Tuesday, April 30, 2013

California, Poorest/Richest State in the Nation

California currently has more than 600,000 millionaires and 85 billionaires in the Forbes 400 list, far more than any other state in the nation. At the same time, California is now the poorest state in the nation, with the highest percentage of residents living at or below the poverty level. According to the Census Bureau, 23.5% (8.7 million Californians) are living in poverty. Florida is number 2 at 19.5%.

These numbers reflect a revision in how the Census Bureau measures poverty. In the past, it looked solely at income versus food costs. Under this system, the poverty rate would be only 16%. Under the new system, it now considers income plus assistance programs (e.g., food stamps, welfare) versus tax rate, childcare, housing and medical costs, in addition to food expenses, providing a much more realistic (though still incomplete) picture of families’ financial challenges.

Nearly 50% of California’s children live in or “perilously close” to poverty according to the newer metric, probably the single biggest reason for the state’s low test scores. True poverty rates are further obscured by the arbitrary and absurdly low federal threshold of $23,021 for a family of four. Considering that average monthly rents are $1552 in Los Angeles, $1431 in San Diego, $1938 in San Jose and $2106 in San Francisco, families must spend between $17,172 and $25,272 per year just to place a roof over their heads.

It is not just that better methods are providing a more accurate measure of poverty. The recession has also contributed to a dramatic increase in poverty. Between 2008 and 2011, for example, poverty rose 12% in Los Angeles County to 24.3%, and rose even more in some of the state’s rural counties. Conditions have grown so bad that California has seen negative migration patterns for the past eight years, according to the WSWS. A combination of low unemployment rates in Mexico (roughly half of California’s in recent years) and increased militarization of the border and deportations (a record 400,000 in 2012) has significantly reduced migration from Mexico. This has led to labor shortages in the state’s agriculture sector, with some farmers opting to let unpicked produce rot rather than increasing wages to attract domestic employees, since the former increases sales prices and profits, while the latter only cuts into profits.

While the state’s economy “recovers,” job growth has been primarily in low-wage service jobs. Thus many formerly unemployed are now earning far less than they did prior to the recession, contributing to the ranks of the working poor. Cuts to social programs has placed further downward pressure on living standards and contributed to the growing number of poor Californians under the new measurement system.

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