Hi Genevieve--
Thanks a lot for the article. It is useful for providing information on
growing gap between rich and poor in California (and I believe in US on
general) in 90s. However, unfortunately I could not find any evidence in the
article about shrinking middle class (maybe I missed something).
The article says,
> In Los Angeles County, a recent United Way study
> discovered a shrinking middle class: nearly half the
> households in 1998 had an estimated net worth of less
> than $25,000, while 34% of households boasted a net
> worth of $100,000 and above. The study found that even
> though the poor were technically making it, they had
> lost considerable ground because of the high cost of
> living and rent.
If my understanding is correct evidence of shrinking involves at least
comparison of percentage of people belonging to middle class (I know that it
is not easy to define it) in past and now. I could not find any reference of
such comparison in the article. I'm afraid that the author might confuse
something in reporting the mentioned study.
What do you think?
Eugene
> -----Original Message-----
> From: genevieve patthey-chavez [mailto:ggpcinla@yahoo.com]
> Sent: Tuesday, January 18, 2000 9:54 PM
> To: xmca@weber.ucsd.edu
> Subject: Middle Class Growth
>
>
>
>
> Hello xmca crew & particularly Eugene.
> I'm pasting an article published in January
> 9th Los Angeles Times entitled 'California
> Income Gap Grows Amid Prosperity.' According
> to a number of folks on both sides of the
> U.S. Mexican border, the middle class has been
> shrinking rather than growing since the 80s.
> The January 9th article was the first I saw
> that provided some hard evidence to support
> that perception. Dump it now if you don't want
> to read a fairly lengthy piece! Genevieve
>
> Sunday, January 9, 2000
> Home Edition
> Section: PART A
> Page: A-1
>
> California Income Gap Grows Amid Prosperity
>
> Money: Despite boom in high-tech and other industries,
> the poor and middle class are lagging. Deepening
> inequalities worry many.
>
> By: MARK ARAX MARY CURTIUS and SORAYA SARHADDI NELSON
> TIMES STAFF WRITERS
>
>
> At the doorstep of a new century, California finds
> itself standing in a new Gilded Age, the income gap
> between rich and poor wider than at almost any time in
> history and magnified by the sudden wealth and lavish
> living of a growing elite.
> California's super rich haven't been this flush or
> freewheeling--and the poor and middle classes haven't
> languished this far behind--since the last days of the
> Roaring '20s, economists say.
> The state's ongoing economic boom, led by high-tech
> industries but also fueled by light manufacturing and
> agriculture, has concentrated even more wealth at the
> very top of the income ladder, according to a study of
> earnings by the California Policy Institute and other
> scholars. The state's poorest working families,
> meanwhile, now bring home 22% less in real dollars
> than they did in 1969, the study shows.
> "Over the last three decades, we've seen a very rapid
> rise in the income gap in California," said Deborah
> Reed, an economist with the nonpartisan institute,
> based in San Francisco. "We're back at the kind of
> income disparities we had in the 1920s and '30s."
> The reason the boom hasn't translated into higher
> incomes across the board is twofold, economists say.
> High-tech doesn't create a vast array of well-paying
> factory jobs, and it puts a premium on an educated
> work force. And California, more than other states,
> has a high concentration of uneducated immigrant
> workers.
> The growing income divide reveals itself in every
> corner of the state even though different engines are
> driving California's three regional
> economies--Southern California, the Central Valley and
> the Bay Area. In Los Angeles County, it is mostly
> whites and, to lesser degree, Asians who create and
> fill jobs in the computer and entertainment
> industries. Meanwhile, the burgeoning service
> economy--maids, nannies, cooks, gardeners, retail
> clerks--employs more and more immigrants from Mexico
> and Central America, economists say.
> In the great Central Valley, in the shadow of some of
> the nation's wealthiest farming operations, villages
> of tar paper shacks rise out of the flat earth like
> relics from the sharecropper South. In one forgotten
> corner of Tulare County, black and Filipino men and
> women live year-round in plywood shanties and old
> wooden Southern Pacific boxcars with no running water.
