Middle class disappearing as wealth gap grows in California

Kristen Tate:

California made major news this month, surpassing Britain and reclaiming a valuable economic marker as the fifth largest economy in the world. Its post-recession growth is accelerating under President Trump’s administration and the state even turned in a modest surplus.

However, the state remains one of the most unequal in the nation — one that has both billions of dollars in Silicon Valley and rampant homelessness. The Golden State’s efforts to eliminate poverty instead accentuates it, and its tax system inadvertently aids those who are already wealthy. With the middle class leaving in droves, California’s society represents a neo-feudal mix of robber barons and poor. It’s an unsustainable mixture.

California has a gross domestic product of more than $2.7 trillion. This represents about 13.9 percent of the national U.S. economy. The topline numbers are a bit misleading, as the state represents a similar 12.1 percent of the national population.

California represented the world’s fifth largest economy before the recession, falling to 10th largest in 2012 while growing at an anemic 0.1 percent per year. The state has been fortunate to be the center of the tech and internet sectors, which represent almost 10 percent of the total. Part of the growth was due to a rapidly expanding real estate sector, which heavily benefits wealthy residents.

With the mega-rich and upper class driving the state’s economy, California is unique in its ability to leave the rest of the population behind. After factoring for costs of living, California is the poorest state in the union. An average of 13.9 percent of Americans were below the poverty line in the Census Bureau’s Supplemental Poverty Measure — California was at 19 percent, well over Alabama’s 14 percent. The supplemental measure not only factors in housing costs but families' well-being after programs like food stamps and housing assistance. Altogether, the state government has made life for poor and middle class Californians nearly unbearable.

How? California renters pay an average of $1,447 per month, compared to the $1,012 national average. In 2015 more than 40 percent of Californians spent over 30 percent of their income on housing. Today, 29 percent of them spend over half their earnings on housing. The median home value, at $529,000, is more than double the national median of $239,800. Residents who can afford rent or a mortgage are on the hook for electricity rates — burdened by green initiatives and over-regulation — that grew 500 percent faster than the national average from 2011 to 2017.

NIMBY, or “Not in My Backyard,” development and construction restrictions mean that California cities are much more expensive for the poor, with Los Angeles having the highest proportion of income going towards rent in the nation. The state and its cities use environmental and zoning laws to restrict housing, which often disallows large-scale development of apartments. The result? Less access for middle class residents.

Fewer than 40 percent of nonwhite and non-Asian students meet the state's educational standards with a staggering percentage of education spending going towards administration instead of the classroom. From 2011-2016 the state increased spending on administration over double what it spent on teacher pay.
...

There is more.

It is easy to understand why the middle class is fleeing.  They can find a nicer home for half as much money in states like Texas.  The state has also failed to maintain its infrastructure while adding liberal programs such as health care for illegal aliens.  I have seen stories of teachers living in their cars and showering at the gym.  Much of the housing stock that is in the state is old and often requires costly renovations.