Pulling Apart - California Factsheet

December 16, 1997

Pulling Apart:
A State-by-State Analysis of Income Trends

CALIFORNIA

Inequality has been increasing in California for nearly two decades. This can be observed by ranking all California families with children according to their income level, dividing them into five groups (or fifths) of equal size, and calculating the average income of each fifth of families. This analysis shows by the mid-1990s:

The richest 20 percent of families with children had average incomes 14 times as large as the poorest 20 percent of families.

The richest 20 percent of families with children had average incomes over 3.2 times as large as the middle 20 percent of families.

The Long-Term Trend

Since the late 1970s, income inequality has increased in California. The long-term economic growth of the past two decades was not shared evenly among the poor, the rich, and the middle class. Instead, the top fifth of families with children fared substantially better than other income groups.

The gap between the top fifth of families and the bottom fifth of families grew by 77 percent since the 1970s. The gap between the rich and the poor increased faster than in all but 8 states. The gap between the rich and the middle class increased faster than in all but 3 states.

The average income of the poorest fifth of families fell by $3,270 between the late 1970s and the mid-1990s, from $12,300 to $9,030.

The average income of the middle fifth of families fell by $2,800 between the late 1970s and the mid-1990s, from $43,110 to $40,310.

The average income of the richest fifth of families increased by $29,700 between the late 1970s and the mid-1990s, from $98,020 to $127,720.

The Recent Trend

Over the past decade, income inequality worsened in California. The average incomes of the richest fifth of families have increased while the incomes of poor and middle class families declined.

The gap between the top fifth of families and the bottom fifth of families increased faster than in all but 4 states between the mid-1980s and the mid-1990s, while the gap between the rich and the middle class increased faster than in all but 3 states.

The average income of the poorest fifth of families decreased by $2,250 between the mid-1980s and the mid-1990s, from $11,280 to $9,030.

The average income of the middle fifth of families decreased by $3,960 between the mid-1980s and the mid-1990s, from $44,270 to $40,310.

The average income of the richest fifth of families increased by $17,090 between the mid-1980s and the mid-1990s, from $110,630 to $127,720.