California’s Two-Tier Economy


Imagine the blue state of California as a nation. With a populace of 39 million, is that so hard to do? With the planet’s seventh biggest economy of $2.2 trillion economy, the Golden State certainly has size on its side. That matters. But wait. There’s more.

“Nearly six years into the recovery from the Great Recession,” writes Foon Rhee, a Sacramento Bee editor, “it’s becoming painfully clear that California has two economies – the booming big-city coast, especially Silicon Valley, and vast swaths of inland California.” He cites the California Business Roundtable, a self-defined “non-partisan” employer’s group. The CBR points to the gap in rates of employment between inland (high) and coastal (low) California as proof of the state’s “two-tier economy.”

To wit, in July 2014, 17 of California’s 58 counties reported rates of double-digit joblessness. Sixteen of these 17 counties are inland, mainly in the agricultural regions. There, drought conditions are worsening the lives of many on and off the job.

By contrast, in March 2015, the unemployment rate was 4% or under in two north state coastal areas, Santa Clara (Silicon Valley) and San Francisco. This is where you will find Larry Ellison, head of Oracle, the wealthiest Californian, with a net worth of $52.8 billion. Fellow tech billionaires also call this coastal area of California home, too. Mark Zuckerberg, Facebook CEO, has a net worth of $33.4 billion. Google co-founders Larry Page and Sergey Brin have net wealth of $29.7 billion and $29.2 billion, respectively.

“Half of California’s billionaires live in the Bay Area and Silicon Valley,” according to Forbes. Not to be outdone, 22 of California’s billionaires call Los Angeles home.

In brief, boom times describe the lives of California’s billionaires, all 131 of them, reports Forbes. The Golden State’s billionaires grew by 23 last year. California’s total of billionaires ranks third in the world, behind “communist” China (223) and the US (541).

Rapid California growth? You bet, but for a minority, though. They are recovering quite nicely after the Great Recession ended in mid-2009. A capitalist crisis is all things equal an opportunity for those with the deepest pockets. Why? Increased rates of unemployment drive down workers’ wage demands. This is not rocket science, folks.

Of course, there is a germ of truth in the gap between rates of employment between inland and coastal areas in California that the CBR underscores. This data, however, sidesteps the actual nature of job creation.

The trend in precarious work, e.g., low pay, intermittent hours and scant if any benefits, is alive and well in California. There is a real reason, for instance, that the rise in part-time college and university instructors, e.g., adjunct faculty, are known as “freeway flyers.” California mirrors the nation in the growth of such insecure employment.

In the meantime, California’s oligarchy contrasts starkly with the state’s rate of poverty in 2013, 23.4%, tops in the nation, according to the Census Bureau. Every fourth kid in California grows up in poverty. That is a hell of a way to treat the future generation.

I suggest that the extreme wealth at the top and misery at the bottom are two sides of the same coin in California. These two poles define the state’s two-tier economy.

Workplace militancy, as we see in the Fight for $15 an hour movement of fast food and retail workers, can change this political equation. So can progressive public policy, connected to militant workers’ demands, improve the lives of the poor and working classes in California.

Business groups such as the California Chamber of Commerce oppose such political measures, calling them “job killers.” This is one strategy, and quite successful, to ensure that the rich, led by California’s billionaires, get richer.

Seth Sandronsky is a Sacramento journalist and member of the freelancers unit of the Pacific Media Workers Guild. Email

From The Progressive Populist, June 1, 2015

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