Sacramento Bee - January 23, 2000
Good times barely touch state's poor
By Dale Kasler and Aurelio Rojas Bee Staff Writers
First of three parts
A middle-age garment worker in Sacramento, her $6.05-an-hour wage depressed by cheap foreign labor. A machine-shop worker in South Central Los Angeles, his lack of education limiting him to $8 an hour with no health insurance. Husband and wife orange pickers in Tulare County, trapped in the fields by their inability to speak English. A clerical worker in Silicon Valley, bouncing from one low-wage job to another in a place that takes no pity on those without money.
Amid one of the loudest economic booms ever heard, these are some of the Californians whose voices have been drowned out. Their share of the great economic feast of the '90s amounts to table scraps -- a housekeeping job here, a clerical job there. Straddling the poverty line, scrimping to pay the light bill, they exist in a world that's been left far, far behind by California's new economy, the bonanza that's enriching those who work in software, biotechnology and other high-profile industries.
Ask them about good times, and they shrug their shoulders. The 11,000-point Dow and the vitality of the business climate mean nothing to them.
"My boss, he's middle American, he's got a home up in the foothills, he's always talking about the economy," said Lemuel Crowell, 57, who makes $7 an hour in a Sacramento plastics factory. "I ride a bus to work for an hour and a half every day -- I don't have time to think about the economy."
Of course, the gap between rich and poor is nothing new. But what's striking is how the state has developed into "an hourglass economy," said historian Fred Siegal, marked at one end by a boom in high-wage professions and at the other by a glut of low-paying, unskilled jobs.
Indeed, California is one of the wealthiest states in America -- and one of the poorest. Incomes are higher in California, and so is the percentage of people living in poverty, according to census data and other sources.
What's more, the California income gap is growing -- and the poor are falling further behind -- all at a time of great prosperity. Although low-income Californians have gained some ground the past couple of years, inflation-adjusted wages for the poorest 10 percent of Californians fell 5.7 percent from 1989 to 1998, according to the Washington-based Economic Policy Institute. At the same time, wages for the wealthiest 10 percent rose 4.5 percent.
"The poor today are poorer than the poor of the past," said economist Deborah Reed of the Public Policy Institute of California.
Reed and others believe California's poor face an increasingly bleak future, no matter how strong the economy remains. That's because barriers to prosperity -- the reasons why millions are being left behind -- are getting higher instead of lower:
In another era, when California manufactured cars and airplanes in great numbers, it was possible to scratch out a middle-class living by the sweat of one's brow. Now many good blue-collar jobs have been shipped abroad or retooled in a way that they command smaller paychecks. California's new manufacturing industries -- electronics and computers -- reward the white-collar workers handsomely but generally don't pay good assembly-line wages as in an auto plant.
Many Californians are being held back by geography. They may live in South Central Los Angeles, where thousands of good blue-collar jobs have bled away. Or in the Central Valley, where good jobs have always been scarce. Then there's the ultra-affluent Silicon Valley, where there are plenty of jobs but no affordable places to live for low-skilled workers, who've been shunted off to homeless shelters or distant bedroom communities such as Tracy and Los Banos.
The global economy is also sharpening the divisions between success and failure. A rising tide of inexpensive imports has left unskilled workers more vulnerable than ever to having their jobs shipped overseas, a circumstance that holds down wages of those at the bottom rung of the California workplace.
Thirty years ago, male high school graduates in California earned $395 a week less than college graduates. Now the penalty for not going to college is $475 a week. Education, more than ever, is touted by policy-makers as the great equalizer -- yet the education gap is actually growing, in part because some of the best teachers are fleeing to the affluent school districts.
Bee/Jay Mather The education gap seems to inflict much of its damage on people like Raquel Velasco, 43. Her six years of school and halting command of English have left her in a $7.20-an-hour job sorting almonds for 10 months a year at Mariani Nut Co. in Winters. She's been there 11 years. Velasco, who is divorced, and her three children are crammed into a two-room, $200-a-month apartment, where they struggle to make ends meet.
"When I don't have work, I cut the phone off," she said.
Minorities make up a disproportionate share of those being left behind, but experts are especially concerned about the millions of underclass Latinos like Velasco. The fast-growing Latino population -- which lags significantly behind other Californians in education and income -- already constitutes more than one-fourth of the state's work force. By 2025, Latinos will make up the single largest bloc of California workers.
"We need to stop looking at these folks as foreigners," said Andres Jimenez, an immigration expert at the University of California, Berkeley. "They're not going away. They're a big part of the future of California."
