An Amtrak train passes by model homes during a tour of the new McKinley Village, a development of 336 residences east of downtown Sacramento. Randy Pench rpench@sacbee.com
An Amtrak train passes by model homes during a tour of the new McKinley Village, a development of 336 residences east of downtown Sacramento. Randy Pench rpench@sacbee.com

Dan Walters

Observations on California and its politics

Dan Walters

California again has nation’s highest rate of real poverty

By Dan Walters

dwalters@sacbee.com

September 13, 2016 04:00 PM

Gov. Jerry Brown and state legislators have been crowing about what they did for California’s poorest residents the last few years.

They raised the state’s minimum wage, improved overtime pay for farm and domestic workers, enacted an earned-income tax credit, expanded health and welfare benefits, and provided extra money for the educations of poor students.

However, their failure to confront the heaviest burden on poor families – California’s soaring housing costs – will extend California’s embarrassment of having the nation’s highest rate of real poverty.

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A new supplemental poverty measure by the Census Bureau, covering the 2013-15 period, found that nearly 8 million Californians, 20.6 percent of the state’s residents, are living in poverty.

While that’s lower than what it was during the previous three-year period, 23.4 percent, the gap between California and other states, which range from 19 percent to 9.7 percent, has widened.

California’s “official” poverty rate, 15 percent, is only slightly higher than the national rate of 14.5 percent, but its 20.6 percent supplemental rate is 5.5 percentage points higher than the national rate, 15.1 percent.

The official poverty rate is based on a half-century-old formula that takes into account only a narrow range of incomes and living costs. The supplemental rate covers a much wider array of income sources and living costs, including housing, and is widely considered to be much more accurate.

Deeper dives into the data leave little doubt that California’s high costs of living, particularly for housing, are a huge factor in its having such a high proportion of impoverished residents.

A few years ago, the Public Policy Institute of California devised the California Poverty Measure, which is similar to the Census Bureau’s supplemental index, and came up with a 21.8 percent poverty rate.

The PPIC study also revealed that the state’s highest level of poverty, 26.1 percent, was to be found in Los Angeles County, home to a huge immigrant population working at low-skill, low-wage jobs but confronting very high housing costs in relation to their modest incomes.

While housing costs in the Bay Area are even higher, its technology-centered economy also generates much higher incomes so its overall poverty rate under the PPIC formula is well under the state average.

Supply shortages lie at the core of California’s high housing costs and thus, of its very high incidence of poverty. Although the state’s current population growth is quite modest, less than 1 percent a year, that’s still about 300,000 new Californians every year who need at least 100,000 more housing units.

Our net housing gain has been about two-thirds of the need in recent years, which means the demand/supply gap is continuing to widen and drive housing prices, especially urban rentals, steeply upward.

Brown proposed a modest plan to cut through red tape for some new housing, particularly low-income, but didn’t make it a high priority, and he and legislators allowed opposition from narrow interests to block it.

So much for helping the poor.