Working full time and functionally broke

My hand and wallet

Millions in the Golden State are failing to keep on the right side of the growing wealth divide.

By Mark Kreidler, Capital & Main

This story is produced by the award-winning journalism nonprofit Capital & Main and co-published here with permission.

The money is gone before Norma Reyes makes it, and that is a fact of her life in California. Reyes does the math every month, a high-wire act of balancing her finances and leaning on others to get from one paycheck to the next.

For Reyes, who works in airline food service in Los Angeles, every choice is a considered one. The 51-year-old spends only on her needs, not her wants, but her bills still soar out of sight long before the next pay period arrives. Lately, she has fallen into a cycle of borrowing from friends until payday, then using most of her check to repay them.

“It has been difficult,” Reyes, a native of Mexico who came to Los Angeles as a young woman in 1990, said through an interpreter. “I am a resilient person, but sometimes it is very frustrating.”

The numbers bear out her situation. A full-time employee, Reyes makes $18.04 per hour, or about $720 a week before taxes. She pays $1,500 a month — well below market value — for an apartment in Hawthorne; $250 for utilities and internet; and $250 for gas and repairs on the 21-year-old car she cannot afford to replace. Food and clothing are a few hundred more.

She’s usually tapped out before the next check. And that is to cover the basics.

In addition to the millions who live in poverty, California is home to millions more like Reyes, who functionally live broke. Her struggle to pay for essentials like food and housing leave her with almost no chance to save, own property or pass along any generational wealth to her three children, one of whom currently lives with her.

Reyes is on the wrong side of the great divide between those with resources and those without, a divide that has been widening in the Golden State since before she moved there.

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California’s expanding income inequality is a decades-old story. While the pandemic exacerbated some of its most toxic features, the wealth gap between the richest and poorest residents of the state has been growing for more than 40 years, according to research from the Public Policy Institute of California (PPIC).

As of 2021, the most recent data available, those at the 90th percentile of income in California earned 11 times more than those at the 10th percentile — $291,000 vs. $26,000. Only New York, Louisiana and the District of Columbia have a larger income gap at those points on the earnings scale, according to Tess Thorman, a PPIC researcher.

In 1980, Californians at the 90th income percentile earned seven times more than those at the 10th. The current gap, the PPIC says, reflects 63% income growth for the high earners over those ensuing four decades. For the low wage earners, the growth over that same period is just 7%.

Those numbers portray life closer to one earnings extreme or the other — and without a doubt, California’s skyrocketing costs of housing, food and fuel have taken a disproportionate toll on those who have less in the first place and spend more of what they make on the basics.

The pandemic also left its mark. From 2016 to 2019, income inequality in the state was actually beginning to narrow, with 10th-percentile earners seeing a 23% increase in income — a long-delayed wage recovery from the Great Recession, Thorman said. But over the next couple of years, as COVID forced widespread business closures and left millions  without jobs, the PPIC found that low wage earners saw their incomes fall by 7% while high incomes grew by 6%.

“I wish we had more detailed data” to explain why, Thorman said. But a couple of factors are clear: Many of those in the higher earnings bracket not only had jobs they could do from home during lockdowns and thus didn’t sacrifice income, but they were also invested in a stock market that enjoyed a tremendous runup. California’s coffers swelled in part because of taxes collected from its richest residents, many of whom got vastly richer while those at the bottom of the earnings heap suffered.

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And then there are those like Norma Reyes. As someone who earns about $37,000 a year, Reyes is not considered part of the state’s working poor, yet she’s barely staying afloat. She is not among the 10th percentile earnings group; in fact, by the numbers, her income sits well above it. But her struggle is every day, not just some days, and the long-term outlook is for more of the same.

After 12 years at Flying Food Group, which prepares meal service for domestic and international airlines, Reyes’ hourly base pay is the minimum required under the Los Angeles World Airports’ living wage ordinance. Low wages are one of several reasons Reyes and her co-workers voted overwhelmingly to authorize a strike through their union, UNITE HERE Local 11, which is in negotiations with the company on a new contract. (Disclosure: UNITE HERE is a financial supporter of Capital & Main.)

Were it not for the kindness of a landlord who is also a friend, Reyes would be in a deeper bind. For years, she said, rent on her two-bedroom apartment stayed level at $1,200 a month, and even at its current $1,500, it is far below the average of $2,248 for a two-bedroom in Hawthorne. But increased costs in other areas, especially food and gas, have eaten through any savings she might have realized.

Reyes now pins her hopes on a raise, and said she is assuming more of a leadership role among her co-workers as they ponder a strike. “It won’t be easy with Flying Food, but it’s not impossible,” she said. “We have to fight for it. I am willing to fight.” The alternative is to disappear ever deeper into California’s massive — and still growing — wealth divide.

Copyright 2023 Capital & Main

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