> Here, James Dixon sleeps on a 50-year-old mattress
> with a sack of rice for a pillow. He draws heat from a
> turn-of-the-century stove and goes to the bathroom in
> a 1940s outhouse. Weather and wood rats have chewed a
> gaping hole in his roof. To keep the ceiling from
> falling, he wedges empty Vienna sausage cans into the
> crevices as makeshift studs.
> "It's not right, what happened to my life," said
> Dixon, 96, his threadbare clothes held together with
> safety pins. "I worked all my days in the cotton
> fields and then cooking on the Union Pacific. I'm not
> happy living in this situation. It rains in my house."
> A few hours up the road, spilling out of Silicon
> Valley's dot-com economy, billionaire Larry Ellison
> has built a 22-acre medieval Japanese-style retreat at
> a cost of $40 million. His Woodside estate, designed
> by a Zen priest, includes a pond filled with purified
> drinking water. Ellison, who founded Oracle, the
> world's second-largest software company, has
> surrounded himself with an 80-foot world-class racing
> yacht, a stable of rare cars and a clutch of
> airplanes, including an Italian turbojet fighter.
> Millionaires Clad in T-Shirts, Running Shoes
> At Ferrari and Porsche dealerships, a whole new
> clientele glides through the door. It used to be that
> Ferrari of San Francisco salesman Brad Goldstone could
> spot his prime customer at a glance: a man in his 50s
> sporting Guccis and gold chains who was ready to crown
> decades of hard work with a $200,000 luxury sports car
> that screamed, "I've made it!"
> Today, Goldstone's keen eye fixes on a different
> moneybags: the twentysomething guy wearing a baseball
> cap, T-shirt, running shoes and an ear-to-ear grin.
> "They always have the same look on their faces," he
> said. "They are giddy, excited. I say: 'Let me guess.
> You just went public.' They giggle. And they don't
> care what they have to pay."
> That Third World poverty and immense wealth exist side
> by side in a state so big and manifold is hardly
> surprising. Income gaps have defined California and
> America since the early days of the railroad and oil
> magnates. Back then, unlike today, welfare and other
> government programs didn't exist as minimal safety
> nets.
> But the income gap persists even as the unemployment
> rate has dropped below 6% and California has continued
> to create more wealth in a shorter period of time than
> at any point in the past century.
> Although the economic expansion since 1995 has begun
> to slow the rate of growth in the income gap, the
> disparity between rich and poor continues to widen
> faster here than in any other state, experts say.
> For the moment, economists say, the boom masks the
> growing income gap because it has driven down
> unemployment and given many entree to the good life.
> But rich and poor are moving in such starkly opposite
> directions that signs of discontent have begun to
> surface, such as in the recent mayoral election in San
> Francisco, where debate centered on skyrocketing rents
> and an unequal distribution of wealth, polarizing the
> city.
> "A lot of my concerns have to do with what will happen
> in the next downturn," said Lynn Karoly, senior
> economist with the Rand Corp. think tank.
> It is then, economists worry, that the inequalities
> will grow even deeper. The wealthy tend to be more
> cushioned against a downturn but the working poor risk
> losing jobs and falling back on a welfare system that
> no longer provides the same safety net.
> "It is a truism going all the way back to the French
> Revolution, that when there are tremendous disparities
> in income and wealth, it creates social instability,"
> said Stanford Jacoby, a UCLA labor economist.
> >From 1993 to 1997, the incomes of California's richest
> grew at a phenomenal pace while the incomes of the
> state's working poor and middle class stagnated or
> increased just slightly, according to census and
> income tax data. The average income of the top
> 1%--$845,000--shot up 57% in that period, said Jean
> Ross, executive director of the California Budget
> Project, a research group. By contrast, the average
> income of the middle fifth of California
> taxpayers--$24,177--grew by only 1.8%. For the state's
> poorest working families, the average income in
> 1997--$13,000--reflects a 13% drop since 1989 and a
> 10% gain since 1993.
