Wage inequality is
surging in California — and not just on the coast. Here’s why
OCT. 10, 2019
Wage inequality has risen more in
California cities than in the metropolitan areas of any other state, with seven
of the nation’s 15 most unequal cities located in the Golden State.
San Jose, with its concentration of
Silicon Valley technology jobs, had the largest gap of any California metro
area between those at the top of the pay scale and those at the bottom. It
ranked second in the nation after the suburb of Fairfield, Conn., home to
wealthy New York financiers, according to a new analysis of 2015 U.S. Census
data by Federal Reserve economists. San Francisco and Los Angeles also ranked
high on the list.
More surprising, perhaps, is the inclusion
of Bakersfield, where high-wage engineering jobs are juxtaposed with
poverty-wage farm work.
The heavy concentration of California
metro areas is a striking turnabout from 1980, when just three figured in the
top 15.
As inequality has soared across the United
States, most sharply since the 1980s, it has been the focus of widespread
debate and become a hot political issue. But less attention has focused on
dramatic geographical differences in inequality.
“Wage inequality … has risen quite sharply
in some parts of the country, while it has been much more subdued in other
places,” wrote Jaison Abel and Richard Deitz, economists at the Federal Reserve
Bank of New York, who titled their report, “ Why Are Some Places So Much More Unequal than Others? ”
“Rising inequality in the United States
has largely been an urban phenomenon,” they added.
Large cities with dynamic economies tend
to have higher wage disparities, while midsized cities with “sluggish
economies” are less unequal because they attract fewer high-wage workers, the
authors found.
U.S. wages have grown “much more rapidly
for highly skilled workers at the top of the wage distribution than for those
in the middle or at the bottom,” the authors wrote. “A worker in the 95th
percentile of the wage distribution earns more than three times what the median
worker earns and more than seven times the earnings of a worker at the 10th
percentile, well above what these ratios were just a few decades ago.”
Comparing wage data from 1980 to 2015 in
200 metropolitan areas, Abel and Deitz documented a disproportionate rise in
inequality in the most populous cities, like Los Angeles, New York and Houston.
By contrast, the pay gap has remained largely flat in midsized Midwestern and
Southern cities, such as Wasau, Wisc., Fort Wayne, Ind., and Ocala, Fla.
The report focused on what the authors
call the 90/10 ratio: the difference between the earnings of workers in the
90th percentile of wage distribution and those in the 10th percentile. But the
disparities were reflected throughout pay levels.
“In 1980, there was virtually no
relationship between city size and the level of wage inequality,” according to
the report. “None of the 10 largest metropolitan areas ranked among the
nation’s most unequal places.… By 2015, five of the 10 largest areas ranked
among the most unequal in the country.”
A scene on the streets of San
Francisco.
(Genaro Molina / Los Angeles
Times)
In San Francisco, inflation-adjusted wages
grew by 18% between 1980 and 2015 for the bottom 10% of the workforce. For
those paid at the median — with half of wage earners making less and half
making more — pay rose by 53%. And for those at the top, earning in the 95th
percentile, pay rose a whopping 122%, according to the paper.
In Los Angeles, over the same 35 years,
inflation-adjusted pay rose by just 3% for those in the bottom 10%, and by 18%
for those at the median wage. For workers at the top, earning in the 95th
percentile, pay rose by 69%.
Ranking 200 metro areas by pay disparities
over time, Abel and Dietz found that San Francisco skyrocketed from 128th most
unequal in 1980 to eighth in 2015. Over the same period, San Jose jumped from
70th to second and Los Angeles rose from 26th to 12th most unequal.
If the explosive inequality in the Bay
Area is easily attributable to a massive expansion of high-paid tech jobs, the
fact that Bakersfield ranked in the top tier for unequal pay in both 1980
(12th) and in 2015 (fourth) may be less obvious.
Cal State Bakersfield economist Richard
Gearhart said inequality is pronounced in the city of 380,000 people because it
has “a highly segmented labor market — either really well paying or really
poorly paying. We don’t have a flourishing ‘middle-class’ economy for IT,
managers, and finance.”
