What’s behind North Bay’s expanding ranks of the working poor

By all accounts, Ivonne Vega, 31, is doing everything she can to keep her household afloat.

The St. Joseph Health Center medical assistant in Santa Rosa works full time on weekdays, cleans offices through the week part time, studies to become a registered nurse and plans to take on more per-diem work in urgent care on the weekends.

With all that, the single mother of three girls finds it hard to make ends meet.

“I’m tired all the time, trying not to get sick. Essential workers need more help. We’re busting our a-- every day. I just don’t take a day off,” she said. When asked about her life, she responded: “This tells me I’m not living, I’m just working.”

Vega is among many others, according to a new study provided by the United Ways of California. The nonprofit developed a formula that uses household cost-benefit statistics to surmise how North Bay residents are doing. The organization ran numbers in Sonoma County for the Business Journal.

Among the findings, the United Way reports almost a third of Sonoma County residents — 28%, or 43,000 families — fall into a population that struggles to make enough to meet basic needs such as housing, child care, transportation and food on the table. They face sagging wages and rising expenses every day, according to the report titled “Real Cost Measure of 2019.” Much of the Sonoma County findings would also apply to other communities in the North Bay, the report concludes.

Other state and federal reports align with these findings.

For working-poor advocates, the fear is conditions will worsen with the ongoing economic decline of middle class households, which are dealing with the COVID-19 crisis.

Despite sometimes feeling like a hamster on an economic wheel, Vega celebrates little victories. Due to the coronavirus outbreak shutting down schools, her education went online. This means she has more time with family, and her childcare costs are down. That $170-a-month cost piles onto the $1,800 she shells out every 30 days to rent her two-bedroom apartment without utilities.

Then, there are the sporadic bills like the payment of $800 to U.S. Homeland Security for her DACA permit that allows her to remain in the country since her parents are originally from Mexico City. Her status eliminates the chances of receiving government aid, but living here matters more to her. Taxes have also gone up for her.

“Come tax time, I’ll probably be owing (the government). My kids — they get scared every day. I take things day by day and tell my daughters to wake up with a good attitude,” she said.

U.S. research shows the gap between the haves and those who have less widening.

An October Bloomberg-Federal Reserve joint report for the first half of 2020 indicated that 50 of the richest Americans hold $2 trillion, the same amount of wealth as the bottom 165 million people in the population.

California split by more than San Andreas Fault

Even before the pandemic, the United Way study of the state provided a stark look at the huge disparity between classes.

Over one in three households — 3.8 million families in the Golden State — struggle to meet basic needs. The finances of the 37% residing in California’s 58 counties fall below what it takes to run a household.

Depending on where one lives, respondents in the study showed families with toddlers hurting more than those with teenagers. Over half the households with children up to age 5 don’t make ends meet.

Adding to the problem, nearly four in 10 households — 38% — pay more than the recommended 30% housing threshold. Some in the bottom rung spend up to 76%.

“We need to make sure all working families have access to all resources,” said Henry Gascon, United Ways of California program and policy development director.

North Bay not immune

In its survey, the United Way determined the Wine Country environment comes with more pitfalls as an expensive place to live, especially for people of color.

Among the Hispanic population, almost half do not earn enough in Sonoma County to make ends meet. That 48% more than doubles that of white households in Sonoma County.

What does it take to make it?

The United Way formula takes into account several factors that go into a family budget as well as the size of the households and ages of the children. That formula concludes much of the same struggle for families of four in many North Bay communities:

  • Santa Rosa households require at least $81,300 a year.
  • Petaluma and Rohnert Park households require $91,000.
  • Healdsburg and Sonoma households require $95,000.

Over a third of that household income is set aside to keep a roof over the heads of the inhabitants. Here’s a sampling of the situation from local cities:

  • Windsor residents on average spend 36% of their income on housing.
  • Cotati residents spend 35%.
  • Santa Rosa residents spend 40%.

Living in the Wine Country comes with its own set of difficulties. Residents have experienced major setbacks caused by wildfires, which have raged in the region over the last four years.

“The equity disparities tend to increase with disasters,” United Way Wine Country chapter President and CEO Lisa Carreno told the Business Journal.

Despite tipping her hat to the better-than-average giving nature of Wine Country businesses helping those in need, Carreno believes the disparity exemplifies “the subversion of capitalism,” which fails to work for everyone.