> In Los Angeles County, a recent United Way study
> discovered a shrinking middle class: nearly half the
> households in 1998 had an estimated net worth of less
> than $25,000, while 34% of households boasted a net
> worth of $100,000 and above. The study found that even
> though the poor were technically making it, they had
> lost considerable ground because of the high cost of
> living and rent. Children Growing Up in Poverty
> Maria Rios, a nurse's aide at a Pasadena retirement
> home, and her husband, Gerardo, a house painter, raise
> four young children on an income of $24,000 a year,
> hovering near the poverty line. It leaves no room for
> health insurance, clothes or savings, much less a trip
> to Disneyland. Rios, who left Mexico with a
> ninth-grade education, yearns to get her GED and start
> her own travel agency, but she's too busy treading
> water.
> "It's getting harder," she said.
> >From Kern to Merced counties, a 180-mile stretch, more
> than one-third of the children live in poverty. The
> Fresno Unified School District serves a student body
> of 79,000 that ranks as the sixth-poorest in the
> nation, behind only cities such as East St. Louis,
> Ill., and Detroit.
> Californians hitched to high-tech and other growing
> industries say the possibilities of the new millennium
> appear limitless. Those mired in low-paying service
> jobs say their lives seem tolerable only when compared
> to that of neighbors or relatives on the other side of
> the border or across the sea.
> "We live on a little more than $1,000 a month," said
> Leon Richardson, an assistant pastor and unemployed
> auto body man with four children on welfare.
> Living in Tulare County, where the jobless rate never
> drops below 12%, it's not easy finding a decent job,
> he said. "In the winter months, the bills burden us
> down. In the summer, I hustle. I haul trash out of
> someone's yard or recycle metal. Somehow, we get by."
> *
> Like a river of American venture financing, Sand Hill
> Road runs two miles between Menlo Park and the brown
> hills overlooking Stanford University. The road, known
> as the "capital of capital" and lined with the
> nondescript office buildings of the new moguls, is the
> moneymaking heart of Silicon Valley. More than $22
> billion of investment capital, the densest
> concentration in the world, sits right here.
> At 28, Joe Kraus is emblematic of all that is right
> with an economy that rewards innovation, guts and
> nerve. A onetime pizza delivery man who graduated with
> a political science degree from Stanford, Kraus
> founded his company, Excite, an Internet portal, in a
> garage with five college buddies in 1993.
> "Getting a job seemed boring. My friends and I all
> thought we were probably smarter than the people we
> would be working for," he said.
> Their parents staked them $10,000. This year they
> yielded an amazing return: a $6.7-billion merger
> between Excite and who-is-at Home. Kraus is worth more than $50
> million. By local standards, he still lives rather
> modestly. He paid more than $1 million for a
> four-bedroom Palo Alto house this year but has yet to
> furnish it. And then he bought his Ferrari, a
> Maranello model, for which he paid $250,000, more than
> sticker price to avoid a 14-month waiting list.
> Some of Silicon Valley's most successful entrepreneurs
> are immigrants from India, China and Israel who came
> here with little more than an education and an
> idea--people like Raj Singh.
> Born to an impoverished Hindu farming family in
> northern India, Singh arrived in 1991 armed with a
> negative net worth and degrees in physics and computer
> science. This year, he made $350 million off the sale
> of two high-tech start-ups he helped found.
> At 53, Singh has plunged into another start-up,
> working 18-hour days that begin when he signs on to
> his home computer at 4 a.m.
> "I like the excitement of building and bringing order
> out of chaos," he said. "Then I like to move on."
> The money is something he hasn't quite gotten used to.
> He still drives a 1996 Suzuki Sidekick and his wife,
> Swadesh, still goes to work at 7 a.m. each day to
> design computer chips. "And she cooks our dinner every
> night," he said.
> For some, the embarrassment of riches sloshing around
> the valley brings with it obligations.
> Steve Kirsch, a computer entrepreneur, has given
> millions to charity but finds it hard to get other
> dot-com moguls interested.
