Wage inequality in Bakersfield and other California metropolitan areas has risen sharply since the 1980s, according to a new report by the Federal Reserve Bank of New York.
According to the report, Bakersfield ranked fourth in the nation and second in the state in terms of wage inequality as of 2015, a significant jump from when Bakersfield ranked 12th in the country in 1980.
The data comes from an analysis of data from the U.S. Census Bureau. The ranking of 200 metro areas across the country were determined based on what is called the 90/10 ratio: the wages of the top 90 percent of earners divided by the bottom 10 percent.
San Jose ranked the highest in the state and second nationwide, the report shows. However, San Francisco’s ranking increased the most among California cities, skyrocketing from 128th in the nation in 1980 to sixth in 2015.
Fairfield, Connecticut ranked the highest in both 1980 and 2015, the report shows.
Wage inequality in California has become more pronounced than any other state in the country, in large part due to their higher populations than other metro areas.
According to the 2015 data, seven California cities were among the top 15 compared to just three in the 1980 data. The report says that a major cause for rising wage disparities in metro areas is the increasing demand for more skilled workers due largely to developments in technology.
“As the U.S. economy has become more dependent on innovation…the demand for skilled workers has increased, pushing up the wages of these workers more rapidly than those workers with less skill,” Jaison Abel and Richard Deitz say in their report.
Abel and Deitz said the inequality is less pronounced in smaller cities because there is less of a demand for skilled workers. Prior to 1980, larger city size didn’t necessarily equate to a rising level of inequality. There was more of a mix of mid-size cities in the rankings.
Richard Gearhart, an economics professor at Cal State Bakersfield, said Bakersfield’s wage disparity is due to a highly segmented labor market. While the Bakersfield area has a lot of low-paid farmworkers, scientists, engineers and those involved in the oil industry command high-paying jobs.
“I was a little surprised that we were so high, but it’s not really that much of a surprise,” he said of Bakersfield’s high ranking in the new report.
While Gearhart said he doesn’t expect the inequality to change much in the next decade, one big wild card is if the state government moves forward with curtailing oil and gas production across the state.
If Kern County’s oil industry takes a hit and people look outside the county for high-paying oil jobs, Gearhart said that could inch Bakersfield to more wealth equality. However, he said it could also have negative consequences.
“It could really depress the local economy if they are contributing a lot as consumers,” he said.
To see the full Federal Reserve report, visit https://nyfed.org/2OxNzfQ.