Only 8 percent of California Latinos have a bachelor's degree or higher, compared with 43 percent of Asians, 33 percent of whites and 24 percent of African Americans, according to the California Research Bureau. California Latinos make $6,000 a year less than other groups, on average. And, contrary to popular belief, this is not solely a product of recent immigration: The typical native-born Latino still earns considerably less than members of other groups.
Regardless of ethnicity, the poor are drawing renewed attention from policy-makers and politicians. President Clinton led business leaders on a tour of Watts and other troubled areas, and Republican presidential candidate George W. Bush speaks of compassion for the poor. California Treasurer Phil Angelides has taken to quoting the Greek philosopher Aristotle's admonition: "In the end, what holds a democracy together is the belief that everyone has a stake and everyone has a possibility of success."
No question, the economic boom has taken a bite out of poverty. Thousands have gotten off welfare -- some for the first time in years -- and entered the working world. Many new workers insist that they're leaving poverty behind for good.
"I'm going to use this job as a stepping stone," said David Seymore, 32, of Sacramento, who found a $6-an-hour job last spring with a retail-inventory company after years of unemployment, welfare and homelessness.
But Jean Ross, of the advocacy group California Budget Project, says too many of the new jobs are entry-level positions that pay poorly and provide little upward mobility. The group says nearly 19 percent of workers in the state still make less than $6.75 an hour, far less than what is needed "to achieve a modest standard of living."
Also, many of the new jobs often don't include health insurance, health care experts say. The percentage of Californians lacking health insurance actually increased in 1998, to 22.1 percent from 21.5 percent the year before, according to the latest census statistics.
Seymore, for example, sometimes takes inventory while stooped over from an old back injury that he's never been able to have treated. He doesn't have health insurance, he said.
Making ends meet has left many working poor swimming in debt, a key reason why bankruptcy filings have jumped 16 percent in California during the past two years.
Nancy Harness, an $8.15-an-hour Kmart employee in Dinuba, Tulare County, racked up a $3,000 credit card bill to pay for her daughter's wedding. Then Kmart cut her hours because business was slow.
She's sidestepped bankruptcy, barely. "I don't buy clothes right now," Harness said.
Economic problems even reach into one of the wealthiest places on Earth: Silicon Valley. There, temporary agencies generate a large share of the new jobs -- accounting for up to 40 percent of the jobs created in recent years, twice the national average.
Julian Cornejo, who assembles telephone systems, has bounced from one temp job to another during the 1990s without benefits. Last year, he was injured on a job and didn't earn a paycheck for 10 months.
Behind on his rent, in an area with the highest housing costs in the nation, he wound up in a homeless shelter with his wife in Menlo Park. He's gone back to work now, making $20 a hour, but he's still dealing with emotional scars.
"The saddest thing is that I had to send my two daughters to live with relatives in Kansas," he said. "There's no security in being a temp, and a lot of companies won't hire you full time because they want to keep costs down."
Donna Boehm, a 56-year-old San Jose widow, makes $8 to $10 an hour as a clerical worker, hired through temp agencies by some of the most prosperous high-tech companies in Silicon Valley.
Although she's lucky in one respect -- her $900-a-month apartment is a steal by San Jose standards -- life is generally a struggle.
"I'm thankful my health hasn't failed because I don't have health insurance. When I get a bad cold or some other illness I have to go to Doctors on Duty (a pay-for-service clinic for the poor and uninsured), where I pay cash.
"Poor people can't afford to live here any more."
Geography works against the working poor in other ways. Factories have largely moved out to the suburbs, other states or other countries -- leaving behind urban decay.
"There used to be a Firestone tire plant in south Los Angeles, a General Motors assembly plant nearby, steel fabrication facilities, big warehouses and so on," said economist Jack Kyser of the Los Angeles County Economic Development Corp.
"You had an area that had good-quality jobs, and they went away, beginning in the late 1950s."
The demise of the aerospace industry in Southern California, the state's largest population center, crippled inner-city and minority-owned parts manufacturers.
"The decline in aerospace has hurt the minority-owned businesses in Los Angeles," said Barry Braszile,the African American owner of a struggling Los Angeles aluminum firm that works for aerospace. "Many of them have just disappeared."
In response, policy-makers are trying to direct investment to inner cities and other depressed communities. "Emerging markets," they're now called -- a phrase designed to encourage investment.
But investment dollars will only go so far. In order to truly spread the wealth, something must be done to surmount the technological wall that is increasingly dividing California's haves and have-nots.
