California’s functional poverty rate is the nation’s highest, and Los Angeles County is the state’s most poverty-stricken. What can be done about it?
The numbers of Californians living in poverty or near-poverty edged upward this year as federal pandemic programs expired, according to a new survey by the Public Policy Institute of California and Stanford University’s Center on Poverty and Inequality.
Currently, 13.2% of California’s nearly 40 million residents live in families which fall below the $39,000 annual income mark deemed the minimum for a family of four to meet its needs. The rate climbs to 31.1% if those in near-poverty (incomes up to $60,000) are included.
The California Poverty Measure, or CPM, is derived from the federal Census Bureau’s Supplemental Poverty Measure, or SPM, which was devised to cure the deficiencies of the official poverty rate, a one-size-fits-all data point that measures just some income but is not adjusted for the cost of living.
Both the California and the census rates use wider arrays of income and measures them against what it costs to live. The SPM varies by state while the California measure is calculated for counties as well as the state.
Although the methodology varies a bit, the Census Bureau’s SPM rate for California, 13.2%, is identical to the California measure rate and is the highest of any state. Within California, Los Angeles County has the highest CPM rate at 15.5%, followed by San Diego County at 15%.
While California’s SPM rate is the nation’s highest because of its costs of living vis-à-vis its income levels, Los Angeles and San Diego rates are the state’s highest because their housing costs outstrip incomes for their many low-income service workers and their families.
About three-quarters of California’s poor families have at least one working adult. Latino Californians have the highest poverty rate at 16.9%, followed by Black Californians at 13.6%.
So there are the numbers. California has the nation’s highest functional poverty rate and Los Angeles County, which has about a quarter of the state’s population, leads the state. The natural question is what, if anything, could be done to lower those rates?
To date, federal and state authorities have concentrated on directly or indirectly raising incomes of the poor through subsidies – such as CalFresh food assistance – rather than lowering their living costs. While the state has policies aimed at fostering more construction of housing for low-income families, the success rate has so far been minimal at best.
The income supplements do have an effect, the PPIC-Stanford study has found. Without CalFresh, earned income tax credits and other subsidies California’s poverty rate would top 20%.
The holy grail of anti-poverty groups in California is a guaranteed income – cash payments sufficient to lift people out of poverty. There are some local cash assistance programs underway around the state to test the theory’s viability.
The data translates into a little more than 5 million people or about 1.5 million families in poverty. On average, it would take, conservatively, about $10,000 per family per year to raise all to at least the $39,000 figure, or perhaps $15 billion – the equivalent of a 5% increase in the state budget.
It’s not an outlandish figure when placed in context. Were California to consider such a step, it would make even more sense to put all of the federal and state funds now being spent on subsidies in the pot to eliminate the management costs and the hassle they entail.
There would be some potential downsides to such an effort – not the mention the politics of taking such a radical step. Landlords and stores might raise prices to peel off some of the extra incomes and some recipients might quit working, thus exacerbating California’s labor shortage.
However, it’s worth considering.