California has always been a land of contradictions, with extreme wealth and extreme poverty tenuously coexisting side-by-side. From the Spanish colonizers’ exploitation of California natives, through the slave labor systems of the Gold Rush, on to the titans of big agriculture and their climate refugee workforce during the Dust Bowl, our state’s history is one of haves and have-nots.
The former, as Woody Guthrie noted in his iconic 1940 tune, “Do Re Mi,” enjoy “a garden of Eden, a paradise to live in or see.” The latter, however, well… “they don’t find it so hot.”
These divides have only grown more extreme during the pandemic, and now, they’re vividly manifesting in public policy.
The “Golden State Stimulus,” by far the largest COVID-targeted state-level stimulus effort in the U.S. is a reflection of — and an attempt to ameliorate — California’s notorious inequality.
In February, lawmakers approved a plan to send 5.7 million payments of $600 apiece to low-income households, undocumented immigrants, and people with disabilities. The $7.6 billion Golden State Stimulus package also includes $2 billion, or four times more money than the previous relief bill, for small businesses, and restores cuts to the UC and CSU systems, among other provisions.
Now that the federal government has normalized the idea of direct cash payments to taxpayers, and with cities across California experimenting with universal basic income, the state government has taken the concept and run with it. But the reason California has cash to give out is, paradoxically, connected to the inequality that produced such dire financial need in the first place. The state’s unexpected budget surplus, which will pay for the Golden State Stimulus, was fed by surging incomes and capital gains among the highest earners, even as unemployment remains close to historic highs and many people are struggling to pay for basics like food and shelter.
While these payments will make a big difference for millions of low-income families — many of whom were excluded from federal stimulus funds — they are, in a sense, a band-aid on much deeper, systemic issues.
“The stimulus is absolutely a huge step in the right direction,” says Sasha Feldstein, the economic justice policy director for the California Immigrant Policy Center. “It’s unique, it’s historic, and it’s gonna get cash to people. But we can’t call it equity when it only accounts for a fraction of the thousands of dollars in relief that people have been shut out from.”
Who Gets Paid?
The $600 payments will go to 3.8 million households making below $30,000 per year and claiming the earned income tax credit (EITC), as well as more than 500,000 undocumented people who file their taxes with an individual tax identification number (ITIN) and make less than $75,000 per year. Payments will also go out to the nearly half a million low-income families enrolled in CalWORKS, and the million or so elderly, disabled, or blind people enrolled in programs like Supplemental Security Income. Some taxpayers overlap in these categories and will receive two payments. You can check your eligibility at the Franchise Tax Board website.
In most cases, all you have to do to receive your payment is file your 2020 taxes. Most eligible taxpayers will receive the payments by check or direct deposit four or five weeks after filing, separately from other tax rebates.
Local programs are also giving out more cash to low-income people. In an expansion of its working families tax credit, San Francisco will provide $250 payments to 4,000 low-income individuals by the end of March. The city will be in contact with those eligible. That money is in addition to the $250 working families credit, which the city has provided since 2005, and is currently available to those earning less than $56,844 and claiming the earned income tax credit. If you think you’re eligible you can apply here.
These direct cash assistance programs come as the concept of a universal basic income (UBI) gains traction. Stockton became one of the first cities in America to pilot a major UBI program, providing cash payments of $500 a month to 125 low-income residents, with no strings attached. Following in the wake of Stockton’s success, (the funds were mostly used for essentials like food and utilities, along with paying down debts), several other cities have announced UBI programs of their own. San Francisco has launched two UBI programs, one for pregnant Black and Pacific Islander women, and one for artists.
But perhaps the most significant precedent for the Golden State Stimulus are the stimulus payments the federal government has provided this year. Congress is on the cusp of approving a new stimulus package that will send most Americans an additional $1,400 stimulus payment, extend Pandemic Unemployment Assistance, and massively increase the size and scope of tax credits for children. With these new provisions, total federal assistance given to a family of four earning $150,000 over the past year will add up $14,000. But undocumented immigrants have been locked out of these benefits, even though they are often the ones most in need.
