters Forty years ago I wrote a series of articles for the Sacramento Bee describing major economic social cultural and political trends coursing through California as the th century was drawing to a close One theme of the series which later became a book was the transformation of California from a state with high economic and social mobility to one of relatively rigid classes defined by ethnicity mentoring incomes and wealth I quoted two researchers Leon Bouvier and Philip Martin who had projected California s future as the doable emerging of a two-tier commercial sector with Asians and non-Hispanic whites competing for high-status positions while Hispanics and blacks struggle to get the low-paying organization jobs Unfortunately their analysis turned out to be quite accurate California has the nation s highest rate of poverty as defined by the Census Bureau when it includes the cost of living in its calculations in or more than million people Additional research by the Community Program Institute of California revealed that of Californians were living in or near poverty in more than half that group is Latino and another is Black Furthermore the poverty rate among undocumented immigrants was And unsurprisingly Californians without high school diplomas were almost four times more likely than college-educated Californians to be poor High poverty rates underscore the fact that Californians costs for housing utilities fuel and other necessities of life are among the nation s highest In particular high-cost counties California s housing department considers adults making more than a year to be poor in terms of qualifying for housing assistance Being poor from an income standpoint has another aspect that hasn t gotten as much attention the even starker stratification of Californians by wealth There s a logical connection between the two Low family income and high living costs make it more intricate to buy a home contribute to retirement accounts and otherwise acquire what s known as generational wealth assets that can grow and be passed down to heirs The General Initiative Institute of California also has delved into that aspect of Californians personal finances Wealth creation is of particular concern in California where high costs of living high poverty rates and a shortage of housing all exacerbate the challenges of building up assets PPIC researchers Tess Thorman and Shannon McConville write in their new survey But while Californians keenly feel the hindrances to building wealth a large number of have only a broad sense that the experience is shared and relatively little research has explored this vital component of economic well-being in the state While overall Californians net worths assets minus debts are about higher than those of other states thanks in part to California s high housing values low wealth is concentrated in Latino and Black households corresponding to lower levels of development Homeownership rates and equity are low among Latino households driven largely by their younger age profile and lower mentoring levels the examination uncovered In contrast Black other homeownership rates are low even after we account for factors like age income and mentoring levels While three in four households owe particular money on unsecured debts those without collateral like credit cards novice loans and or therapeutic bills the summary continues older households are less likely than others to hold any unsecured debt as are white Asian and immigrant households Latino households are more likely to carry credit card debt and Black other and Latino households are more likely to carry education-related debt than white and Asian households So there it is another confirmation that California has indeed become a highly stratified society the perhaps unchangeable reality of a state whose political leadership still insists that it is a model for the world CalMatters is a inhabitants interest journalism venture committed to explaining how California s state Capitol works and why it matters