Despite California’s immense wealth, millions remain mired in poverty

This story appeared on Calmatters

Volunteers Terry Scovil (center), and Shendi Klopfer load the car of a community member with food from the Trinity County Food Bank at the Trinity County Fairgrounds on Feb. 8, 2023. Photo by Martin do Nascimento, CalMatters

In summary

California received another reminder this week that, despite its world-class economy, the state has millions of families mired in poverty.

As if it needed one, California received a new reminder Tuesday that, despite its trappings of sybaritic wealth, it’s home to millions of families that struggle each day to put roofs over their heads and food in their bellies.

United Ways of California issued updated calculations of real world poverty, revealing that 34% of the state’s families lack enough income to meet basic living costs, primarily because those costs – particularly for housing – are extraordinarily high.

The estimate is based on 2021 data, but there’s no reason to believe the situation has improved significantly, if at all, since then.

The federal government’s official poverty number is based strictly on income, and California’s rate is not particularly high by that methodology. But the U.S. Census Bureau also has an alternative measure that includes the cost of living and it generally places California at or near the top in poverty among the states.

United Way’s methodology is similar to the Census Bureau’s alternative poverty measure, and also resembles the Public Policy Institute of California’s calculations of poverty and near-poverty. The 34% poverty level also comports with the 15 million Californians who receive health care through the state’s Medi-Cal program.

In a sense, therefore, the United Ways report is just telling us something we already know. However, its interactive feature provides important details about which communities and which demographic subgroups are most likely to experience severe economic stress in a state with the world’s fifth – and perhaps the fourth – largest economy.

It reveals, for instance, that rural counties and the cores of urban areas are most likely to be poverty-stricken, and that 51% of Latino families have incomes below the “real cost measure” of what it takes to meet basic living costs, the highest of any ethnic group.

Additionally, 68% of Californians without high school diplomas are in poverty, as are 70% of single mothers and 57% of non-citizen immigrants.

The United Ways report once again implicitly asks what, if anything, can California’s political apparatus do about its high poverty since especially high living costs – housing mostly – rather than especially low incomes, are the major factor.

High housing costs stem from the state’s chronic housing shortage and while there’s been a recent uptick in housing construction, it still falls very short of the 180,000 units a year the state says are needed to close the gap.

The state has made some noteworthy efforts to jump-start housing construction, mostly by removing local barriers to development, but its major anti-poverty approach has been to increase family incomes through intermittent programs such as increasing welfare grants, raising minimum wages, expanding health care and child care services and providing earned income tax credits and direct cash payments.

However those are generally short-term, marginal benefits that rely on the state’s erratic revenue flow, rather than permanent income supports. There are some state-level efforts to create a guaranteed basic income program to lift low-income families out of poverty, but the potential costs are enormous.

The United Ways study says that 3.8 million families live below its “real cost measure” for a decent way of life and typically would need about $40,000 more in annual income to meet it. Providing that supplemental income would, therefore, cost about $150 billion, or roughly a 50% increase in the $300 billion state budget.

That’s not going to happen.

If California’s politicians want to get serious about poverty, rather than engage in superficial virtue-signaling, they will become more vigorous – even ruthless – about eliminating barriers to housing construction, improving educational shortcomings, and making the state more attractive to job-creating investment rather than chasing employers away.

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