> "There is a race in Silicon Valley," he said. "All the
> top venture capitalists are in a race to see who can
> get to a billion dollars net worth first." Giving
> money away, his friends tell him, "means it will take
> that much longer to get there." Not Driving a Mercedes
> Is Deemed Suspicious
> For Dennis and Martha Mendoza, the Silicon Valley
> dream was moving their two daughters from a section of
> San Mateo where gunshots were fired to a pricier part
> of town. But no matter how straight and steady Martha
> Mendoza drove her beat-up Oldsmobile on the streets of
> her new neighborhood, she kept getting pulled over by
> cops. Her husband told her it was the car. Everyone
> else, he pointed out, was driving BMWs,
> Mercedes-Benzes and Audis. The Mendozas just looked
> suspicious.
> So they bought a 20-year-old, repossessed Mercedes
> sedan with a busted radiator. They paid $500 and
> scoured junkyards for parts. "I don't get stopped by
> the police anymore," Martha Mendoza said, laughing as
> she took a visitor for a ride in her now-gleaming
> white car.
> Still, the family struggles mightily to live on
> $27,000 a year. The Mendozas, natives of Honduras with
> high school-level educations, have little hope of
> hooking into the new economy and its high-paying jobs.
> She works as a part-time caregiver to an elderly,
> housebound man. He works 60 hours a week as a driver
> for a carrier company that pays no benefits. Rent on
> their two-bedroom apartment consumes nearly half their
> salaries.
> Like generations of immigrants before them, the
> Mendozas pin their dreams on their daughters,
> 10-year-old Denise and 9-year-old Dina. They make a
> point of eating out once a month, for the treat of it
> and to teach the girls social graces.
> "The girls need to know how to behave, what to order
> in a nice restaurant, because someday they are going
> to have that in their lives," she said.
> Twice a week after school, the girls receive private
> tutoring through a volunteer group. And their parents
> have signed up for a program that matches each dollar
> they save with $2 from private donors--to help their
> daughters pay for college one day.
> "My girls will go to college," Martha Mendoza said.
> *
> On the vast west side of the San Joaquin Valley, in
> the heart of the nation's most high-tech farm belt,
> rises the empire of John Harris, one of California's
> wealthiest farmers. He's known among growers as "Mr.
> E-Mail" and his Web site, www.harrisfarms.com, not
> only markets his products but tells the humble origins
> of Harris Farms.
> Harris, 56, grows cotton, almonds and tomatoes, among
> a dozen other crops, breeds and owns some of
> California's top racing horses, runs a hotel and
> restaurant and moonlights as a cattle baron. His feed
> lot along Interstate 5 near Coalinga, just up the road
> from his Mediterranean-style Harris Ranch Inn and
> Restaurant, is the biggest feedlot in the state,
> packing 100,000 beef cattle on 700 acres.
> "When you buy our beef, it's got our name on it, not
> Safeway's or Ralphs," said Harris, a UC Davis
> graduate. "We're proud of what we've built."
> In keeping with a more modest expression of wealth on
> this side of the mountain, Harris wears Wrangler jeans
> and roper boots and drives a mud-caked Ford Explorer.
> Most of his 1,500 full-time employees call him John.
> And yet he flies to and from Santa Anita racetrack in
> his $2-million Pilatus Turbo and rubs elbows with Gov.
> Gray Davis and Sen. Dianne Feinstein at political
> fund-raisers at his house and hotel. The Harris home
> along a majestic stretch of the Kings River is known
> as one of the more stunning estates in California, a
> 6,000-acre ranch with a French chateau-style house
> furnished with European antiques.
> Harris has heard the rap that big agriculture wastes
> water and exploits migrants. But he grows at least
> half of his crops using water-saving drip irrigation
> and, like a handful of farmers, maintains a
> neighborhood on his land where 100 farm laborers and
> their families live in modest houses. Private Cessnas,
> Tar Paper Shacks
> He proudly ticks off the name of workers whose 401(k)
> savings plans have amassed tens of thousands of
> dollars in the stock market boom.
