Forty years ago, I wrote a series of articles for the Sacramento Bee describing major economic, social, cultural and political trends coursing through California. One theme of the series, which later became a book, was the transformation of California from a state with high economic and social mobility to one of relatively rigid classes defined by ethnicity, education, incomes and wealth.
I quoted researchers, Leon Bouvier and Philip Martin, who projected California’s future as “the possible emerging of a two-tier economy with Asians and non-Hispanic whites competing for high-status positions while Hispanics and Blacks struggle to get the low-paying service jobs.”
Unfortunately their analysis turned out to be quite accurate.
California has the nation’s highest rate of poverty as defined by the Census Bureau when it includes the cost of living — 18.9% in 2023. Research by the Public Policy Institute of California revealed 31.1% of Californians were living in or near poverty in 2023; more than half that group is Latino and another 13.6% is Black. Furthermore, the poverty rate among undocumented immigrants was 29.6%. Californians without high school diplomas were almost four times more likely than college-educated Californians to be poor.
High poverty rates underscore the fact that Californians’ costs for housing, utilities, fuel and other necessities of life are among the nation’s highest. In some high-cost counties, California’s housing department considers adults making more than $100,000 a year to be poor in terms of qualifying for housing assistance. Being poor from an income standpoint has another aspect that hasn’t gotten as much attention — the even starker stratification of Californians by wealth.
There’s a logical connection. Low family income and high living costs make it more difficult to buy a home, contribute to retirement accounts and acquire generational wealth — assets that can grow and be passed down to heirs.
“Wealth creation is of particular concern in California, where high costs of living, high poverty rates, and a shortage of housing all exacerbate the challenges of building up assets,” PPIC researchers Tess Thorman and Shannon McConville write in their new study. While overall, Californians’ net worths (assets minus debts) are about 50% higher than those of other states, thanks in part to California’s high housing values, low wealth is concentrated in Latino and Black households, corresponding to lower levels of education.
“Homeownership rates and equity are low among Latino households, driven largely by their younger age profile and lower education levels,” the study found. “In contrast, Black/other homeownership rates are low even after we account for factors like age, income and education levels.
So there it is, another confirmation that California has, indeed, become a highly stratified society — the perhaps unchangeable reality of a state whose political leadership still insists that it is a model for the world.
Dan Walters’ commentary is distributed by CalMatters.
