The shrinking middle class is a big issue, not just for California, but the results of the study released by the Public Policy Institute of California are telling us more about what's causing it and what to do.
Talking with the sightseers and shoppers around Union Square, everybody knows someone who has been hit by the recession.
"Kind of breaks your heart to see someone in the 50s who's lost their job," said Rob Ingebretson of Fremont.
A new study by the PPIC shows the state's middle class has shrunk to just 48 percent of the population, down from a high of 60 percent in the 1980s.
"The recession just exacerbated that long-term trend, and now we're at a new low in 2010," said Sarah Bohn, Ph.D. with the PPIC.
Bohn co-authored with year-long study for the PPIC. At a noon meeting, Bohn told Capitol staffers that the recession hurt all income levels, but the wealthy were hurt the least.
The poorest Californians lost 21 percent of their income; the middle, 11 percent and the wealthy just 8 percent of their income.
"The gap between high and low incomes, as we measured it in 2010, is twice what it was in 1980," said Bohn, adding that the gap is growing because the middle class Californians are underemployed.
Sandy Aldrich is one of those Californians.
"I work temporary, on and off, so I have less money (and) don't have a permanent job right now," Aldrich said, adding that she knew other people in the same boat.
The PPIC report recommend job creation will help more than wage increases, but globalization and automation have precipitated a long-term decline in American manufacturing. It's not apparent those manufacturing jobs are coming back.
Bohn found the biggest factor for increasing income is education.
"By promoting access to education, we can do something to try to ensure that economic opportunity is available for all workers," Bohn said.
Along with the PPIC report, there was another report on Thursday from the Federal Reserve. That report showed this past summer, American household wealth dropped by the biggest percentage in two years.
At the same time, corporations increased their cash stockpiles to new record levels.