> "Agriculture gets tagged with the 'unemployed farm
> worker' but most of the unemployment in this valley
> isn't a farm worker problem," he said. "People without
> a lot of skills or education choose to live here
> because it's cheaper than in Los Angeles or San
> Francisco."
> Piloting his Cessna 210 from work to home, Harris
> flies past the rural community of Teviston in southern
> Tulare County. It is not quite a town and not quite a
> squatter's village of 650 residents and four churches.
> The black sharecroppers are dying off after migrating
> here from the South in the 1940s to pick the new
> cotton of the West. Their ranks are being replaced by
> new farm worker families from Mexico, making better
> wages, on their way up the ladder.
> The one thing the old-timers and some newcomers share
> is the desperation of their housing: broken down
> trailers, old buses and tar paper shacks that would be
> condemned if located in the city. Paul Boyer, who
> helps rural communities upgrade houses and water
> lines, says conditions are among the most depressing
> he's seen in California. "It doesn't get much worse
> than Teviston," he said.
> *
> The road from immigrant student to wealthy Los Angeles
> businessman is lined with toys, at least for
> 48-year-old Charles Woo, who is part of a growing
> economy that serves the poor.
> A native of Hong Kong who graduated from UCLA with a
> master's degree in physics, Woo worked in the family's
> Chinese restaurant in Redondo Beach. Counting receipts
> at night, Woo kept thinking there had be a better way.
> All those toy helicopters and plastic figurines made
> in China needed a conduit to the five-and-dimes in Los
> Angeles. Why not act as that go-between?
> So the family took $20,000 in savings and opened a
> wholesale toy dealership downtown. From Day 1 in 1979,
> business boomed. A decade later, he and his brother
> opened Megatoys, in what was by then a full-fledged
> Toy District. Today, sales have jumped to more than
> $20 million a year.
> Named the first Asian American to head the Los Angeles
> Chamber of Commerce beginning in 2001, Woo earns more
> than $500,000 a year. After selling Halloween costumes
> and Easter baskets, he is now exploring the business
> realm of biomedical research.
> He says he doesn't much care for designer suits and
> his 1992 BMW is running just fine. He, his wife, Ying,
> and two sons live in a 5,000-square-foot home in
> Rancho Palos Verdes with a view of Santa Catalina
> Island.
> Woo, who walks with a crutch because of childhood
> polio, donates about $50,000 a year and 15 hours a
> week to a variety of causes, including helping
> disabled Asians get meaningful jobs.
> Woo has a unique vantage on the growing income gap;
> his business serves toy stores in the poorest reaches
> of the city. He said he is concerned about the
> widening gulf and its consequences for the future,
> issues he hopes to address in his new chamber role.
> But he is optimistic that if the boom continues, the
> gap can be bridged.
> At his company, for example, a secretary and warehouse
> clerk have worked their way up to top managerial and
> sales positions. Immigrants, he said, are especially
> suited to taking advantage of emerging markets, as
> long as they have the right education.
> "We take a global view, we walk in a different
> community," he said. "We don't feel uncomfortable
> because we come from a different culture."
>
> PHOTO: Joe Kraus, 28, who bought a Ferrari after
> making millions as
> a co-founder of Excite, an Internet portal, unwinds in
> employee break
> room.
> PHOTOGRAPHER: ROBERT DURELL / Los Angeles Times
> PHOTO: Diane Jones cooks French fries in trailer she
> shares with
> her husband in the dirt-poor farm-worker community of
> Teviston in Tulare
> County.
> PHOTOGRAPHER: GINA FERAZZI / Los Angeles Times
>
> Descriptors: CALIFORNIA -- ECONOMY; INCOME; WEALTHY
> PEOPLE; MIDDLE CLASS; INDIGENTS; DEMOGRAPHICS;
> STANDARD OF LIVING;
> __________________________________________________
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This archive was generated by hypermail 2b29 : Tue Feb 01 2000 - 01:02:29 PST