With robust oil and agriculture
industries, the city has six-figure engineering and science jobs. But it also
has some 40,000 local farmworkers, many of whom are paid on a piece rate,
earning below the legal minimum wage, Gearhart added.
As for Los Angeles, Christopher Thornberg,
a partner at the consultancy Beacon Economics, said the city has “high-income
folks in entertainment and some in tech. But it also has an enormous
low-skilled population working in restaurants, hotels, janitorial services and
back offices.”
The fact that Los Angeles rose in the
inequality ranking over 35 years can be partly attributed to “a huge influx of
low-skilled Latin Americans into L.A. County since 1980,” he said. Moreover, he
added, “L.A. was once an enormous manufacturing center. But since 1990,
manufacturing jobs have dropped from about 850,000 to 350,000.”
According to the Federal Reserve study,
growing inequality in large cities is driven by the contrast between rapidly
rising wages of the best-paid workers, and far more modest increases for
medium- and low-wage workers.
Several factors explain the trend, the
report indicates:
·
Big cities have more need for skilled
workers. Think programmers in San Jose and San Francisco, and finance
executives in New York. On the other hand, as automation and globalization have
cut the demand for middle- and low-skilled workers, cities such as Detroit and
Youngstown, Ohio, where thousands of auto and steel industry jobs disappeared,
experienced wage stagnation.
·
What economists call “urban agglomeration
economies” — the way that companies in related businesses cluster together in
dense metropolitan areas — spurs higher productivity and higher wages. This
clustering tends to favor higher-skilled workers, research shows. Think
Hollywood.
·
The weakening of labor unions led to less
worker bargaining power to create middle-class jobs. And the erosion in the inflation-adjusted
value of the federal minimum wage over decades has kept pay low for those in
the bottom tier, although many states are now raising pay floors.
·
Migration within the U.S. is changing the
employment mix, with better-skilled professionals moving to cities to earn
more. “Since the early 1980s, those with college and graduate degrees have
flocked to large cities, while lesser-skilled workers have increasingly been
priced out of such places, in large part because of high and rising housing costs,”
the authors write.
In 2017, according to the
latest U.S. Census migration data, the Golden State lost a net 86,890 residents
without bachelor’s degrees, and just 4,443 with four-year degrees. It gained
11,653 people with graduate degrees.
OPEN BORDERS: IT’S ALL ABOUT KEEPING WAGES
DEPRESSED!
"In the decade following the
financial crisis of 2007-2008, the capitalist class has delivered powerful
blows to the social position of the working class. As a result, the working
class in the US, the world’s “richest country,” faces levels of economic
hardship not seen since the 1930s."
"Inequality has reached unprecedented
levels: the wealth of America’s three richest people now equals the net
worth of the poorest half of the US population."
PELOSI,
FEINSTEIN, KAMALA HARRIS AND GAVIN NEWOMS’S MEXIFORNIA
Report:
California’s Middle-Class Wages Rise by 1 Percent in 40 Years
Justin
Sullivan/Getty Images
3 Sep 2019172
6:24
Middle-class wages in
progressive California have risen by 1 percent in the last 40 years, says a
study by the establishment California Budget and Policy Center.
“Earnings for California’s
workers at the low end and middle of the wage scale have generally declined or
stagnated for decades,” says the report, titled “California’s Workers Are
Increasingly Locked Out of the State’s Prosperity.” The report continued:
In
2018, the median hourly earnings for workers ages 25 to 64 was $21.79, just 1%
higher than in 1979, after adjusting for inflation ($21.50, in 2018 dollars)
(Figure 1). Inflation-adjusted hourly earnings for low-wage workers, those at the
10th percentile, increased only slightly more, by 4%, from $10.71 in 1979
to $11.12 in 2018.
The report admits that the
state’s progressive economy is delivering more to investors and less to
wage-earners. “Since 2001, the share of state private-sector [annual new
income] that has gone to worker compensation has fallen by 5.6 percentage
points — from 52.9% to 47.3%.”
