SAN FRANCISCO – (INT) - Income inequality is greater than before the Great Recession.

Top pre-tax cash incomes in California are 40 percent higher than they were in 1980, while middle incomes are only 5 percent higher. Low incomes are 19 percent lower.

The Public Policy Institute of California (PPIC) found the gap between high-income Californians and those with low incomes is twice as large as it was in 1980.

Income inequality has been growing for decades—a trend that has been reinforced by economic cycles in the nation as a whole and is more pronounced in California. Top incomes have fallen in recessions over the past three decades but have typically rebounded fairly quickly and gained additional ground in the long term. Middle incomes improved in the late 1990s and early 2000s, but these gains disappeared during the recent Great Recession. Low incomes declined the most during each of the major recessions since 1980.

Across the state, incomes vary substantially, and so does income inequality. At the extreme, Bay Area incomes at the bottom, middle, and top are roughly twice that of incomes in the Central Valley and Sierra region. In general, coastal areas tend toward higher incomes at all levels, while inland and northern counties typically have lower incomes.

Income distribution trends have differed across California regions during and after the Great Recession. Inland areas saw the largest increases in inequality between 2007 and 2014, while coastal regions have seen a reduction in inequality in the recovery from the recession.

The report comes at a time when inequality and the role of public policy in addressing it is a major focus of public debate. It finds that the safety net—tax credits as well as nutrition, cash, and housing assistance—plays a significant role in lessening inequality in California. When these local, state, and federal programs are factored in, the gap between the top and bottom incomes shrinks by 40 percent.

Story Date: May 25, 2016