California Factors Dampen Upward Mobility For The Poor

Loren Kaye
President of the California Foundation for Commerce and Education

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 CalChamber poll buttresses these empirical findings. We found 59 percent 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 are raising warning flags, especially parents. Growth and opportunity should be key touchstones for policy makers in 2017.

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