Measured by gross domestic product, California has the sixth largest economy in the world. And, with continued growth, it could overtake fifth-place United Kingdom this year. In 2015, L.A. Weekly did some cocktail-napkin math and determined that if the Golden State were a country, it would have more billionaires than any nation besides the United States itself and China. Residential real estate in Greater Los Angeles is worth $2.5 trillion, more than any other big American metropolis, according to recent findings by listings site Zillow.
Yet people continue to struggle in L.A., which has seen homelessness rise 23 percent compared with 2016. Median rents are so high that locals have to be officially, legitimately rich to get into a typical two-bedroom apartment here. In recent years, the U.S. Census Bureau has determined that as many as one in four Californians are poor according to supplementary standards that include cost of living. While those figures have improved since 2013, a new report suggests that things are worse than they appear for the Golden State's massive working class.
The “2017 Prosperity Now Scorecard,” which looks at U.S. Census Bureau and other economic data, concluded this week that nearly 40 percent of California households are “liquid asset–poor, meaning they have so little savings that they could not live at the poverty level for just three months if they lose a job or suffer another significant income loss,” according to a summary.
The report's findings are sobering. One in five jobs in California is low-wage. Households of color are nearly twice as likely as white households to exist in a state of poverty. While a majority of white Californians households live in owned homes, only about 44 percent of households of color do. Households of color have net worth of 14 cents on the white dollar.
“A startling 60.7 percent of Latino households and 56.7 percent of black households have virtually no savings and are considered liquid asset–poor, compared to 28.2 percent of white households,” according to the summary. Latinos are now the largest racial or ethnic group in the Golden State.
“In California we see that white household median net worth is $240,000 for whites and $34,000 for blacks,” says Solana Rice, director of state and local policy for the organization behind the report, Prosperity Now.
The economic prospects of Californians have actually improved since the nonprofit began measuring them in 2012, when California ranked 42nd in the nation in financial prosperity, she says. This year, the Golden State ranked 26th, thanks in part to a growing, post-recession economy and improving unemployment. “The economy has been growing, and GDP has outpaced many other states,” Rice says.
However, California ranked second to last in housing affordability. Hawaii took last place among states. And wealth disparity here remains huge, particularly between whites and minorities (specifically African-Americans and Latinos), according to the report. “Households of color are bearing the brunt of the lagging tail end of the economic recession,” Rice says.
She says U.S. Census Bureau data on poverty in California often doesn't tell the whole story. Prosperity Now looked at credit, debt and savings and determined that even more people are on the precipice of financial collapse.
“More people are living on the edge than what typical data tells us,” Rice says.