NCPA - National Center for Policy Analysis

California's Boom Masks State's Uneven Recovery

August 20, 2012

California added more jobs faster than any other state in the country this past year. The Golden State is rebounding, but for a broad swath of residents, it is a lot less golden and is likely to stay that way, says the Wall Street Journal.

  • California's economy has experienced a boom with a $2 trillion annual output, which is bigger than all but nine countries.
  • Yet, California has a 10.7 percent unemployment rate -- higher than all but two states in the country.
  • Furthermore, there is a growing income disparity, with households increasingly reporting incomes of under $35,000 and over $100,000.
  • The median family income has fallen by 11 percent between 2007 and 2010, compared to 6 percent nationally.

With a state as large as California, it is understandable how different regions are benefitting from the state's economic recovery while some do not. Areas like Santa Clara, where Silicon Valley is located, are among the places that have accrued a lot of wealth, but the rest of California continues to suffer from a sluggish recovery.

  • California's budget for the latest fiscal year cut spending by $8 billion.
  • The cost to attend the University of California or California State University has more than tripled in the past decade.
  • In Los Angeles, 13 percent of adults have less than a ninth grade education and the highest share of poorly educated workers among the country's largest metropolitan areas.

The problem rests in the fact that a lot of support jobs that sustained the middle class are now being moved to other parts of the country or overseas. The spending cuts disproportionately affect lower-income families because of the slashes to education and job training. Funding priorities have shifted to ensure that places where hot tech jobs are located continue to get funding because it represents the wealth of California.

Source: Scott Thurm and Pui-Wing Tam, "California's Boom Masks State's Uneven Recovery," Wall Street Journal, August 15, 2012.


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