“Corporate practices reward shareholders and investors over employees and infrastructure. Where’s the incentive to doing something different?” Carreno said. “This is the trend around the world — the exploitation of people and land at the expense of well being.”

United Ways of California President and CEO Peter Manzo agreed.

“The good old days have not been good for everyone,” the Los Angeles man said.

After World War II, the United States witnessed a growth of the middle class in which there was a broader participation in the economy.

“Then, companies started to worry about maximizing shareholder revenue. There was an explosion in CEO pay and gains in stock ownership,” he said. “Middle class wages have not kept up with gains of the top 1%.”

Through the years, these workers have found a business environment that has kept wages stagnant and removed more benefits. Today, more than 5 million Californians at work have no access to retirement benefits, he cited from his study’s data.

“Every person in every community deserves to live a good life. The less inequality we have, the greater happiness we have in society,” he said. “Part of what we’re saying with the ‘Real Cost Measure’ is there is such a thing as a decent standard of living.”

That continuing problem of affordable housing is only being aggravated by the pandemic. Some renters who lost their jobs have managed to put off paying their landlords — for now.

“The problem is, when we get to February, people will emerge owing four to five months of back rent. That’s insurmountable to some families. It’s just a mess,” Manzo said, adding policy changes need to be made to help the working poor.

The business community should care for reasons beyond good will and altruism, Manzo contends. Keeping all consumers participating as cogs in the wheel in this battered economy is paramount to recovery.

The stock market isn’t the economy

Even wealth managers agree there’s a disparity, especially with workers in trades such as leisure and retail.

“I appreciate folks worried about the growing divide. Low-skilled workers always get hit the hardest. This economic downturn is no exception,” economist Chris Thornberg said in a Union Bank-sponsored virtual conference on Nov. 19, when the panel was asked about economic inequality in the United States.

Still, Thornberg and the bank’s wealth manager Todd Lowenstein, cautioned government bailouts will only hinder a long-term recovery for future generations like Vega’s children, who may inherit a crippling public debt exacerbated by the $2.2 trillion already doled out in the CARES Act.

“The key here is to get the economy back to normal. Government can’t create wealth, but it can create the conditions to stimulate the economy,” Lowenstein added.

Wealth and income are different animals

Sonoma State University economics professor Robert Eyler considers employees who work in tourism, restaurants and bars, as well as younger generations, have been hit the hardest by an economy and tax structure that benefits the rich. The upper income households know how to use their money to accumulate more wealth.

“It’s an age-old problem,” he told the Business Journal.

One example lies in home ownership. Many poverty-stricken families and those once labeled the middle class have been priced out of the American dream — at a time when people struggling to stay alive need it most.

“If you own a home, at least you’re generating wealth. We need to provide opportunities for people to generate wealth,” Eyler said. “Capitalism does offer the ability to increase wealth.”

Some factors have undermined the process for the working poor. For one, renters are “subservient to landlords,” he notes.

“Teaching people that they must save is the best way to help people break out of poverty,” Eyler explained.

Otherwise, unexpected expenses and career setbacks may further escalate the struggles of the working poor trying to fend off home-, food- and job-insecurity.

“Wealthy people don’t usually have these problems at once,” he said.

More dropping from the middle

According to a 2018 Pew Research Center study, the middle class has shrunk by 10% over the four decades between 1971 and 2011. In 2016, over half of the American adult population lived in middle class households. The nonpartisan think tank has defined the annual income range of the U.S. middle class as $45,200 to $135,600.

Upper income households, consisting of 19% of Americans, saw their average annual earnings go up from $172,152 to $187,872 within five years from 2010. That 9% rise almost doubles that of lower income households, who at the time made up 29% of adults.

In 2020, the federal poverty level stands at an annual income of $15,950 for single-occupant households, according to the U.S. Health & Human Services Department. Tack on $5,600 for each additional person in the household, and that’s still a fraction of the kind of income needed in most places in California, especially in the San Francisco Bay Area.

The need to unite is great

Marty Bennett, a Santa Rosa Junior College history teacher and founder of North Bay Jobs with Justice, equates the loss of the middle class with the demolishing of unions.

“Household income is only up slightly compared to the 1950s,” Bennett said of an era when workers’ unions were prevalent. Back then, 41% of workers were in one. In 1984, a quarter of staffers signed up. Almost 35 years later, that figure has plummeted to 16%.