Tony Roberts, who directs the welfare-to-work program in economically troubled Yuba County, put it this way:
"We're in the computer era, but our work force can't turn this on," he said, tapping his desktop PC. "Technology's blowing right by them."
Technological shifts have reduced the wages of many blue-collar occupations.
An example is a 150-employee bicycle-parts factory opening near Redding.
Twenty years ago, the parts would have been made by highly paid artisans. At the Redding plant, the parts will roll off a highly automated assembly line operated by workers who'll make as little as $8 an hour, said Chris King, president of the company.
"It's not like being a craftsman," said King, president of Chris King Precision Components. "All they're really required to do is push a button on the machine and measure the parts as they come off."
Technology is threatening to delete many unskilled jobs altogether. One vulnerable occupation is electronics and computer assembly, which has provided low-wage work for thousands of unskilled and semi-skilled Californians, particularly immigrants.
In Sacramento, Diamond Flower Electric Instrument Co., maker of touch-screen computer equipment, functions as a kind of high-tech Ellis Island, providing low-paid work experience to scores of Asian immigrants.
Maisee Lee, 38, earns only $6.25 a hour, but the work supports an unemployed husband and six children.
"I build computers," she said proudly. "It's not very hard."
But even in this industry, entry-level jobs are disappearing.
"Ten years ago if you could turn a screwdriver, you could build a PC," said Kent Greenough,a Diamond Flower vice president. "Today you have to be versed in assembly techniques, understand the components as they come in, understand the anti-static techniques."
Increased international trade just exacerbates the problem. Unskilled workers generally produce goods and services that the United States is importing more and more, said economist Ted Gibson of the state Department of Finance.
Take the Anchor Group, a garment factory just north of downtown Sacramento.
Hardly a sweatshop, the company provides health insurance and a clean, well-lighted workplace. It has 325 workers -- and a waiting list of 400 job applicants.
Yet the global marketplace keeps wages of many workers to $7 an hour or less. Fong Chinn, 48,makes $6.05 an hour, plus benefits, sewing sweat shirts and T-shirts for the Gap and other customers.
"I'd love to see everyone making $10 an hour and still be making a profit, but that's not an economic reality," said her boss, Steven Ames. "For a person in her skill set, it's a buck an hour in Mexico, and far less overseas."
Certainly some folks at the bottom of the economic ladder have problems that transcend economics: drugs, alcohol, domestic violence. Lemuel Crowell, for instance, found his job at Plastic Machining in south Sacramento last September after a rocky two-year stretch that included unemployment, General Assistance and a prison term. Now, while he tries to save up for a used car, he endures a 90-minute bus and light-rail commute to work from his apartment in Del Paso Heights.
"At this point in my life, the economy's important, but more important is that ... I get myself back together again, get me back to where I belong," he said. "Because where I belong is not $7 an hour."
For many people, the answer is education.
In South Central Los Angeles, 33-year-old Luis Carillo supports a wife and four children on the $8 an hour he makes at West Coast Metal Finishing. Rent chews up $550 out of his monthly take-home pay of $1,000. He rides the bus or his bike to work. There's no health insurance.
But given his skill level -- he stopped school after sixth grade -- Carillo isn't complaining.
"We get by, barely," said Carillo, who has worked at West Coast for five years. "Sure, I wish I made more. But they treat me the best they can, I guess. At least I have a job."
Sacramentan Leroy Dailey was making $11 an hour as a quality-assurance inspector at Packard Bell NEC Inc. When he was laid off about a year ago, his lack of education caught up with him.
He's gone a year without work, living off his wife's salary as a teacher's assistant. Recently he visited a Sacramento County job-service site, scrutinizing job postings offering $7- and $8-an-hour jobs.
"When you don't have a lot of education," he said, "you have to work your way up. You don't like it, but you'll go do it, and you'll do it with a smile."
Many experts believe that most of today's adults pretty much have gone about as far as they can on the educational ladder. Among immigrants, there's barely an opportunity to learn English. In rural California, they forsake school and head right to the fields.
In agriculture, "you can go right to work," said Nelida Valencia, who picks olives in Ivanhoe, Tulare County. "You don't have to give them a high school diploma or a resume."
The hope is with the next generation.
Francisco and VianeyTorres are fruit pickers in Tulare County citrus country. It's pretty much all they've done their adult lives; between them they earn perhaps $22,000 a year.
They'd like to get better jobs, but believe it's pretty much impossible, given their lack of formal education and inability to speak English. One of their children is in college, and they will insist the others get there as well.
"We're going to have them go to a university," Vianey Torres said. "We're going to have them do better for themselves."