In 2016, California’s Gross
Domestic Product was $2.6 trillion, so the 5.6 percent drop shifted $146
billion away from wages. That is roughly $3,625 per person in 2016.
The report notes that wages
finally exceeded 1979 levels around 2017, and it splits the credit between the
Democrats’ minimum-wage boosts and President Donald Trump’s go-go economy.
The 40 years of flat wages are
partly hidden by a wave of new products and services. They include almost-free
entertainment and information on the Internet, cheap imported coffee in
supermarkets, and reliable, low-pollution autos in garages.
But the impact of California’s
flat wages is made worse by California’s rising housing costs, the report says,
even though it also ignores the rent-spiking impact of the establishment’s
pro-immigration policies:
In just the last decade
alone, the increase in the typical household’s rent far outpaced the rise in the
typical full-time worker’s annual earnings, suggesting that working families
and individuals are finding it increasingly difficult to make ends
meet. In fact, the basic cost of living in many parts of the state is more
than many single individuals or families can expect to earn, even if all adults
are working full-time.
…
Specifically, inflation-adjusted
median household rent rose by 16% between 2006 and 2017, while
inflation-adjusted median annual earnings for individuals working at least 35
hours per week and 50 weeks per year rose by just 2%, according to a Budget
Center analysis of US Census Bureau, American Community Survey data.
The wage and housing problems are made worse —
especially for families — by the loss of
employment benefits as companies and investors spike stock prices by cutting
costs. The report says:
Many workers are being paid
little more today than workers were in 1979 even as worker productivity has
risen. Fewer employees have access to retirement plans sponsored by their
employers, leaving individual workers on their own to stretch limited dollars
and resources to plan how they’ll spend their later years affording the high
cost of living and health care in California. And as union representation has
declined, most workers today cannot negotiate collectively for better working
conditions, higher pay, and benefits, such as retirement and health care, like
their parents and grandparents did. On top of all this, workers who take on
contingent and independent work (often referred to as “gig work”), which in
many cases appears to be motivated by the need to supplement their primary job
or fill gaps in their employment, are rarely granted the same rights and legal
protections as traditional employees.
The center’s report tries to
blame the four-decade stretch of flat wages on the declining clout of unions.
But unions’ decline was impacted by the bipartisan elites’ policy of
mass-migration and imposed diversity.
In
2018, Breitbart reported how Progressives for
Immigration Reform interviewed Blaine Taylor, a union carpenter, about the
economic impact of migration:
TAYLOR: If I hired a framer to do
a small addition [in 1988], his wage would have been $45 an hour. That was
the minimum for a framing contractor, a good carpenter. For a helper, it was
about $25 an hour, for a master who could run a complete job, it was about $45
an hour. That was the going wage for plumbers as well. His helpers typically
got $25 an hour.
…
Now, the average wage in Los
Angeles for construction workers is less than $11 an hour. They can’t go lower
than the minimum wage. And much of that, if they’re not being paid by the hour
at less than $11 an hour, they’re being paid per piece — per piece of plywood
that’s installed, per piece of drywall that’s installed. Now, the subcontractor
can circumvent paying them as an hourly wage and are now being paid by 1099,
which means that no taxes are being taken out. [Emphasis added]
Diversity
also damaged the unions by shredding California’s civic solidarity. In 2007,
the progressive Southern Poverty Law Center posted a report with the title
“Latino Gang Members in Southern California are Terrorizing and Killing
Blacks.” In the same year, an op-ed in the Los Angeles Times described another murder by Latino
gangs as “a manifestation of an increasingly common trend: Latino ethnic
cleansing of African Americans from multiracial neighborhoods.”
The center’s board members
include the executive director of the state’s SEIU union, a professor from the
Goldman School of Public Policy at the University of California, Berkeley, and
the research director at the “Program for Environmental and Regional Equity” at
the University of Southern California, Los Angeles.
