The Squeeze on the Middle Class Is a Chokehold on the State : Without new strategies for the productive, California will lose an economic base that it vitally needs

An article of faith that every generation will spawn another whose lives will be better, richer and more comfortable has been the very foundation of middle America. Hard work, education and home ownership have catapulted millions into the middle class. Nowhere was this more evident than in California, particularly in the 1950s and 1960s when its housing, roads and public education were among America’s best.

If only the children born of that generation could be as fortunate as their parents. A crisis in affordable housing, traffic and education in California is shattering the American dream and thinning the ranks of the state’s middle class. Mid-income families are finding it more difficult every day to cope with new economic realities of California living. It’s a rude awakening: Some once-comfortable Californians are discovering that they are barely eking out their coveted middle-class lifestyle. The result: A growing number of these disenfranchised people are packing up their kids, dogs and belongings in search of a cheaper and better life outside California.

A squeeze on the middle class will be a chokehold on the state. Already voters--mostly middle-income--are rejecting most tax measures unless the money would be spent on things meaningful to their lives, such as transportation and education. Many of their needs--child care, family leave, health care, flexible working schedules--require new legislative and fiscal measures. Middle-income voters understandably feel alienated and detached from a state government that has irresponsibly shunned these pressing needs. They deserve a responsive government that acts.

LOSING GROUND:

For all the seeming glitter of the last two decades, gains in real income were illusive during the 1970s and 1980s for most Americans. Californians fared far worse because astronomical housing costs extracted a disproportionate share of their income.

Baby-boomers and their children are not living better than their parents, either in real economic terms or in expectations. Compensation per worker in California--wages and benefits adjusted for inflation--declined 0.4% a year between 1969 and 1982. It rose a scant 0.9% annually in the 1982-90 period, according to the California Department of Commerce.

The standard of living edged up only because more people went to work. Dual-income families became a necessity to make ends meet. The enlarged work force in the 1970s and global competition in manufacturing during the 1980s helped to keep wages down. Meanwhile, other expenses-- medical care, college, a car, auto insurance--kept rising.

To remain competitive, California shifted employment to trade and services. Between 1982 and 1990, California manufacturing added 255,000 jobs, while the trade and service sector added nearly 2 million jobs. But those job gains came either on the low-wage, low-skill end or on the other extreme, the upper end. The bulges in new employment occurred in jobs that paid $5,000 to $15,000 a year or $40,000 to $50,000 a year. These brackets grew two to three times faster than jobs paying $25,000 to $30,000 a year. Moonlighting has become a way of life for many mid-income families.

PAYING FOR HOUSING:

Housing costs have outpaced income gains for nearly everyone. No other item--gasoline, hamburgers, breakfast cereals, cars or clothing--is more out of line with the national average than California’s housing costs. The median price of a home in California is $204,090, double the $101,900 national average, according to the California Assn. of Realtors.

In California, with a minimum qualifying annual income of $63,685, only 21% of households can even afford to buy a home. That is particularly distressing when 49% of U.S. households can afford to purchase a home and need only a minimum annual income of $31,797 to qualify. Little wonder that California has 18 of the 25 least affordable housing markets in the United States. San Francisco, Los Angeles-Long Beach, San Jose and Anaheim-Santa Ana are among the most expensive.

But the latest news is even worse. Even Californians who own homes are seeing their assets decline. Equity in home investments is eroding with the recession. Prices in many areas are down in the current soft housing market, so many home sellers are finding their properties priced for less than what they paid for them. Others are seeking property tax reassessments to cut their housing costs.

The crisis in affordability will cost California jobs and people. Bringing back affordable housing means abandoning old ideas and laws about density, multiple housing and zoning. New designs, lot configurations and aesthetic considerations could bring about novel land uses that are more efficient, liveable and less expensive.

IMPROVING TRANSIT:

Ever in search of affordable housing, Californians are settling in far-flung suburbs where homes are plentiful but jobs aren’t. In Southern California, for example, an increasing number of commuters are living in Riverside, San Bernardino and Ventura counties but working in Orange or Los Angeles counties. That typically means high-stress auto commuting.

Even for those fortunate enough to live close to their place of employment, the commute is no joy ride. The 1991 State of the Commute Report showed the distance of the average commute has stayed constant at about 16 miles but commuting time is actually longer because more vehicles are on the roads. As a result, these commuters spend an average of more than one hour each day on freeways and 65% consider their commute worse than a year ago.

Interest in transportation alternatives has grown. Southern California voters endorsed a sales tax increase last November to fund a regional mass transit system, to eventually stretch over a six-county area and include the light-rail Blue Line, which runs from Long Beach to downtown Los Angeles.

Similar new train and trolley systems are being developed in Sacramento and San Jose, but more mass transit lines are necessary. There must be more express buses to help prevent gridlock, and companies must promote ride sharing and work schedule alternatives.

ENHANCING LIFE’S QUALITY:

Because the fastest-growing communities are dependent on commuting, it’s time to rethink traditional ways of working in California. Reducing commuting time would cut vehicle usage and freeway congestion, improve air quality and reduce stress.

California’s first prototype telecommuting facilities are opening this week in Ontario and Apple Valley. A public/private partnership of public agencies, government and corporations has established the two satellite work sites, where employees of selected companies who live in the areas can do their usual work but avoid commuting headaches.

Other innovative work policies--family leave, day care, flextime and job sharing--would help improve the lot of the middle class, especially dual-income households with children.

SAVING PUBLIC SCHOOLS:

Educating those children is another major headache and expense for many mid-income families, especially those who are using private schools. Though it’s an investment in a child’s future, the cost of private schooling detracts from a family’s standard of living.

The fact that California, with an economy equivalent to the world’s sixth-largest national economy, cannot provide quality public education is shameful. The state spent $4,460 for each of the 4.7 million students in public schools, from kindergarten to 12th grade, in 1989-90. That was $492 per student less than the national average. California ranked 31st in state spending on education. Its per-pupil expenditure was $3,979 less than top-ranked New Jersey’s and $958 behind 13th-ranked Vermont’s.

Meanwhile, college costs more than ever. A year at a University of California campus runs about $11,000. But many students are taking longer to graduate because of a shortage of classes and teachers caused by budget cutbacks. Quality education is crucial to having skilled and literate workers who will attract high-value jobs and industries.

California’s greatest asset is its people. Enhancing the interests of the middle class will enrich California. Without a thriving and growing middle class, the gap will widen between the rich and poor. California will be a state of haves and have-nots. The besieged middle class deserves a full range of policy and employment initiatives that will bolster their well-being. But this will require unusually bold leadership by the governor, state legislators, state agencies and business.

Once, ragged bands of Depression and Dust Bowl refugees from the Midwest crossed America. They weren’t headed east. They streamed into California, tens of thousands of them, in search of better lives. The Golden State attracted millions of people from all parts of the United States and the world. For many, the American dream materialized here. In a sense we are all children of those dreamers. We owe it to their memory to reawaken the California dream.