Rural Laws: April, 2001 - Number #4

The number of welfare cases in California fell 40 percent, from 925,000 in 1995 to 555,000 in 2000. Among cash welfare recipients in 2000: 44 percent are Latino; 25 percent are white; 21 percent are African American; and 10 percent are Asians and others. About 75 percent of the adult recipients are women whose average age is 34; about 60 percent are single mothers who have not finished high school. About 40 percent of adults receiving cash assistance in 2000 were working, and only 10 percent had been sanctioned so far for failing to meet the work participation requirements.

A survey of employers in four cities including Los Angeles found that most of the employers hiring ex-welfare recipients were retail outlets who hired sales workers. Ex-recipients were most likely to work for employers located near public transit stops who had contacts with welfare agencies. The Los Angeles-area jobs obtained by ex-welfare recipients paid an average $7.83 an hour, but only 40 percent of the employers provided health benefits. The ex-recipients had high rates of absenteeism and quits, which were linked to child-care and transportation concerns.

California's Industrial Welfare Commission agreed to increase the state's minimum wage from $5.75 an hour to $6.25 an hour in January 2001 and to $6.75 in January 2002. The IWC is supposed to set a minimum wage that is "adequate to provide the necessary cost of proper living." In Oregon and Washington, the minimum wage is $6.50 an hour, the Massachusetts minimum wage rose to $6.75 in January 2001.

One reason why advocates want an increase in the minimum wage is because California's housing costs are rising. According to the California Association of Realtors (www.car.org/), only 30 percent of households could afford to purchase a median-priced home in California in June 2000, compared to 52 percent of US households. In many areas with minimum wage jobs, rents are $750 or more a month, and the median selling price of homes is $250,000 or more. A minimum wage worker earning $5.75 an hour for 40 hours a week earns $230 a week or $920 a month.

In some areas, including resort areas around Lake Tahoe, employers paying $6 to $7 an hour attract Eastern Europeans who enter the US on J-1 exchange visas that permit them to work while experiencing US culture; US youth can participate in similar exchanges in Eastern Europe. Their major complaint is the high cost of housing, which sometimes consists of mobile homes set up in resort parking lots.

Welfare. The number of US residents receiving cash welfare assistance peaked at 14.3 million in 1994, and fell to 6.6 million in 1999. The decline between 1993 and 1999 was sharpest in Wyoming and Wisconsin, down 90 percent, and slowest in a diverse group of states that include California and New York, down about one-third. As a result, California, with about one-eighth of US residents, now has about 25 percent of US welfare recipients. California and New York combined have about 20 percent of US residents and 35 percent of US welfare recipients. For more information: (http://www.acf.dhhs.gov/news/stats/caseload.htm)

Between October 1997 and September 1998, there were an average 2.6 million adults receiving cash assistance, and they were 36 percent white, 37 percent Black, and 20 percent Hispanic. In California, there were 612,000 adults on welfare, and they were 32 percent white; 20 percent Black; and 34 percent Hispanic. For more information: (www.acf.dhhs.gov/programs/opre/characteristics/fy98/sum.htm)

By citizenship, these 2.6 million adults were 88 percent US citizens and 12 percent non-US citizens throughout the US, and 73 percent US citizens and 29 percent non-US citizens in California. The 6.3 million children were 85 percent US citizens; in California, the 1.5 million children were 94 percent US citizens.

Several of the counties on the fringes of the San Francisco Bay area had extraordinarily large reductions in the number of adult welfare recipients. For example, Napa county reduced the number of adult recipients from a peak 1,500 to 500 by Fall 1999, and Sonoma county from a peak 6,400 to 2,300.

Inequality. The distribution of earnings has gotten more unequal over the past 25 years, especially in the US and the UK. The Gini coefficient, a measure of equality that varies from 0 (no inequality) to 1 (maximum inequality) rose from 40 in 1980 to 47 in 1998, while in the UK it rose from 24 to 34. In Canada, by contrast, the Gini coefficient remained at 36.

The Federal Reserve Bank of San Francisco released a report in August 2000 based on the Current Population Survey that found that income inequality rose in California in the 1990s, even as inequality was reduced in the rest of the US. A major reason for rising inequality is California's comparatively large pool of young and poorly educated workers, many of them immigrants.

In 1998, the median family of four in California had an income of $49,336, compared to $51,642 for the other 49 states- this was down four percent for California since 1989 in real terms, and up eight percent in the other 49 states. In 1998, 15.3 percent of Californians were below the poverty level in 1998, compared to 12.3 percent for the other 49 states-- the poverty line for a family of four was $16,529.

Incomes for the highest earners have continued to rise, giving California more of an hourglass-shaped income distribution then the other 49 states. California had 39 percent middle-class families in 1998, defined as those with incomes of $33,058 to $82,645, compared to 45 percent middle-class families in the 49 other states.