California’s Workforce Has Undergone Fundamental Changes in Past Generation, New Analysis Shows

Budget Center Analysis Highlights Shifts in Workforce and Discusses Ways That State Policies Can Better Address Them

SACRAMENTO — A new analysis from the California Budget & Policy Center, a nonprofit, nonpartisan research organization, shows that even as California’s labor force has undergone major shifts in the past few decades, public policies have yet to adapt to these fundamental changes and address the issues they raise.

Released to coincide with Labor Day, the Budget Center’s analysis shows that California’s workforce has become more diverse, that women are playing a much larger role in the workforce than a generation ago, that the state’s workforce is better educated than in prior years, and that low-wage workers account for a greater share of the labor force.

“Our analysis shows some enormous progress but also some real challenges for California’s workers,” said Luke Reidenbach, Budget Center policy analyst and the publication’s author. “California’s workforce is more diverse and better educated than ever. But some of the critical issues facing workers in our state, such as their ability to earn good wages and support themselves and their families, are not being adequately addressed by public policies.”

How California’s Workforce Is Changing and Why State Policy Has to Change With It shows that:

  • California’s workforce is more diverse than ever. Latino workers together with non-Latino workers of color accounted for more than half of California’s labor force (58.4 percent) in 2014, up from less than one-third (31.4 percent) in 1984.
  • Women’s share of California’s labor force has held steady following the substantial growth from 1950 to 1980. Between 1950 and 1980, women’s share of California’s labor force jumped from 28.4 percent to 42.1 percent, and in 2013 they account for nearly half (45.7 percent) of the state’s workforce.
  • Women in California are working more than they did a generation ago. The typical hours worked per year by women in California were substantially higher in the last two economic expansions than in the economic expansions that ended in 1979 and 1990. The median hours worked per year for California women was 1,440 and 1,260 in 2000 and 2007, respectively, well above the medians of 880 and 1,080 hours per year in 1979 and 1990, respectively.
  • The share of California households where all parents work has grown substantially since 1970. More than half of California households (57.3 percent) with children under 18 had all parents working in 2014, up from just over one-third (34.2 percent) in 1970. For households with at least one child younger than five, the share of those with all parents working has similarly increased, from 25.0 percent in 1970 to 49.2 percent in 2014.
  • The share of California workers with a bachelor’s degree or higher has steadily grown since 1979, and college remains a key pathway to economic opportunity. More than one in three (35.7 percent) of California workers in 2014 had at least a bachelor’s degree, up from just over one in five (21.0 percent) in 1979. The median wage for college graduates in the state has grown substantially in recent decades — increasing by 16.6 percent from 1979 to 2014, after adjusting for inflation — while it has declined for workers who do not have bachelor’s degrees.

Yet along with highlighting these shifts in California’s workforce, the Budget Center’s analysis points to a variety of key challenges related to employment and earnings in our state and the need for public policies that can address them. Among these challenges are the following:

  • The share of California workers earning low-wages has grown in the past generation. In 2014, more than one in four California workers (26.8 percent) earned low wages, defined as earning less than two-thirds of the state median. This level is up from 22.9 percent in 1979.
  • Workers of color in California face significant challenges in the labor market. While the median wage for white workers has increased since 1979, by 13.7 percent, it has declined among black workers (by 3.3 percent) and among Latino workers (by 5.2 percent). In addition, black and Latino workers are more likely than white workers to face unemployment.
  • Even as access to child care has become more important for working families in California, the high cost of care poses a major challenge, especially for single parents. The typical cost of child care is prohibitively high across family types, but especially for single-parent families. Typical child care costs for a married-couple family in 2014 accounted for 22.0 percent of annual income. Child care costs in 2014 were nearly half (48.8 percent) of annual income for a typical single-father family and more than two-thirds (69.9 percent) of annual income for a typical single-mother family. (Child care costs assume full-time care for an infant and part-time care for a school-age child.)
  • State disinvestment in California’s public colleges and universities threatens to limit access to a four-year degree. Since 1990-91, tuition and fees have more than tripled at the California State University and more than quadrupled at the University of California.

The Budget Center’s new publication highlights a variety of state policy options for addressing the state’s current labor market challenges and helping to broaden prosperity and foster economic security. These include:

  • Improving the well-being of low-wage workers by raising the minimum wage, expanding the state’s new Earned Income Tax Credit (EITC), and passing stronger protections against wage theft.
  • Addressing the inequities that workers of colors disproportionately face in the labor market, such as by combatting discrimination in hiring and immigration policies and also helping to address the barriers to employment faced by individuals emerging from the criminal justice system, in which people of color are overrepresented.
  • Supporting families in balancing work and family, such as by boosting access to affordable child care, expanding California’s paid leave program, and ensuring families have greater control over their work schedules.
  • Significantly boosting state support for higher education, so as to make it more accessible for students of all backgrounds and income levels, while also helping workers advance economically and connecting them with skills training, apprenticeships, and adult education programs.

“State policymakers have a number of options for strengthening and better supporting California’s labor force and ensuring that all workers and their families can advance,” said Chris Hoene, executive director of the Budget Center. “When workers win the overall economy wins. By taking on the challenges facing California’s workers, we lay the groundwork for sustained economic growth that is widely shared.”

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The California Budget & Policy Center engages in independent fiscal and policy analysis and public education with the goal of improving public policies affecting the economic and social well-being of low- and middle-income Californians. Support for the the Budget Center comes from foundation grants, subscriptions, and individual contributions.