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Published on Thursday, August 23, 2007 by The San Francisco Chronicle
by Sam Zuckerman
Steven Bustin lives with his wife in a four-bedroom, 2,600-square-foot house in Novato. He drives a gray 2006 Audi A4. He earns more than $200,000 a year in salary and commissions from his job as head of sales for Podaddies, an Internet startup that sells online video ads.
Tamara Johnson lives with her three children in a two-bedroom apartment in the Sunnydale housing project in San Francisco's Visitacion Valley. She drives a used 2003 Buick Sebring with 74,000 miles on it. Last year, she brought in just under $12,000 from her job as a home health care worker, supplemented by disability payments for two of her kids.
Bustin and Johnson represent California's increasingly polarized economy.
The gap between the state's rich and its poor is getting bigger. The bulk of job growth in California over the last generation took place at the top or bottom of the pay scale, a trend that has accelerated since the beginning of this decade. Jobs in the middle are scarcely growing at all.
The changes are documented in a report based on census and tax data set for release today by the California Budget Project, a liberal research and advocacy group.
"The story of the past generation is one of widening income inequality," the group says about the state.
It's well documented that the gulf between highly paid and low paid people is growing across the country. But it is more pronounced in California, according to census and tax records.
The divisions suggest that poverty will persist despite California's growing economy. And the erosion of middle-income jobs could make the American dream of climbing the economic ladder harder to achieve in the state, the budget project warned.
"You're in essence taking steps out of the ladder," said Jean Ross, the group's executive director. "These are troubling signs for our society."
The growing disparity between the wanting and the well-to-do shows up starkly in pay data.
Since 1979, 26.9 percent of new positions created in California were in such categories as food service and retail trade, which paid hourly wages in the bottom fifth of all jobs, the report finds. At the other end of the spectrum, 28.1 percent of new jobs were in such categories as administration and management, which paid in the top fifth.
The breach has expanded this decade. From 1999 to 2005, 43.1 percent of California's job growth occurred among jobs at the lowest 20 percent of the pay scale. About 54.4 percent of new jobs were in the top 40 percent of pay. Only 2.6 percent of growth came among jobs at 20 to 60 percent of the pay scale.
"We're having a hollowing-out of job growth," Ross said.
As a result, California's population is polarizing. A large group at the top enjoys a standard of living significantly higher than it did three decades ago. Another large group is living worse. A shrinking fraction of people in the middle is getting squeezed, according to the budget group's study.
From 1979 to 2006, the hourly pay of California's low-wage workers fell by 7.2 percent after adjusting for inflation. High-wage workers saw gains of 18.4 percent, while those exactly in the middle edged up 1.3 percent.
The richest Californians are capturing a growing share of wealth. Income reported for tax purposes of the top 1 percent of the state's taxpayers jumped 107.7 percent from 1995 to 2005, after adjusting for inflation. Dur
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