Why Do So Many California Workers Feel Economically Insecure?
by Mary Severance - Public Policy Institute of California
California is an economic powerhouse, but many working Californians feel financially insecure—they struggle to pay bills, save for the future, and balance the demands of work and daily life. Why does economic security seem out of reach for so many workers, and what could be done to improve their well-being? At a virtual event last week, PPIC researchers discussed a new report that focuses on these questions.
Sean Cremin, a report coauthor, outlined the report’s key findings. “We draw on big-picture data on California’s workforce,” he said. But the report also draws from 12 focus groups convened across the state. “Our focus groups included workers who, like three-quarters of California’s labor force, are lower and middle earners—making below about $100,000 per year.”
“We were aiming to hear from people experiencing economic insecurity,” said coauthor Tess Thorman. But Thorman was struck by the similarity of the challenges facing middle-wage and low-wage workers: “To hear the same story from both income groups was a bit of a surprise.”
Workers in the focus groups were especially concerned about housing and food prices, particularly since the onset of the pandemic. As Cremin noted, “Workers making lower wages have a more difficult time adjusting to higher costs for essentials, as these make up a larger share of their spending relative to higher-wage workers.”
Indeed, higher costs force many workers to make tradeoffs. Some have to choose between working a full-time job to earn more and working part time so that they can care for children or other family members. Many have considered moving to lower-cost areas but did not want to move away from local support networks. And others described choosing between working more hours or maintaining income eligibility for safety net benefits—in particular, Medi-Cal coverage for prescription costs.
While recent inflation has heightened worker challenges, longer-term shifts in the labor market have played a major role. “Since 2000, the number of high-wage jobs in the labor market has grown by 60%, and the number of low-wage jobs has grown by 20% . . . but there has been essentially no growth in middle-wage jobs,” Cremin said.
These long-term trends, combined with recent labor market volatility and economic uncertainty, make it more challenging for lower-wage workers to improve their earnings and well-being.
Coauthor Sarah Bohn was not optimistic about the near-term economic outlook. “Inflation is tempering but remains higher than the Federal Reserve’s target of 2%—and there are questions about trade policy,” she said. “On the wage front,” she added, “when the number of job openings is not as high as it was a few years ago, it’s not an environment where employers really need to compete by increasing wages.”
Many focus group participants felt that state policymakers seeking to improve economic well-being need to better understand the experiences of lower-wage workers. As one focus group participant put it, “Until you know how hard it is to live on, like, $2,000 a month, when rent is $1,200–$1,800 and you have kids or dependents, then you can’t really conceptualize what people need.”