Outside
California, President Donald Trump’s low-immigration policies are pressuring
employers to raise Americans’ wages in a hot economy. The Wall Street Journal reported
Overall, median weekly earnings
rose 5% from the fourth quarter of 2017 to the same quarter in 2018, according
to the Bureau of Labor Statistics. For workers between the ages of 25 and 34,
that increase was 7.6%.
.
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Free
Trader Paul Krugman Admits Failure of Globalization for American Workers:
‘Major Mistake’
Jae C. Hong/Associated Press
13 Oct
2019780
3:21
Economist
Paul Krugman, the longtime defender of global free trade and a member of the
failed “Never Trump” movement, now admits that globalization has failed
American workers.
In a column for Bloomberg
Krugman writes:
In the past few years, however,
worries about globalization have shot back to the top of the agenda , partly due to new research and partly due to the political
shocks of Brexit and U.S. President Donald Trump. And as one of the
people who helped shape the 1990s consensus — that the contribution of rising
trade to rising inequality was real but modest — it seems appropriate for me to
ask now what we missed . [Emphasis added]
…
The pro-globalization consensus of
the 1990s , which concluded that trade contributed little
to rising inequality, relied on models that asked how the growth of
trade had affected the incomes of broad classes of workers, such as those who
didn’t go to college . It’s possible, and probably even correct, to think of
these models as accurate in the long run. Consensus economists didn’t
turn much to analytic methods that focus on workers in particular industries
and communities , which would have given a better picture of short-run
trends. This was, I now believe, a major mistake — one in which I
shared a hand . [Emphasis added]
Krugman, though, writes that he and
his fellow free trade economists “had no way to know” that globalization of the
American economy or a surge in trade deficits “were going to happen,” though
the anti-globalization movement had warned for years of the harmful impact free
trade would have on U.S. workers — including Donald Trump.
In an interview with SiriusXM
Patriot’s Breitbart News
Tonight Alan Tonelson said that
Krugman’s acknowledging that he and the free trade economic consensus has been
wrong is “better later than never,” but “the damage has already been done.”
LISTEN :
“There’s been an even more
startling, in fact jaw-dropping, development on that front. Paul Krugman, the
famous Never Trumper, the famous pro-free trade economist, the Nobel Prize
winner just published an article … saying that for the past 20 years, he and
his other globalist, free trade economist friends have been substantially wrong
about the effect of globalization, particularly more trade with low income, low
wage countries like China,” Tonelson said.
“They’ve been substantially wrong
about its effects on the American economy and American workers in particular,”
Tonelson said.
Meanwhile, decades of free trade
have spurred mass layoffs, unemployment, and offshoring of high-paying American
jobs while surging trade deficits. Since China entered the World Trade
Organization (WTO), the U.S. trade deficit with China has eliminated at least 3.5
million American jobs from the American economy. Millions of American workers
in all 50 states have been displaced from their
jobs, which have been lost due to U.S.-China trade relations.
John
Binder is a reporter for Breitbart News. Follow him on Twitter at @JxhnBinder .
Report:
Immigration Encourages Job Discrimination Against Americans
Dave
Einsel/Getty
29 Oct 2019118
9:50
Mass migration encourages mass discrimination against Americans,
especially black employees, according to federal data unearthed by the Center
for Immigration Studies.
“You really have to be out of touch with reality to argue that
there are no negative effects of immigration on native workers,” said Jason
Richwine, a statistician who studied the issue for the Center for Immigration
Studies.
“Forty
percent of the decline in labor participation rates among black workers over
three decades was attributable to competition from illegal immigration,” labor
lawyer Peter Kirsanow said at a CIS press
event at the press club. That “comes to nearly 1 million fewer jobs for
black Americans as a result of the competition from illegal immigrants … and it
is the wage levels also,” Kirsanow told the audience on October 25.
