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Think Tank Releases Findings On Income Gap

A solid majority of Californians say children growing up in the state today will be worse off financially than their parents, while more than two-thirds say the gap between rich and poor is widening. In the past year, more than four in ten households with annual incomes below $40,000 had work hours or pay reduced, and an equal share had to cut back on food. With COVID-19 cases and hospitalizations again rising, the pandemic continues to disproportionately affect lower-income households and Latinos. These are among the key findings of a statewide survey released recently by the Public Policy Institute of California.

Six in 10 Californians (63 percent) think that when children in California today grow up they will be worse off financially than their parents; about a third (35 percent) say better off. Majorities of whites (76 percent), Asian Americans (67 percent), and African Americans (62 percent), and nearly half of Latinos (47 percent), say California children will be worse off than their parents. Most across income groups say this, including 73 percent of those with annual incomes of $80,000 or more (58 percent $40,000 to under $80,000; 54percent under $40,000).

“Majorities of Californians across income groups think that children growing up in California today will be worse off financially than their parents,” said Mark Baldassare, PPIC president and CEO.

A strong majority (69 percent) say the gap between rich and poor in their part of the state is getting wider, 6 percent say the gap is narrowing, and 25 percent say it has stayed the same. Majorities across income, age, and racial/ethnic groups and across regions believe the gap is getting larger.

Thinking nationally, Californians link racial and ethnic discrimination with economic disparity. An overwhelming majority (83 percent) say racism is a problem in the US, and about seven in ten say racial and ethnic discrimination contributes a great deal (34 percent) or a fair amount (38 percent) to economic inequality. African Americans (63 percent) are far more likely than other groups to say racial and ethnic discrimination contributes a great deal to inequality (36 percent Latinos, 32 percent Asian Americans, 29 percent whites).

“Overwhelming majorities of Californians, including nine in ten African Americans, say that racial and ethnic discrimination contributes to economic inequality in the US,” Baldassare said.

With coronavirus cases and hospitalizations surging again, about three in four Californians are either very (31 percent) or somewhat (41 percent) worried that someone in their family will get sick from the virus, similar to responses in April and July (77 percent either very or somewhat worried). Today, lower-income adults are slightly more likely to be very worried about illness (40 percent incomes under $40,000; 34 percent $40,000 to under $80,000; 24 percent $80,000 or more). Latinos (44 percent) are much more likely than Asian Americans (31 percent), African Americans (23 percent), and whites (21 percent) to be very worried about illness.

About two in three Californians are very (27 percent) or somewhat (38 percent) worried COVID-19 will hurt their family’s finances. Similar shares were very or somewhat worried about financial impacts in April (75 percent) and July (71 percent). Today, lower-income Californians are somewhat more likely to be very worried (38 percent incomes under $40,000; 32 percent $40,000 to under $80,000; 18 percent $80,000 or more). Latinos (39 percent) are much more likely than Asian Americans (26 percent), African Americans (24 percent), and whites (19 percent) to be very worried.

“The pandemic is continuing to have a disproportionate impact on Californians with lower incomes and on Latino households,” Baldassare said.

Many lower-income households faced a range of economic challenges in the last 12 months. Among households with incomes under $40,000, 43 percent had someone in their household with reduced work hours or pay (42 percent $40,000 to under $80,000; 36 percent $80,000 or more). In addition, 42 percent cut back on food to save money (27 percent $40,000 to under $80,000; 12 percent $80,000 or more).

One-third or more of lower-income households report receiving unemployment (36 percent), not being able to pay a monthly bill (36 percent), having difficulty paying rent or mortgage (35 percent), or being laid off (35 percent) in the past year. Similar shares report using a food bank (43 percent) and receiving food stamps (38 percent).

Most employed Californians (82 percent)—including those earning less than $40,000 (79 percent)—are satisfied with their jobs, but lower-income workers are less likely to have key job benefits.

“Less than half of lower-income workers report having a job that offers them health care, retirement savings, and education or training,” Baldassare said.

Californians have an unfavorable outlook for the state’s economy in the next year and beyond. Three in 10 (31 percent adults, 30 percent likely voters) expect good times financially for California in the next 12 months. Less than half (40 percent adults, 41 percent likely voters) expect good times during the next five years, while majorities (59 percent adults, 58 percent likely voters) expect periods of widespread unemployment or depression.

“Californians have a gloomy economic outlook, and one in four are seriously considering leaving California due to a lack of well-paying jobs in their region,” Baldassare said.

Asked about a number of policy proposals to improve economic well-being, Californians expressed the most support for increasing public funding for job training programs so that more workers have the skills needed for today’s jobs.

Other proposals to increase economic well-being also have the support of most Californians. These include increased funding for child care serving lower-income working parents (78 percent adults, 76 percent likely voters), a government health insurance plan similar to Medicare (77 percent adults, 75 percent likely voters), expanding the Earned Income Tax Credit (73 percent adults, 72 percent likely voters), free college tuition (66 percent adults, 59 percent likely voters), and eliminating college debt (65 percent adults, 60 percent likely voters).

The Californians and Their Economic Well-Being survey is supported with funding from the James Irvine Foundation.

The findings presented are based on responses from 2,325 California adult residents.