SACRAMENTO — The income gap between the richest and poorest Californians is growing while the growth in middle-income jobs is slowing, according to a report released Wednesday by the California Budget Project.
The report, called A Generation of Widening Inequality, examined changes in California’s economy between 1979 and 2006.
It found that most of the state’s job growth during that period took place at the ends of the income scale. Nearly 28 percent of the new jobs went to the lowest fifth of wage earners while another 28 percent went to those in the top wage bracket.
In contrast, only 6 percent of new jobs were in the second fifth and 14 percent were in the third highest bracket.
The trend has increased in recent years, with more than two out of every three new jobs between 1999 and 2005 created at either the top or bottom of the pay scale. At the same time, the state lost jobs in the second highest wage bracket.
“A significant faction of California’s work force is falling behind,” said Jean Ross, executive director of the Sacramento-based nonpartisan group. “The rising tide has left some boats high and dry.”
Incomes of workers in the highest bracket jumped 18.4 percent between 1979 and 2006 while those in the middle saw their wages grow by only 1.3 percent. The state’s lowest-paid workers actually lost 7.2 percent in earnings when inflation was taken into account, the report said.
In 1979, the wealthiest hourly workers in California and the U.S. made 2.4 times as much as their poorest counterparts. By 2006 that gap had increased to 3.1 times in California compared to 2.7 times nationally, according to the report.
Ross said that “a lot of different factors,” including federal tax policies, a loss of manufacturing jobs and an increase of lower-paying service-sector jobs had contributed to the widening gap.
“It’s a very complex picture,” she said. “You can’t go out and say there’s one factor that’s responsible for what’s going on in the economy.”
The weak growth in middle-income jobs would make it harder for low-income workers to improve their lots, Ross said.
She said automatic increases in the minimum wage to keep up with inflation, an earned income tax credit for low-wage workers and improving the state’s schools and job training programs would help close the gap.
“The best way to attract high-wage jobs, good jobs, to California is by making sure that the education system turns out well-trained workers,” she said. “In the short term, people follow jobs. But in the long term, jobs tend to follow workers. Employers will go where they find a highly educated work force.”
She said education isn’t a sure cure. One of the “troubling trends” found by the study was that earnings of young college graduates did not keep pace with inflation between 2000 and 2006, Ross said.
Art Pulaski, executive secretary-treasurer of the California Labor Federation, said the report demonstrates the need for federal tax policies that reward companies that keep jobs in the U.S.
He also said corporations should rethink their policies and shift more of their wages to lower- and middle-income workers.
“The middle class is disappearing,” he said. “We’re losing out on wages and somebody else is gaining, and that somebody else is primarily the executives and businesses. The good jobs are being sent overseas, and more and more what we’re seeing is service sector jobs, which tend to be lower-wage jobs.”
Vince Sollitto, a spokesman for the California Chamber of Commerce, said the report’s findings demonstrate the value of enterprise zone programs that give businesses tax breaks for locating in distressed areas.
He said it also “reinforces the danger of imposing unique, California-only mandates on business.”
The report did find that the wage gap between men and women in California had narrowed. The typical woman made 87 cents for every dollar made by her male counterpart in 2006, compared to 63 cents for every dollar in 1979.