The huge impact of this discrimination is mostly ignored by
wealthy “woke” professionals, who prefer to use discrimination claims as a
political club against conservatives. The documented discrimination is just
“the tip of the iceberg,” but left-wing critics have gone silent since Donald
Trump was elected, said CIS director Mark Krikorian,
Yet white-collar workers are also losing salaries and jobs
because of discrimination, said Kevin Lynn, founder of Progressives for
Immigration Reform:
The gains made by women and minorities in STEM fields over the
past three decades have really been reversed. For example, today on average 12
percent of women earn degrees in computer science. In 1984 it was 37 percent.
So you have to ask yourself what’s going on. Well, when the opportunities
become scant and the workplaces become hostile to women, they typically choose
other career alternatives.
….
There is a preference for hiring Indians over Americans in these
[Indian-run] consulting firms because, one, they will work longer hours. It’s a
quiescent workforce, largely because they’re here on H-1B visas. And a lot of
what goes into this is they are given the hope that their company will sponsor
them for an – a green card, and then they’ll eventually get citizenship here in
the U.S. Unfortunately for the American worker, that means that they’re
competing with someone who is willing to work for less, work for increasingly
lower benefits and other benefits that go along with their salaries, and it
just ultimately makes things a lot more difficult.
The press club event was scheduled to spotlight Richwine’s study
of discrimination lawsuits by the Equal Employment Opportunity
Commission. He summarized several of the EEOC cases, often quoting
directly from the commission’s reports:
When a warehouse in Memphis began using a new employment agency
to fill its daily work crew, the agency, quote from EEOC, “essentially replaced
the African Americans with Hispanics.” End quote. Potential workers would line
up outside the warehouse each day, but the agency would select Hispanics over
blacks even when black workers were farther ahead in line. Sometimes managers
would send potential black workers home by announcing in English that there
were no more positions. After the African Americans left, the Hispanics were
allowed to come into the warehouse and work. Again, systematic – neither
subconscious nor subtle.
Richwine described cases where Hispanic managers discriminated
against American blacks:
Perhaps the most egregious example of this comes from Prestige
Transportation Services. It would discard or refuse to accept employment
applications from non-Hispanic blacks. Quote from EEOC: “On multiple occasions
when a black person applied for employment, Prestige managers Mr. Ramirez and
Ms. Rodriguez would stand behind the applicant and rub their hand on their skin
to display their disdain for black people.” End quote. Staff meetings were
conducted in Spanish only.
The record shows that some Indian immigrants also discriminates
against blacks, he said.
At a Hampton Inn in Colorado, three non-Hispanic white
housekeepers were fired by the new general manager and replaced by Hispanics.
The owners, Falgun Patel and Mukund Patel, told the general manager that they
prefer that maids be Hispanic because in their opinion Hispanics worked harder
while American employees are lazy. The general manager allegedly told a
Hispanic employee to recruit friends for the incoming vacancies because the
owner preferred a Hispanic workforce. After three months, all of the Hampton
Inn’s non-Hispanic housekeepers were gone.
The pattern of lawsuits by Hispanics is very different, said
Richwine. Instead of losing job opportunities because of discrimination,
Latinos lose workplace protections that were once normal for Americans, he
said:
When Hispanics file suits, they are not complaining that they
are being replaced by some other group in the workforce; instead, they’re
complaining about working conditions, they complain about low pay, they
complain about dangerous situations on the job site, and they complain about
harassment. Harassment oftentimes is ethnically based, ethnic slurs and so on
directed at them. The saddest part is that when we’re talking about Hispanic
women, sexual harassment is a very pervasive problem if you believe these EEOC
lawsuits,
The examples are merely the most egregious ad straightforward
cases, he said, ensuring that they are likely many other cases of
discrimination that do not end up in court.
Deputies for President Donald Trump have partly reversed some
discrimination against blacks, for forcing wages up to record levels.
But his deputies done little to curb the white-collar
discrimination, partly because there is so much more money at stake for
high-tech firms, hospitals, and investors.
For example, the federal government rewards companies that
discriminate in favor of Indian “OPT” work-permit workers by rejecting American
graduates, Lynn said.