It’s no secret that low-income service workers in fields like restaurants and hospitality have been particularly hard-hit by the pandemic. But undocumented immigrants, who disproportionately work in these jobs, haven’t had access to the same protections as other workers. Without stimulus checks, unemployment benefits, and many federal tax credits, even undocumented workers remain employed in essential jobs are wary of taking time off for their health or that of their family, Feldstein says.
“You’re facing two extremes,” Feldstein says of undocumented workers. “You either are working in the most dangerous, exploited jobs where you can’t afford to take off, or you are out of a job completely with no recourse.”
In fairness, California does have more undocumented worker protections than many states. Despite being ineligible for unemployment insurance, undocumented workers are eligible for paid family leave and disability insurance. Undocumented workers were also the beneficiaries of a targeted emergency disaster relief program last spring that provided payments of $500-$1,000 to about 150,000 people. “We feel a deep sense of gratitude for people who are living in fear of deportation, but are still addressing the essential needs of tens of millions of Californians,” Gov. Gavin Newsom said when announcing the program in April of 2020.
But those protections and benefits are a drop in the bucket compared to the outsized role undocumented immigrants play in California’s economy and society. Undocumented immigrants make up 1 in 10 workers in California, and paid $2.5 billion in state and local taxes in 2019. Now, as the pandemic reaches its one-year mark, an extra $600 is a poor substitute for consistent unemployment payments, and all the other benefits citizens continue to receive from Washington.
“This one-time stimulus is a great step for a one-time payment,” says Daniela Urban, executive director of the Center for Workers Rights in Sacramento. “But in the long term, if you’re working in California and you lose your job, you should have the same safety net benefits, regardless of your immigration status.”
California’s ability to afford these additional stimulus payments at all is a product of the state’s almost unfathomable wealth. California, which contains about 12 percent of the U.S. population, is home to a quarter of the nation’s billionaires. As a cohort, the Golden State’s billionaires earned 40 percent of the wealth added by American billionaires between March 18 and Dec. 7, 2020, according to a CalMatters analysis. California’s many uber-successful tech IPOs last year helped power significant wage and capital gains increases that translated to higher than expected tax revenues, thanks to the state’s progressive tax structure. California’s high taxes caused some Twitter-famous rich guys like Elon Musk to flee the state, but they appear to be the exception, not the rule.
As a result, the broad COVID-induced recession the state finance department had predicted at the beginning of the pandemic never materialized. Instead, only certain industries, with large proportions of low-income and undocumented workers, went deep into the red this year. That meant Gov. Newsom and the legislature had a $10 billion budget surplus to work with — a stark difference from the $54 billion budget deficit the state had projected in the early days of the pandemic. And while Newsom warned of difficult times ahead for the state budget, he pushed forward with the $2.3 billion in direct cash assistance and the rest of the Golden State Stimulus.
As it turns out, this is a familiar story. The state’s previous, more modest emergency cash relief program for undocumented immigrants was directly made possible by California’s billionaires. $50 million out of the $125 million program was funded by philanthropies, including the Chan Zuckerberg Initiative and Laurene Powell Jobs’ Emerson Collective.
Meanwhile, California’s unemployment rate stood at 9 percent in Dec. 2020, the latest month for which data is available. Thanks to our astronomical housing prices, California has the highest poverty rate in the country when the cost of living is factored in. In a recent survey, 42 percent of Californians earning $40,000 or less reported they had to reduce their spending on food at some point during the pandemic. These burdens fall heaviest on Black and Latino households, who have disproportionately felt the health and economic ramifications of the pandemic.
These are the issues worker advocates like Urban witness every day. “The number of clients that we speak to that are homeless grows each week during the pandemic,” she says. But the hard times experienced by California’s poorest residents aren’t exactly new. “The economic disparities that we’re seeing during the pandemic highlight economic disparities that existed before.”
Or, to put it another way: The Golden State has always been far kinder to those with a healthy supply of “dough re mi.”