Posted on 09/25/2007 6:31:41 AM PDT by Lorianne
California is rapidly become a classic example of a place where the rich get richer and the poor continually get poorer.
That’s been true for a decade or more when it comes to employment, where pay for high-end jobs requiring college degrees or higher has grown rapidly, while wages for unskilled labor in fields, carwashes, restaurants and hotels have risen only slightly.
Now the real estate market is creating even more severe inequalities. Example: In one ZIP code area of southern Santa Monica, there were two foreclosures on houses during the second quarter of last year and two again for the same time period this year. Meanwhile, in another ZIP code almost 100 miles east in the Riverside County city of Moreno Valley, there were 23 foreclosures during the second quarter of last year and 296 this year. Guess where prices are still about three times higher? Statewide, foreclosures were up from about 20,000 during that time period last year to 53,000 this year.
Strikingly, property values in most neighborhoods are down this year, but they are actually up in high-end areas where home prices average more than $1 million.
So the rich are still getting richer, and the poor – even the not-so-poor and the middle class – are getting much poorer, seeing whatever equity they’ve built up over years of making house payments disappear in a price slump and then often having to abandon their homes when monthly payments on some sub-prime mortgages rise after three or five years of requiring only interest.
But that kind of inequality occurs every time there’s a real estate recession like the one in which the entire nation is mired today.
Even more serious and permanent is the widening difference between economic classes in this state, spawned by the ongoing wave of immigration from Latin America, both legal and illegal.
“By slow degrees, California has changed from a state where opportunities abounded and prosperity was more broadly shared to one with an increasing divide between the rich and the poor,” reports Jean Ross, executive director of the Sacramento-based California Budget Project, a non-partisan analysis agency. “It makes it harder for working families to succeed and to give their children a decent start in life.”
A new report from the Budget Project finds the gap between low-wage and high-wage workers has widened more in California than other parts of America.
One reason for this, the study found, is that job growth in this state has come mostly at the high end and the low end of the wage scale, while the middle ground remains largely stagnant.
What the report does not say is that these conditions are largely the result of buildups in the high technology sector and the steady stream of immigration, both legal and illegal.
High-technology jobs require education and skills, unless they are simple assembly line posts. Companies like Intel, Google, Yahoo!, Qualcomm, Cisco Systems and Oracle, which employ many thousands of workers, offer higher pay and better working conditions than normal. Fortune magazine lists all of them among the 50 best employers in America to work for. That’s partly because their highly skilled workers are in constant demand, with headhunters calling many of them almost daily. The high pay and free gourmet meals some of these firms routinely provide are ways of hanging onto their best employees.
But no one would rank any car wash, restaurant kitchen or vineyard in that category. Jobs there pay exponentially less than those in high-tech. No free meals here, either. Not even a taco is gratis.
The low-end jobs stay in that category for two reasons: There is little or no competition for workers because these positions require few skills. The immigrants who fill most of them are among the least educated to arrive in America in the last century. Especially the illegals, who undergo no screening for education, disease, criminal record or anything else, as legal immigrants must.
As a result, the Budget Project reports about two million California families with incomes below 200 percent of the federal poverty level of $13,690 per year. These families can offer their children few resources, often need children to join them and help at their jobs, and they produce a large number of high school dropouts. One result: school achievement tests show a continuing gap between Latino children and whites. All those factors mitigate against future success for the children.
The danger in all this is that extreme distance between economic classes has often been a harbinger of social unrest. It was one of the underlying causes of riots like those in Watts and other parts of Los Angeles in 1965 and 1992.
This state’s government appears utterly oblivious to the problem, but continuing to ignore it can only lead to future trouble as rage builds gradually among many millions of have-nots.
As per kalifornia, they have created their own messes.
Can't have it both ways Tom, if they've only paid interest the only equity they've built was the bubble inflating ...
I won't be breaking out my crying towel for this one
No you're not.
California is a liberal state and liberals are so much more compassionate and believe in equality.
Equality between the middle class and the poor, maybe. Until then, the rest of us are to subsidize the poor so that rich liberals don't have to pay the wages to hire them otherwise.
The only solution is for the government to set the salary for all jobs.
“school achievement test show a continuing gap between latino children and whites.”????
And that is about money?
““school achievement test show a continuing gap between latino children and whites.”????
Well, just revise the lesson plans and teach in Spanish, that should put the caucasians down a tad and level the playing field.
The left wants everything to be fair and equal don’t they?
What you are saying is completely in line with Socialism and Communism. Won’t work, never has and never will. Look, every job has a value to the company. They won’t pay more than the value of that job. People have to earn the increase in pay, not sit back and expect a company to just hand them money.
Our current legal immigration policies coupled with illegal immigration are importing poverty. We are bringing in millions of high school dropouts.
Modern liberalism can be described as the application of childish emotion to complex issues.
The writer is sad for, and the situation is “mean” to, the poooooor. Therefore, we must have a “nice” policy that will correct the problem.
IOW, California is the new Mexico.
And demand that those in that crowd...take a 50% pay cut immediately..and buy some poor people some homes.
"The low-end jobs stay in that category for two reasons: There is little or no competition for workers because these positions require few skills. The immigrants who fill most of them are among the least educated to arrive in America in the last century. Especially the illegals, who undergo no screening for education, disease, criminal record or anything else, as legal immigrants must."
He is not recommending correcting the problem by redistribution of wealth, but rather, pointing out the causes of a growing problem, mainly caused by our current immigration policies and failure to curb illegal immigration. We are importing poverty. And with the high rates of high school dropouts and unwed mothers among the Hispanic population, the social pathology is clear that the problem is going to get worse--much worse.
“and then often having to abandon”
These are two of the editorial pieces of the “report”; the use of the words “disappear” and “often”.
The first implies that when any group of people see some of the “equity they’ve built up over the years making house payments” decline in “a price slump” that that equity “disappears”. That is not true for most homeowners who in fact are not homeowners that just bought their homes a few years ago. Most homeowners have had their homes longer than the end-period of the latest housing bubble and still have values that have appreciated since they bought. Today’s market value may in some cases be lower than last year’s or even the year before, but for most homeowners it is still higher than what they paid.
The second implies that if someone has a “sub-prime” mortgage with monthly payments scheduled to “rise after three or five years” (ARMs - adjustable rate mortgage) that, in markets like the current one (many regional average selling prices either have declined or quit rising) “THEY OFTEN” have to abandon their homes.
“Often” is totally not true. Subprime mortgages represent about 20% of all mortgages and ARMs about 80% of sub-primes; or about 16% of all mortgages. Depending on the area, no less than 70%, and on average about 75% of sub-prime mortgages ARE NOT IN DEFAULT OR HEADING TO DEFAULT. The fact is that many people who had to acquire a sub-prime mortgage for reasons of their credit standing, do have the financial resources to adjust to the higher monthly payments on ARMs if the have them and the vast majority are doing so.
“Often” and “disappear” are no more than the alarmist editorializing of the “reporter”; not news.
Yes, a lot of people are missing the point.
Bill Gates actually talked about this problem earlier this past year. IIRC, Gates was advocating changing our immigration requirements to attract more highly skilled, educated immigrants who could help the US maintain a competive edge in the 21st century economy. I wonder if anybody with half a brain in Washington is listening...
Not exactly sure what it is you’re trying to say, but, um, no.
Our education system is failing us. It is no wonder that more than half of the advanced degrees in engineering and the hard sciences are awarded to foreign students. We need to stop importing the poor and undeducated from Latin America and have an immigration policy that serves the best interests of this country. We are creating a permament underclass that will be a growing source of problems.
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