Dispatch From California’s “Upstairs, Downstairs” Economy

The employment numbers of the past two months show a California economy that continues to be adrift. The unemployment rate of 5.5% remains the highest among all states, monthly job growth slowed to 3800 jobs, and unemployment claims continue to run well above the national average.

This story of employment stasis has been the main media story of the California economy throughout 2025. But there is another employment story that holds greater and longer term impacts. This is the story of California’s evolving Upstairs, Downstairs economy: its prospering Upstairs college-educated professional and knowledge economy workers, and the army of Downstairs service economy workers who serve them.

This two tier economy is not new. It has been building in the state over the past two decades—and in some ways since the late 1970s. What is new is how this economy is so widely taken for granted in 2025. It is accepted as the natural order by the very people on the Upstairs who regard themselves as champions and protectors of the working class and poor.

California’s Upstairs workers—especially these workers at the state’s burgeoning industry of nonprofits and advocacy groups– have been increasingly vocal this year in denouncing the national Administration. They denounce inequality and poverty, and speak often of social justice. But they are silent as to the low wage workers who attend to their daily needs, and the inequality that they benefit from. In fact, policies they and the state’s political leadership have advocated for the past decades have expanded the Downstairs workforce.

It Was Not Always Like This

It was not always like this. Histories of mid-twentieth century California—D.J. Waldie’s Holy Land, Kevin Starr’s Golden Dreams: California in an Age of Abundance–describe the middle class society and economy that arose after World War II and defined California for more than three decades. It wasn’t only that wages were more equal, and employment more stable during that period. A class of low wage workers did not exist that attended to the transportation, home deliveries, child care, house repair, and home cleaning for other higher paid Californians. Workers at the time, white collar and blue collar, handled these functions on their own.

I grew up in the Fairfax district of Los Angeles. Our block of 4^th Street, between Orlando and La Cienaga, was mix of white collar and blue collar workers, and a good number of small business owners (“Ward Cleaver’s Job World”). Incomes varied, but nobody hired workers for transportation, home cleaning or child care—even though some of the families had the economic resources to do so.

Journalist Mickey Kaus, who also grew up in post World War II Los Angeles, has written often of the social equality of that period, as well as greater economic equality—including in his still very relevant 1992 book, The End of Equality. Chapman University Fellow Joel Kotkin repeatedly has drawn attention to the contrast between this earlier time and today in his ongoing series of books and articles on California’s growing class divides.

All Jobs Serve Others, But the Gap Widens Between Upstairs and Downstairs

There is no way of going back to this earlier economic structure of a greater self-sufficient middle class. But also no reason to do so. California’s service workers provide needed services for all income levels, and particularly services that certain subpopulations, such as aged, infirm, or persons with disabilities, have been shut out of. Uber, for example, has opened up mobility for the disability community in a way that was never available in previous times.

This is part of the genius of the market system. All true jobs are ones of service. The Uber driver, the child care worker, the home repair person all are clearly serving others in a spiritual/religious as well as economic manner. Work in the knowledge economy–in insurance, real estate, finance, law—often are ones of service, as can be jobs outside of the market system, in nonprofits and government. As George Gilder explained more than forty years ago in Wealth and Poverty, his paean to the moral basis of the free market: “Many public sector and nonprofit jobs are worth subsidizing. Even though they do not technically earn profits, they produce a tremendous yield for the society. But all such jobs subsist on the productive labors of others.”

Yet it is one thing to serve others and another to serve others in a position of low pay, status, and authority. That’s the condition in California with its Downstairs workers, the result of policies by state government dating back to the 1990s and of culture shifts. The state legislature has imposed an empire of rules and costs that has undercut the ability of California employers to create stable decently-paid jobs. In the place of a jobs strategy, an expansive benefits system has been assembled. Perhaps of greatest consequence, many of the service and blue collar jobs have come to be viewed as beneath Californians. Immigrant workforces have been brought in, helping to keep wages low.

Of course, there is no easy answer to improving the lower wage service jobs. During the pandemic and early post pandemic period, wages of California’s low wage service workers went up faster than the wages of any other group. However, these wage increases have slowed in the past six months.

The state government has funded a variety of workforce initiatives and financial incentives to upskill low wage workers and link skills upgrading to wage increases. But nearly all of these initiatives have failed to deliver wage increases of any size or to reach more than a tiny number of workers. In the latest state legislative session, the Democratic supermajority rushed to embrace the much-hyped “abundance agenda” of supercharged building and prosperity, based on the book, published in March, by Ezra Klein and Derek Thompson (two men who have never built anything). But as the state’s labor unions have been first to point out, the agenda is mainly a rehash of government efficiency strategies that have been around for decades. Further, as these strategies are set out in the book, they are likely to depress blue collar wages.

If answers are scarce to the low wage jobs perplex, a start is to at least be honest about the politics. The equality politics and rhetoric of the state’s Upstairs workforce bear little relation to their high degree of entitlement today, and how the state’s economy actually is operating.

Upstairs, Downstairs, produced by London Weekend Television in the early 1970s and shown in the United States on PBS, ran for 68 episodes between 1971-1975. It traced the lives of the Bellamy family and their servants in London’s Belgravia neighborhood in the early 1900s. It was a surprise hit, and over the years spun off other dramas that depicted the two-tier economy of the Edwardian era and subsequent years prior to World War II. The recent popular drama Downton Abbey has themes and storylines that hark back to Upstairs, Downstairs.

Commentators on Downton Abbey often express amazement at the class structure of the past, and the lack of self-awareness and the sense of entitlement of the Upstairs occupants. But things are not really different in California today.