Business & Real Estate

As the local economy improves, the poor are left behind

Local unemployment is down. The Sacramento economy is slowly growing. But Sacramento’s poorest residents are reaping few of the rewards.

Sacramento-area households making less than $23,000 – the bottom-earning fifth – saw their inflation-adjusted incomes plunge, on average, 17 percent from the end of the recession in 2009 to 2012, new census figures show. And that’s on top of a 10 percent income drop during the recession between 2007 and 2009.

Most other Sacramentans also saw incomes fall, though not as quickly, both during and after the recession. The exception: those at the very top. Local households making more than $193,000 – the top-earning 5 percent – saw their annual incomes rise slightly from 2009 to 2012, after adjusting for inflation, according to the census figures.

“The vast majority of Sacramentans, year by year, have seen their incomes decline – and not just by a little bit,” said Sasha Abramsky, an instructor at UC Davis and author of “The American Way of Poverty: How the Other Half Still Lives.”

As the region’s poor lose income, the gap between them and everyone else grows. The census figures show that the highest-earning 20 percent of households scooped up half the region's income last year. And the bottom 20 percent squeaked by with 3 percent.

The census numbers include income from jobs, Social Security, retirement, welfare, unemployment and rent but exclude money from the sale of stock and noncash income like food stamps.

Several aid organizations say the census figures represent a stubborn decline for the local poor: diminished wages, layoffs, high rents and lost homes.

“We are seeing 100 mothers and children a day,” said Michelle Steeb, executive director at St. John’s Shelter in Sacramento, adding that hundreds more are waiting for a spot.

John Foley, executive director of Sacramento Self-Help Housing, said his organization continues to take hundreds of phone calls each month from desperate residents – even as the foreclosure crisis has faded. “We’re seeing a lot of folks in really tight circumstances,” he said.

The downward spiral

Those new to economic despair have trouble finding their way out. Sandra Manny, 49, for example, said she lost her rental home in Woodland about a month ago. She’s disabled and receives an $841 Social Security check each month. Her rent was $641 a month.

Before, Manny said she could earn some money on the side by teaching music. Without a home, she has no place to host lessons.

At one point in her recent past, Manny lived with her mother. But today her mom stays at a rest home in Grass Valley, and Manny has no way to see her, let alone stay with her.

“I am in a mess,” she said on Christmas Eve. “I have nothing.”

Loaves & Fishes, the homeless services center near downtown helping Manny and others, served 25,000 free breakfasts through October of this year, roughly the same number served during a similar period last year and up sharply from 2011, officials there said.

The center has also provided more free showers – about 11,000 – to clients through October than during similar periods of 2011 and 2012.

“These numbers are what you might expect during a recession,” said Joan Burke, advocacy director for Loaves & Fishes. “They have stayed up.”

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Eating breakfast on Christmas Eve at Loaves & Fishes, Rose Marie Miller, 56, talked about how her husband died in 2010 and how she subsequently lost the trucking business they ran together. She’s recently been diagnosed with high blood pressure and Graves’ disease and is struggling to find a steady source of income.

“People think drugs – all that stuff,” she said, describing a perception of the homeless. “It doesn’t always happen that way. There’s a lot of older women out there whose husbands have died.”

For a while, Miller lived in her car. Now she’s staying at a shelter on the Loaves & Fishes campus.

Like Miller, about 17 percent of the region’s residents – 1 in 6 – fell below the poverty line last year, compared to 11 percent in 2007.

The elusive jobs

For those searching for jobs, the market now does offer more opportunities – but in a limited way.

Luke Reidenbach, a policy analyst at the California Budget Project, said the recovery has created jobs at the high and low end of the pay scale, but not so many in the middle.

The creation of more low-paying jobs has helped improve unemployment in the region – no small thing – but the tight job market for midwage jobs makes it hard for someone in a minimum-wage job to move up, Reidenbach said.

“Even for those who have jobs, they may not have the jobs they want or the hours they want,” Reidenbach said. The same income trends occurring in Sacramento are happening statewide, he said.

Reidenbach and other experts cited several reasons for the patterns. Good paying jobs increasingly go to those with college degrees. Lower-paying jobs most available to everyone else are often part time. Benefits such as subsidized child care that once helped the poor hold a job have been cut due to budget shortfalls.

“Especially for people without college degrees, middle-class work is disappearing,” Abramsky said. “What’s left is work in the service industry that pays $8 to $10 an hour.”

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The most commonly held jobs among the region’s poorest residents are cashier, cook, personal care aide and retail sales clerk, census figures show.

“It’s hard to find employment with anyone that pays a lot of wages,” said Wil Rivera, 44, a cook at Loaves & Fishes. “But the positions that pay minimum wage – they’re a lot easier to find.”

Earlier this year, the California Legislature and governor agreed to raise the state’s minimum wage from $8 an hour to $10 an hour by 2016. Reidenbach is optimistic that change will help the state’s working poor. When the minimum wage goes up, it can have a ripple effect, he and others said, increasing the wages of those who already make more than the minimum.

“All of the industries are going to have to raise their wages to keep up,” Abramsky said.

Still, Abramsky and Reidenbach said, an economic recovery that benefits the poor will require larger changes. Citing the growing demand for workers with a college degree, Reidenbach said that “investing in education is the biggest general thing California can do.”

So far in 2013, income from wages in California have grown about 2 percent from last year, after adjusting for inflation, according to U.S. Bureau of Economic Analysis. Those figures don’t break down earnings by income group.

That sort of growth will need to speed up and spread more evenly to reverse the hit taken by the region’s poor over the last several years.

“So many people think this is normal” said Steeb, referring to clients at her shelter who have been in poverty for years.

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