“When we look at jobs being created, there are a substantial number of high-wage (jobs) and a substantial number of low-wage. Where we have shrunk is in the middle,” he said.

According to the California Budget & Policy Center, the median hourly earnings for workers ages 25 to 64 in 2018 was $21.79. That’s just 1% higher than in 1979. And while the middle income wage is $23 per hour for households with both parents and two children, 53% of Sonoma County businesses pay their workers under that. Many of these employees work in the leisure and retail trades.

Plus, Black and Latino workers are paid far less than their white counterparts. The median hourly wage for Latinos is reported by the state policy center as $16.51, almost half of what whites make. Black workers earn $19.04.

For women, the median hourly wage is $19.95, in contrast to men who make $23.38.

Alarm bells are going off

The disparity in the data has raised more red flags with the surge in the number of jobs for independent contractors, which are classified as “contingent work” with no or few benefits.

“We’re seeing an acceleration of these trends since the 1990s when the concentration of wealth is at the top,” Bennett said.

Why should the business community care?

“If you don’t have a middle class, you don’t have consumers,” he said.

Moreover, the ones you have will have less economic power, according to data coming from the U.S. Census Bureau’s Center for American Progress.

Middle class households made up a 45% share of the national income in 2018. In the union heyday in 1967, that figure was 52%.

Meanwhile, the top 20% of U.S. households holds over half the total income. That’s a nearly 20% increase than it was 40 years ago.

As a solution, Jobs with Justice Executive Director Mara Ventura recommends developing more apprenticeship programs and trade schools to teach the working poor new skills.

“We try to emphasize and stress to local leaders the need to bring workers into the middle class,” she said.

One such example is the Culinary Academy in Las Vegas that the casinos pay into.

Another bright spot sits close to home.

Bennett and Ventura singled out Graton Resort and Casino as one employer where much of the staff is unionized.

Without relinquishing much pay data from the private employer, Federated Indians Tribal Chairman Greg Sarris said the casino’s starting wage is $15 an hour, with 1,500 workers also earning tips with their hourly income.

“People don’t want to leave,” Sarris said. “The tribe’s mission is for social justice and environmental stewardship. There must be dignity in the workplace. We give our team members health care and good wages, so they can partake in the American dream.”

It all adds up to a better society to Sarris.

“We just believe that greed is out of control. We’re not for socialism, but I think we’re at the end stage of capitalism,” he said. “That’s why we’re seeing a shrinking middle class, and an angry poor rising up. If big companies treated folks the way we do, you’d see a burst of the middle class.”

Struggle to live in Sonoma County

• 28% of Sonoma Co. households struggle to make ends meet and fall below the “Real Cost Measure” study threshold

• 37% of Californian households struggle

• 52% of California households with children up to age 5 struggle

• 38% of California households pay more than the housing expert’s suggested 30% threshold

• Santa Rosa households require at least $81,300 a year to make ends meet

• Petaluma and Rohnert Park households require $91,000

• Healdsburg and Sonoma households require $95,000

• Windsor residents spend 36% of their income on housing

• Santa Rosa residents spend 40%

• Cotati residents spend 35%

Source: United Ways of California “Real Cost Measure of 2019”

Wealth comparisons

• 50 of the richest Americans hold the same amount of wealth — $2 trillion — as the bottom 165 million in the U.S. population.

• 4.6% of U.S. wealth is earned by millennials, which make up 72 million residents

• 4% of the wealth is found by Black households

• 80% of the wealth is controlled by White households

Source: Federal Reserve-Bloomberg Billionaires Index

• 52% of Americans lived in middle class households in 2016, defined as an annual income of $45,200-$135,600

• 10% is how much the middle class shrunk in the nation between 1971 and 2011

Source: Pew Research Center

• $21.79 was the median hourly wage for California workers ages 25 to 64

• 53% of Sonoma County businesses pay under that figure, which was 1% higher in 2018 compared to 1979

• $16.51 was the median hourly wage for Latino workers

• $19.04 was the median hourly wage for Black workers

• $19.95 was the median hourly wage for women

• $23.38 was the median hourly wage for men

Source: California Budget & Policy Center

• 60% of the U.S. population in 2018 consisted of middle class households

• 45% of the wealth was found in these households in 2018

• 52% of that income was earned in these households in 1967, when unions flourished

• 20% of the top households seized over half the total U.S. income in 2018

Source: U.S. Census Bureau, Center for American Progress report

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