The pandemic is accelerating the demise of the middle class, leaving many unable to sustain financial independence
Home to one hundred and sixty-six billionaires, who made over $235 billion since the beginning of the pandemic, the Golden State also has the highest poverty rate: 17.2% percent when adjusted for the cost of living, according to a recent Census Bureau analysis.
Even with a $66,129 salary, Rivas couldn’t make her more-than $2,000 monthly rent in the tech valley. According to 2017 data, the median household income in Sunnyvale is $134,234, and the median rent is $2,390.
“How can you be normal when that’s what it takes?” Rivas said. If Summit Denali charter school reopens this year, Rivas will have to face a difficult choice: either quit her job or find a new place to live in Silicon Valley. “I’ll never be able to buy a home, I’m never going to be able to comfortably raise a family there.”
She isn’t the only one struggling: one Mill Valley high school teacher, who asked not to be identified, described contemplating sex work to fill the gaps left by her roughly $65,000 salary. Others switched to gig or low wage work. Experts worry that, on top of increased distress for the poor, the state’s already-shrinking middle class is taking a hard hit too.
“We kind of already had a hollowing of the middle class — that’s not going to help,” said Dr. Sylvia Allegretto, a labor economist and co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley. “This is going to be harmful for families, you’re going to see more food insecurity, then evictions play out.”
One in four Californians filed for unemployment since March, and the state’s unemployment rate in August was still three points higher than the rest of the country, with 11.4% percent, according to the state Employment Development Department.
Some found new work, but job growth has been slow and many have had to settle for the lower-paying jobs available on the market, often without career prospects.
Rivas, who learned in September — months after she’d moved out — that the school would reinstate teachers’ full pay, isn’t sure whether she’ll be able to find new housing. Rents haven’t gone down, she says, and she might become one more California worker unable to afford to live where they work, no matter how much she loves her job or how good she is at it.
“I think one of the key things to recognize is that economic value is increasingly based on information and knowledge — not labor,” said Chris Benner, a longtime professor of sociology at the University of California, Santa Cruz. So, hard work and long hours are not rewarded as generously as ideas and information, and in the Bay Area, people’s ideas are often worth a lot in the form of investments, wealth, and net worth. But Benner points out our system taxes income, not net worth, leading to increased wealth disparity.
“It doesn’t serve to redistribute wealth, it serves to raise government revenue,” adds University of Santa Clara School of Law professor of tax law Patricia Cain. As a result, economic growth doesn’t translate into social inclusion.
The wealth gap is powered by two principal forces, Cain said: growing concentration of wealth, and government spending on social safety nets.
In the Bay Area, the one-time federal check of $1,200 plus additional $500 per child barely made up one month’s rent for many. Thanks to the latest federal Lost Wages Assistance Program, workers who lost work due to the pandemic can now apply to receive an extra $300 (the previous program provided $600), although applicants must already be receiving $100 or more from regular unemployment. Read more via abc10