Analysis Finds California Factors Dampen Upward Mobility for Poor

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Children born to low-income parents in California have slightly higher lifetime earnings than children born to low-income parents in other states—but not because they live in California.

Researchers credit the better income mobility to the parents. In fact, these same children would have experienced even greater upward income mobility had they grown up outside of California.

These findings were released by the Legislative Analyst, using data developed by a team of researchers led by Raj Chetty of Stanford. The national study found that barely half of 30-year-olds earn more than their parents did at a similar age, a steep decline from the early 1970s when the incomes of nearly all offspring outpaced their parents.

While the news is good that low-income Californians have slightly better upward mobility prospects than their counterparts in other states, the fact that they live in California holds them back.

According to the Analyst, the geographic factors that affect income mobility include the quality of a child’s education, the strength of social networks, exposure to violent crime, and larger share of two-parent and middle-income households.

But without attributing the difference to any of these factors, the Analyst calculated that the fact of growing up in California, compared with the nation as a whole, will depress a low-income resident’s income by more than $400 a year.

Variations by county within California are enormous, unsurprising given the vast differences in economic opportunity and social conditions within the state.

A recently released California Chamber of Commerce poll buttresses these empirical findings. We found 59% of voters with children living at home agree that “My children will have a better future if they leave California.”

This belief that moving out of state will provide a better future for their children is especially strongly held in Orange County and the Central Valley.

Compared with the rest of the country, much of California is prospering. But residents in many regions of the state, especially parents, are raising warning flags. Growth and opportunity should be key touchstones for policy makers in 2017.

Loren Kaye is president of the California Foundation for Commerce and Education, a nonprofit think tank affiliated with the California Chamber of Commerce.

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Loren Kaye
About Loren Kaye
Loren Kaye was appointed president of the California Foundation for Commerce and Education in January 2006. He also is a gubernatorial appointee to the state's Little Hoover Commission, charged with evaluating the efficiency and effectiveness of state agencies and programs. Kaye served in senior policy positions for Governors Pete Wilson and George Deukmejian, including Cabinet Secretary to the Governor and Undersecretary of the California Trade and Commerce Agency. Kaye also has represented numerous private sector interests, managing issues that affect specific business sectors to promote an improved business climate or to resist further regulation or costs on business.