California leads the nation once again in a statistic no state wants to boast about.
When the cost of living is factored in, the Golden State has the highest poverty rate in the country. More than 20 percent of its residents struggle to make ends meet, according to recently released Census figures. Thatโs nearly 8 million people.
Unfortunately for Californians, this yearโs poverty numbers are not an aberration. The Census began releasing state-by-state results for its โsupplemental poverty measureโ in 2011, in an attempt to improve upon the outdated and heavily criticized official poverty statistics.
In the less sophisticated โofficialโ measure, a family of four in San Francisco or Los Angeles or San Diego faces exactly the same poverty thresholdโ$24,339 annuallyโas a family in rural Mississippi. Thatโs despite the fact that you can rent a three-bedroom, two-bathroom, 1,200-square-foot house in Horn Lake, Miss., for the same price ($850 per month) as half a living room in the Bay Area.
California has been the poorest state in the nation under the vastly more sophisticated โsupplementalโ poverty measure since the alternative statistic was created. (Mississippi is poorest under the old measure.) Itโs not even really that close: Florida has the second-highest rate, at 18.7 percent.
The supplemental poverty measure is calculated using a three-year moving average, so year-over-year changes canโt swing a stateโs poverty rate one way or another all that much. The Census uses data dating to 2011 to calculate the cost of living, so even the improved poverty rate could be underestimating how big of a drain housing has been on Californiaโs poor. The biggest jumps in housing costsโlike those weโve seen in Sacramento and other mid-size California cities in recent yearsโtypically apply to a relatively small percentage of renters finding new apartments. But ask any California renter whether theyโd rather be paying 2011 rents or 2017 rents, and theyโll ask you for the keys to the DeLorean as soon as possible.
What, exactly, is the role of housing in Californiaโs poverty problem? There are a couple ways to answer that question, none perfectly satisfactory.
One method: What would poverty look like if everyone in California had cheaper rents?
Researchers at the Public Policy Institute of California, which has developed its own California-specific alternative poverty measure, tried to simulate an answer to that question. Researchers there ran a model of the stateโs poverty rate with every Californian bearing a cost of living similar to that in Fresno County, where a family of four making about $25,000 a year would not be considered poor.
The result? The overall poverty rate would drop dramatically (from about 21 percent to 14 percent), with nearly 2.4 million Californians lifted above the poverty line. The effect is most pronounced among children, who are disproportionately likely to live in higher-cost regions of the state. The child poverty rate drops nearly 8 percentage pointsโabout 717,000 kidsโonce the cost of living is lowered.
Relocating every poor family in the state to Fresno is, well, not a practical policy consideration. And housing subsidies for low-income families currently make only a small dent in the poverty rate, at least compared to some other safety-net programs. (Advocates for the poor argue thatโs a great reason to dramatically expand housing subsidies.)
A group of researchers at Columbia University re-created the Census supplemental poverty measure for all states with data stretching back to the late 1960s. Under this measure, California started looking considerably different from the rest of the United States in the early 1980s.
But notably, while Californiaโs supplemental poverty rate has remained significantly above the national average in recent years primarily because of housing costs, in absolute terms, the state is actually in better shape than it was in the early 1990s, when more than one in four Californians lived below the poverty lineโand the recession of the early 1990s paled in comparison to the Great Recession of the late 2000s.
Thatโs partly because of the significant expansion of federal and state povertyprograms to California families in the past three decades. In 1991, researchers estimate, such programs reduced California poverty by about four percentage points. In 2014, those same programs (and new ones) cut hardship by twice as much.
CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.
