California: Nations Poorest State? Rank Does Not Matter—Over 20% in Poverty Does

Academics love to fight over the number of angels that you can have on the tip of a needle. Who cares? When it comes to poverty, it is not the ranking, but the actual numbers and the reason for the poverty that count. When you lie about the unemployment rate by discounting those who have given up looking for work, and those who only had part time jobs, then claiming a low unemployment rate.

Could it be that AB 32 has cost the Satte jobs? Have high taxes and bad regulations chased good paying companies and jobs out of State. Does the added permit fees, wasted time waiting for permits, cause California ot be the most expensive State on the American mainland caused the poverty? Could the millions of illegal aliens, and the costs to provide for them and their taking low paying jobs, be the cause of poverty?

Forget the State ranking, fix the problems and causes.

california fire

Is California the Poorest State?

Sarah Bohn, Caroline Danielson, Public Policy Institute of California, 9/29/14

In September and October of each year the Census releases estimates of poverty in the U.S. and in each state. Earlier this month “official” poverty estimates for 2013 showed 14.9% of all Californians in poverty and 20.3% of California children in poverty.

In October we expect to see the Census calculations for the “research supplemental poverty measure.” These estimates will represent three-year averages for states (2011-2013) and will likely show that more than 20% of all Californians are in poverty. In past years, this supplemental measure ranked California as the poorest state in the U.S. But according to the latest official estimates, 16 states had higher poverty rates than California. How do we make sense of this?

Some basic information on measuring poverty should help clarify the statistics:

  • The “official” poverty measure. This is based in a 1960s-era formula that is meant to provide a consistent measure across a long timeframe. Rates developed using this measure tell us what share of families lack enough cash to meet a simplistic budget. The rates compare pre-tax cash income (from work, investments, child support, social security, unemployment, and the like) to an estimate of resources needed built from a 1950s food budget and updated for inflation. This budget does not vary according to where a family lives.
  • Supplemental Poverty Measure. This is based on a more comprehensive set of resources and an up-to-date estimate of what it takes to make ends meet. Rates developed using this measure tell us what share of families lack enough total resources to meet basic needs. It adds together a family’s cash income (after taxes) and any in-kind benefits received (like food stamps and housing assistance), then subtracts key out-of-pocket expenses (like child care and medical costs). The resulting total is compared to an estimate of resources needed to meet basic living expenses for food, housing, clothing, and utilities. That estimate varies according to housing costs, so it is different within and across states.

In our view, the official measure is useful for tracking long-term trends in poverty. But the other measures better capture the full set of resources families have on hand and more accurately gauge current costs of living. Based on these measures, California is indeed one of the poorest states in the country.

This finding is largely driven by California’s high cost of living, rather than by sharply limited resources among its families. Using the California Poverty Measure we find that California’s housing costs loom large. Were these costs closer to the U.S. median, California’s poverty rate by either supplemental measure would be much closer to the official rate, and child poverty would be lower than the official rate.

Nonetheless, we also find that safety net resources substantially moderate poverty for many California families: according to the California Poverty Measure, the state’s poverty rate would be as much as 8 points higher were it not for these programs.

Poverty rates also vary widely across the state. PPIC just released a publication that examines this variation—as measured by the California Poverty Measure for 2011—with a focus on children and the role of the social safety net in mitigating poverty.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.