American companies which hire Indian graduates are not required
to pay Social Security taxes, he said, adding:
That’s about a 15 percent premium that is added to hiring
someone on the OPT program and, again, these people compete directly with our
new [American] graduates in the workplace … [where] a [U.S.] student today
might exit university with anywhere from $35 [thousand] to $85,000 in debt.
That’s a lot of money, and … they’re having their legs broken as they leave the
gate into the workplace.
Instead,
American victims of Indians’ discrimination are suing the Indians firms in
court. For example, in a 2016 lawsuit against a giant Indian software firm,
Infosys, American witnesses alleged :
Hiring Manager Instructions: an Infosys hiring manager admitted
“There does exist an element of discrimination. We are advised to hire Indians
… because they will work off the clock without murmur and they can always be
transferred across the nation without hesitation unlike [a] local workforce.”
Talent Acquisition Unit Observations: Recruiters in Talent
Acquisition observed that Indians were highly favored, and it was extremely
difficult to move non-South Asians ahead in the hiring process. Non-Indians
were regularly rejected as being “not a good fit,” – an Infosys euphemism for
“non-Indian.” This discrimination is on-going. In 2016 for example, an Infosys
manager in their Talent Acquisition Unit observed that of Infosys’ 2,900
hires in the United States, 2,200 (76%) were Indian. She observed a similar
hiring disparity in prior years.
Applicant Data Manipulation: Infosys manipulates applicant
tracking data in such a way that consideration of non-South Asians and
non-Indians is minimized, and the hiring of South Asians is maximized. For
example, recruiters have observed that non-South Asian applicants were
repeatedly deleted from Infosys’ applicant tracking system, forcing one
recruiter to keep a separate spreadsheet of applicants on his computer.
Recruiters have also observed South Asian applicants, located by Infosys’
“sourcers” in India, manually entered into the applicant tracking system
despite those individuals not having formally applied, thus streamlining the
hiring process. Individuals sourced in this way were moved “to the front of the
line” ahead of applicants in the U.S. A recruiter also observed that
applications for United States positions were regularly not reviewed, and in
2016, approximately 11,000 to 12,000 were rejected en masse.
Immigration
Numbers:
Each year, roughly four million young Americans join the
workforce after graduating from high school or a university. This total
includes about 800,000 Americans who graduate with skilled degrees in business
or health care, engineering or science, software, or statistics.
But the
federal government then imports about 1.1 million legal immigrants. It also
adds replacement workers to a resident population of more than 1.5 million
white-collar visa workers — including approximately one million H-1B workers
and about 500,000 blue-collar H-2B, H-2A, and J-1 visa workers. The
government also prints more than one
million work
permits for
new foreigners, and it rarely punishes companies for employing illegal
migrants.
This policy
of inflating the labor supply boosts economic growth and
stock values for investors . The stimulus happens
because the extra labor ensures that employers do not have to compete for
American workers by offering higher wages and better working conditions.
The federal
policy of flooding the market with cheap,
foreign white-collar graduates and blue-collar labor shifts wealth
from young employees toward older
investors. It also widens wealth gaps, reduces high-tech
investment, increases state and local tax
burdens, reduces marriage rates, and hurts
children’s schools and college educations.
The
cheap-labor economic strategy also pushes Americans away from
high-tech careers, and it sidelines millions of marginalized Americans, including
many who are now struggling with drug addictions.
The labor
policy also moves business investment and
wealth from the Heartland to the coastal cities, explodes rents and housing costs , undermines suburbia, shrivels real estate values in
the Midwest, and rewards investors for creating low-tech, labor-intensive workplaces.
But President Donald Trump’s “Hire American” policy is boosting
wages by capping immigration within a growing economy.
The Census
Bureau said September 10 that men
who work full-time and year-round got an average earnings boost of 3.4 percent
in 2018, pushing their median salaries up to $55,291. Women gained 3.3 percent
in wages, bringing their median salaries to $45,097 for full-time, year-round
work.
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