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RB 1211SBRB

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RB 1211SBRB

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object(Timber\Post)#3742 (44) { ["ImageClass"]=> string(12) "Timber\Image" ["PostClass"]=> string(11) "Timber\Post" ["TermClass"]=> string(11) "Timber\Term" ["object_type"]=> string(4) "post" ["custom"]=> array(5) { ["_wp_attached_file"]=> string(15) "RB_1211SBRB.pdf" ["wpmf_size"]=> string(7) "1158406" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(4125) "www.ppic.org The Great Recession and Distribution of fncome in California Sarah Bohn ● Eric Schiff Summary T he effects of the Great Recession hafe been felt far and wide. bccording to official mea- sures, the recession ran from December 2007 until June 2009. During that time, California experienced record unemployment, a housing market bust, sizable budget shortfalls, and downturns across nearly all major industries in the state. These problems hafe continued well past the technical end of the recession. California’s families hafe been hit hard by the Great Recession and its aftermath. Family income has declined across the spectrum, with lower incomes seeing the steepest losses (Table 1). The gap between upper- and lower-income families is now wider than efer. bnd the number of families in the middle-income range is shrinking. Specifically, we find: • Total income for the median family in California fell more than 5 percent between 2007 and 2009 (the official recession years) and an additional 6 percent between 2009 and 2010. • bt the lowest income lefel—the 10th percentile—family income fell more than 21 per- cent in total. bt the 90th percentile, family income fell 5 percent. • bfter adjusting for California’s higher cost of lifing, just less than half—47.9 percent— of indifiduals were in families that could be considered middle income in 2010. bs these findings suggest, the Great Recession has brought us to new extremes. These include record high measures of inequality, near-record lows in the proportion of middle- Justin s ullivan/Get ty ima Ges The Great Recession and Distribution of Income in California 2 www.ppic.org income families, and record high unemployment and unemployment duration. Through 2010, past the technical end of the recession, there has been no efidence of recofery in income across the distribution.Unemployment and underemployment—working fewer hours or weeks per year—were hallmarks of the Great Recession, and California is still facing high unemployment numbers. We find that efen for working families, income fell during the Great Recession for the middle of the distribution and below. Underemployment, rather than a decline in wages, appears to hafe drifen this income drop. This suggests that policies that create jobs and promote full- time employment, rather than those that target wage rates, are more likely to be effectife in aiding the recofery of family income. We do not yet know the timing of the recofery from the Great Recession and how that recofery will be shared across the income distribution. If prefious recofery patterns repeat themselfes, it is likely that the lower half of the income distribution will recofer much more slowly than the upper half, potentially allowing already record-high income inequality to per- sist. The erosion of low and middle incomes raises concerns about the equity of economic opportunity in the state. The most important factor drifing the gap between high- and low-income workers is edu - cation. Looking ahead, California may need to find innofatife ways to promote opportunity through education, especially so that middle- and lower-income families are not left behind. Please fisit the report’s publication page to find related resources: www.ppic.org/main/publication.asp?i=965 Table 1. Family income fell in every income catefory between 200b and 2010 Family income (f) Percenbage change 2007 2008 2009 20102007–2009 (official recession) 2007–2010 (acbual peak bo brough) 10th percentile 19,10 017,000 16,200 15,000 –15 . 2–21. 5 25th percentile 34,60034,200 32,400 31,200 –6.4 –10 . 0 Median 68,40066,000 64,700 61,10 0 –5.4 –10 . 7 75th percentile 122,00012 2 , 3 0 0 115 , 6 0 0 112 , 4 0 0 –5.3–7. 9 90th percentile 18 8 , 30 018 7, 5 0 0183,700 17 9,10 0 –2. 5 – 4.9 95th percentile 246,0002 32 ,10 0235,600 226,300 –4.2 –8.0 SOURCE Authors’ calculatiofs from the Curreft bopulatiof Survey of the U.S. Cefsus Bureau. NOTES: Family ifcome is adjusted to 2010 dollars afd formalized to accouft for family size. See Techfical Appefdix A for details." } ["___content":protected]=> string(108) "

RB 1211SBRB

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During that time, California experienced record unemployment, a housing market bust, sizable budget shortfalls, and downturns across nearly all major industries in the state. These problems hafe continued well past the technical end of the recession. California’s families hafe been hit hard by the Great Recession and its aftermath. Family income has declined across the spectrum, with lower incomes seeing the steepest losses (Table 1). The gap between upper- and lower-income families is now wider than efer. bnd the number of families in the middle-income range is shrinking. Specifically, we find: • Total income for the median family in California fell more than 5 percent between 2007 and 2009 (the official recession years) and an additional 6 percent between 2009 and 2010. • bt the lowest income lefel—the 10th percentile—family income fell more than 21 per- cent in total. bt the 90th percentile, family income fell 5 percent. • bfter adjusting for California’s higher cost of lifing, just less than half—47.9 percent— of indifiduals were in families that could be considered middle income in 2010. bs these findings suggest, the Great Recession has brought us to new extremes. These include record high measures of inequality, near-record lows in the proportion of middle- Justin s ullivan/Get ty ima Ges The Great Recession and Distribution of Income in California 2 www.ppic.org income families, and record high unemployment and unemployment duration. Through 2010, past the technical end of the recession, there has been no efidence of recofery in income across the distribution.Unemployment and underemployment—working fewer hours or weeks per year—were hallmarks of the Great Recession, and California is still facing high unemployment numbers. We find that efen for working families, income fell during the Great Recession for the middle of the distribution and below. Underemployment, rather than a decline in wages, appears to hafe drifen this income drop. This suggests that policies that create jobs and promote full- time employment, rather than those that target wage rates, are more likely to be effectife in aiding the recofery of family income. We do not yet know the timing of the recofery from the Great Recession and how that recofery will be shared across the income distribution. If prefious recofery patterns repeat themselfes, it is likely that the lower half of the income distribution will recofer much more slowly than the upper half, potentially allowing already record-high income inequality to per- sist. The erosion of low and middle incomes raises concerns about the equity of economic opportunity in the state. The most important factor drifing the gap between high- and low-income workers is edu - cation. Looking ahead, California may need to find innofatife ways to promote opportunity through education, especially so that middle- and lower-income families are not left behind. Please fisit the report’s publication page to find related resources: www.ppic.org/main/publication.asp?i=965 Table 1. Family income fell in every income catefory between 200b and 2010 Family income (f) Percenbage change 2007 2008 2009 20102007–2009 (official recession) 2007–2010 (acbual peak bo brough) 10th percentile 19,10 017,000 16,200 15,000 –15 . 2–21. 5 25th percentile 34,60034,200 32,400 31,200 –6.4 –10 . 0 Median 68,40066,000 64,700 61,10 0 –5.4 –10 . 7 75th percentile 122,00012 2 , 3 0 0 115 , 6 0 0 112 , 4 0 0 –5.3–7. 9 90th percentile 18 8 , 30 018 7, 5 0 0183,700 17 9,10 0 –2. 5 – 4.9 95th percentile 246,0002 32 ,10 0235,600 226,300 –4.2 –8.0 SOURCE Authors’ calculatiofs from the Curreft bopulatiof Survey of the U.S. Cefsus Bureau. NOTES: Family ifcome is adjusted to 2010 dollars afd formalized to accouft for family size. See Techfical Appefdix A for details." 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