How much is a living wage in California?

This story appeared on Calmatters

From CalMatters California Divide reporter Jeanne Kuang:

What’s one of the driving forces of poverty and inequality? When the cost of living outpaces the growth in wages. 

In response, California over the last two decades has raised the minimum wage every few years, as have some local governments. New state Sen. Steve Padilla, a Chula Vista Democrat, says that strategy leaves the state “constantly playing catch-up.” 

So he’s introduced a bill that would require the state to create and maintain a calculation of a “living wage” — the earnings it would take for a family to actually afford rent and basic expenses in each county. It would also require California’s Workforce Development Board to recommend to the Legislature each year the minimum wage necessary to afford housing in each county and recommend a way to adjust that to reflect inflation.

It’s an acknowledgement of a common lament among anti-poverty advocates in California, that the state’s sky-high cost of living easily wipes out much of the gains from having one of the nation’s highest minimum wages ($15.50 an hour this year) and a more generous social safety net than most states.

• Padilla: “If you continue to just every few years sort of decide on a (minimum wage) number and prescribe it, you run the risk that by the time that gets implemented, other factors you don’t control, like the housing market, are way out of reach.” 

There’s an important caveat: Padilla’s proposal would not bind the state to peg its minimum wage to the living wage standard. But proponents say it would be more than an academic exercise; an official government measure could influence future policy on labor or other issues.

For now eligibility for most government assistance programs, such as CalFresh or Medi-Cal, is determined by household earnings in relation to national poverty measures, which do not account for California’s higher cost of living. 

There are a few measures that try to come close.

The U.S. Census Bureau maintains its alternative Supplemental Poverty Measure, which includes non-wage income, such as aid from social programs, and expenses, such as regional housing costs. By that measure California has the highest poverty rate in the nation.

Also the United Ways of California calculates its Real Cost Measure of how much a household must earn to afford the basics in various California cities, which inspired Padilla’s bill. In 2019, the latest year for United Ways’ data, two adults would need to work full time, earning $22 an hour, to make a living wage for a family of four.  

Pete Manzo, United Ways president, said the measure is meant to reflect a “decent, working-class standard” of living — children getting their own room, for example. It includes housing, food, transportation, health care and child care. 

• Manzo: “There are multiple ways to try to get (families) to meet that self-sufficiency level. Let’s first figure out how many people are struggling, what’s reasonable to pay out of their earnings, and then can we increase their earnings or figure out other ways to help.”

Meanwhile California voters will get to decide on two wage-related measures on the 2024 ballot. One would raise the statewide minimum wage to $18. The other is a referendum on creating a fast food industry council that would have the power to, among other things, raise fast food workers’ minimum wages to $22 an hour.

Tax relief: In case you missed it, late Friday the Internal Revenue Service issued some long-awaited guidance for taxpayers: California’s Middle Class Tax Refund does not have to be reported on federal income tax returns and will not be subject to federal taxes.

More than 16 million payments, ranging from $200 to $1,050, have been sent to Californians through direct deposit or debit cards. Early on the state’s Franchise Tax Board made it clear the payments don’t need to be reported as income on state returns.

But until Friday it wasn’t clear what the IRS would do, even though it started accepting individual returns on Jan. 23. The IRS said figuring out whether special payments in 21 states should be taxable was too time-consuming, so it “determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.”

Meanwhile Republican state lawmakers, who fired off a letter last week to President Joe Biden on the issue, tried to take credit for the IRS decision.

• Sen. Rosilicie Ochoa Bogh: “Taxing Californians on their tax refund is double dipping. With inflation already squeezing Californians, the federal government should not be taking more money out of working families’ pockets.”      

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Other Stories You Should Know

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1
Mental health workforce crisis

Behind some of the biggest policy challenges California faces — pervasive homelessness, learning gaps in education and its approach to criminal justice — there’s a common refrain: The need for more mental health services, especially during the pandemic.

The good news: The state recognizes those needs and has launched a number of mental health-focused initiatives.

The bad news: There’s a shortage in the workforce that would address the needs of some Medi-Cal recipients and that is likely to worsen and could stall state initiatives, says a study released today by the County Behavioral Health Directors Association of California.

Findings: It’s difficult to recruit enough people:  The “public safety net workforce” that serves mental health and substance use disorders for Medi-Cal clients amounts to 28,000 licensed professionals for at least 650,000 people with acute mental health needs. Most of those professionals only speak English and many are near retirement. The Inland Empire and the San Joaquin Valley have the greatest shortages.

•  Dr. Janet Coffman, of Healthforce Center at UCSF, who co-authored the report:  “Our state has no time to waste in scaling up our investment and training capacity if we are to keep up with our communities’ needs and go further to focus on prevention strategies.”

Recommendations:  Expand college and universities’ capacity for training behavioral health professionals, provide financial assistance to students who work in  county behavioral health after graduation and increase reimbursement rates the state pays to counties to serve Medi-Cal patients.

The study argues against delaying the $200 million in funding to build up the behavioral workforce that the state pledged in 2022 for over two years. Gov. Gavin Newsom recently proposed delaying it due to the state’s projected budget deficit.

More in mental health policy: The governor on Friday responded to a lawsuit challenging the constitutionality of the state’s CARE Court plan, which would compel some into mental health treatment.  “CARE Court participants cannot be forced to participate,” the administration said in its legal filing.   

Also last week, Newsom joined other governors in Washington D.C., to discuss infrastructure, homelessness and education. 

While there, Newsom and U.S. Sen. Alex Padilla, a California Democrat, met with senior White House officials and other federal staff to push for a waiver to allow the state to use Medicaid funds for inpatient psychiatric facilities that have more than 16 beds — which Newsom’s office called a tool to address homelessness. 

• “Obtaining this waiver will provide California with additional tools to address the homelessness crisis — especially people needing to access mental health services,”  the governor’s office said in a statement.

2
Black childbirth mortality defies income level

We’ve known for many years now that Black mothers in the U.S. die at three to four times the rate of white mothers during childbirth. It’s one of the widest of all racial disparities in women’s health, according to the federal Centers for Disease Control and Prevention. 

But a recent study of 2 million California births shows that income levels don’t change that: The richest Black mothers and their babies are twice as likely to die as their white counterparts. 

That’s despite California having one of the lowest maternal mortality rates in the U.S.

The study from the National Bureau of Economic Research cross-referenced records from the California Department of Health with parental income data from the IRS. 

The authors say their study implies that policies seeking racial health equity won’t succeed if they only target economic markers. 

• Maya Rossin-Slater, an economist and author of the study, told the New York Times: “It suggests that the well-documented Black-white gap in infant and maternal health that’s been discussed a lot in recent years is not just explained by differences in economic circumstances. It suggests it’s much more structural.”

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