Boom, migration and economic opportunities
In the early 1840s, California’s population was sparse and its economy underdeveloped. This changed dramatically with the discovery of gold in 1848, which triggered one of the largest migration waves of the 19th century. San Francisco quickly became a booming urban center, attracting both migrants and foreign-born workers.By the mid-1850s, gold became harder to find, but California still had vast unexploited plains suitable for cultivation. As transportation improved, commercial agriculture began to thrive. Large numbers of domestic migrants and foreign-born immigrants continued arriving in San Francisco.
The fact that some individuals amassed considerable earnings in the new frontier does not necessarily imply that most people enjoyed high living standards. It is possible that working families struggled to meet their basic needs even as others prospered. What does the evidence reveal about San Francisco? Did working families in this city enjoy high living standards?
High wages
The evidence shows that skilled and unskilled workers in San Francisco earned enough to meet their basic needs during and after the Gold Rush. Certainly, living standards varied in San Francisco according to skill level, family size, and race. For example, unskilled workers received lower salaries than skilled workers, and therefore had lower welfare ratios (controlling for family size), while workers with large families had lower welfare ratios than single workers (controlling for skill). However, even laborers with a wife and four children had a welfare ratio above 1.0 during this period. On the other hand, Chinese workers were excluded from some highly paid jobs; however, since most were single, their welfare ratios were higher than those of married white artisans.
The welfare ratio reached its peak during the Gold Rush. The rapid increase in labor demand led to a substantial rise in nominal wages. Although prices also increased, they rose at a slower pace than wages, resulting in exceptionally high real wages. As gold mining declined, real wages fell accordingly. From 1860 onward, San Francisco’s economy expanded, increasing the demand for labor; however, large-scale inflow of domestic migration and international immigration sharply expanded the labor supply, which ultimately prevented real wages from rising.
A global perspective
A comparison of welfare ratios shows that San Francisco’s welfare ratio was not relatively low. For instance, the welfare ratio in San Francisco was above that of Amsterdam until the 1870s. Working families in San Francisco enjoyed relatively high living standards. The claim that laborers in the United States enjoyed high living standards before 1900 is not limited to the East Coast. Not surprisingly, San Francisco experienced a massive influx of workers from other states and countries during this period.
Referencia:
Luis Felipe Zegarra, Living Standards on the New Frontier: An Estimation of Welfare Ratios in San Francisco, European Review of Economic History, 2026;, heag018, https://doi.org/10.1093/ereh/heag018
