Child Poverty and the Social Safety Net in California

Child Poverty Is High in California

About a quarter of California’s children live in families without enough resources to make ends meet at a basic level. The share of poor children is higher than the share of working-age adults (21%) or older adults (19%) in poverty.¹ Research suggests that poverty in the first few years of life may undermine brain development, adversely affect overall health status, and lead to both diminished success in early elementary school grades and lower chances of ever completing high school.² Children who experience poverty are less likely to work as adults and have low odds of making it out of poverty as adults.³ Thus, the stakes for reducing hardship among children appear to be especially high. With an improving economy but continued high poverty, policymakers in California are renewing their focus on safety net and other programs that include reducing the number of children in poverty as one of their goals.⁴

As they make decisions about policies and programs that can reduce the number of children in poverty, policymakers need an accurate picture of need among California’s children, including an assessment of the role that safety net programs play today. We estimate that about 2.3 million children are poor in California, and an additional 1.3 million would be considered poor were it not for safety net resources utilized by their families. These estimates derive from the California Poverty Measure (CPM), a new metric that can be used to assess economic need. The CPM not only accounts for cash resources like earnings, but it also includes a broad range of government program benefits aimed at helping vulnerable families make ends meet (see box below).⁵ In this framework, a family is in poverty if its resources (i.e., earnings and support from government programs after subtracting out-of-pocket medical and work expenses) fall below a threshold of need that is based on food, clothing, shelter, and utilities spending.⁶ As compared with official poverty statistics that are routinely reported by the federal government, these estimates offer a broader, updated representation of poverty.⁷

Data from the 2011 CPM show about 800,000 children age 5 and under are in poverty. Close to 900,000 children ages 6 to 12, and roughly 650,000 teenagers also live in poverty. However, rates of poverty are quite similar across age groups: 26 percent of children age 5 and under have family resources that put them below the poverty line, 25 percent of children ages 6 to 12 live in poverty, and 24 percent of children ages 13 to 17 are in poverty.⁸ That these poverty rates are similar stems in part from the fact that families are presumed to share resources and thus poverty status is also shared-and many children live with younger or older siblings. Nonetheless, we present statistics by age group at several points in this report because regional differences by age are in some cases more substantial. In addition, policies to address poverty can be age-specific. For example, a program like WIC (officially known as the Special Supplemental Nutrition Program for Women, Infants, and Children) provides resources for very young children, whereas free and reduced-price school meals are typically for children enrolled in elementary school through high school.

Of course, there are degrees of economic need, and the poverty rate does not encapsulate the entire spectrum. Deep poverty, which is usually defined as living on less than half of the threshold of need (about $15,000 annually in California for a family of four, on average), is relatively uncommon: across all age groups of children, only 6 percent are in deep poverty (Figure 1). However, an additional 26 percent of children in the state are in “near poor” families-those with resources that put them between 100 percent and 150 percent of the poverty threshold (up to about $46,000 annually for a family of four on average). In total, then, about half of the state’s children are in families below or near the poverty line.

Poverty Varies across the State

Most children in poverty live in Los Angeles County, the most populous in the state (Table 1).

Figure 2 shows that Los Angeles also has among the highest child poverty rates in the state (28% to 32%, depending on the age group); rates for younger children are equally high in Orange County. Northern counties and the Sacramento region have the lowest child poverty rates (15% to 20%).

Somewhat surprisingly, child poverty tends to be higher in relatively affluent coastal California than in inland areas. Below we explain how two factors included in the CPM methodology-variation in the cost of living across the state and the role of safety net resources in family budgets-can help make sense of these regional differences in poverty rates.

Poverty for the youngest children-age 5 and under-varies from 20 percent to 32 percent across regions of the state. Among elementary school children, poverty rates are typically somewhat lower, ranging from 16 percent to 31 percent across the state’s regions. Los Angeles County is an exception, with a poverty rate of 31 percent for children 5 and under and a very similar 30 percent among older children. Poverty rates among teenagers are generally similar to rates for children age 6 to 12.

While there is substantial variation in poverty across the state, the incidence of deep poverty-having family resources that are less than half the basic threshold of need-varies little. Throughout the state, between 4 percent and 7 percent of children in all three age groups are in deep poverty.⁹ However, the share of children in near-poor families does differ across regions. In Los Angeles, a substantial majority of children (59%, the highest share in the state) live in families with resources that put them near or below poverty. At the low end of the spectrum, 42 percent of children in the Bay Area are in poor or near-poor families.

Factors that Drive Child Poverty

What factors contribute to a child’s prospects of living in an impoverished family? Economic context, the cost of living, skills that family wage earners possess, and safety net programs are all key pieces of the problem.

Regional Differences in the Cost of Living

Figure 3 illustrates regional differences in poverty thresholds for a family of two adults and two children.¹⁰ Statewide, the annual amount needed to meet basic needs (and be above the CPM poverty line) is $30,063. However, the picture changes if we look at California regions. Figure 3 shows how regional poverty thresholds compare to the state average. Poverty thresholds in Northern counties, the Sacramento area, the Central Sierra, and the Inland Empire are substantially lower than the statewide average, while thresholds in the Bay Area and Orange County are considerably higher. A family in the Bay Area needs nearly $3,000 annually more than the state average, and a family in Orange County requires about $3,500 more annually than the statewide average. In contrast, we estimate that in the “Central Sierra” region (Central Valley and Central Sierra counties), a family of four can make ends meet on about $5,400 less than the statewide average.¹¹

This variation in the cost of living means that a family needs substantially more resources to make ends meet in some regions than in others. For the most part safety net benefits do not vary according to cost of living, so the resources that could make up the difference come from earnings. However, safety net benefits phase out as earnings increase so families in poverty-especially in high-cost regions-may have earnings near or above the different cut-offs for safety net benefits and yet still have resources below the thresholds shown in Figure 3

Family Earnings

The state and regional economic context contributes to the ability of parents and caregivers to provide adequate resources through working. The Great Recession restricted work opportunities for a lengthy period of time for many families in the state.¹² Still, even in 2011, when the statewide unemployment rate hovered between 11.0 percent and 12.6 percent, strong majorities of poor children in California were in families with at least one adult earning income from work (Figure 4). Statewide, 79 percent of poor children lived in such families; regionally, the share ranged from 62 percent in Northern counties to 88 percent in Orange County.

Fewer children in poverty-but still 58 percent statewide-lived in families with annual earnings of at least $12,000 (roughly the annual earnings from a minimum wage job).¹³ Regions with less than half of poor children living in families with at least $12,000 in earnings included Northern, Sacramento area, and Central Sierra counties.

The Role of the Social Safety Net

Another determining factor in child poverty is the role played by the safety net: the availability, generosity, and level of participation in government programs.

Major social safety net programs substantially mitigate poverty. Without the safety net, 1.28 million more children would be poor: 420,000 age 5 and under; 510,000 6-to-12-year-olds; and 360,000 teenagers. California’s child poverty rate would be nearly 40 percent (rather than 25%) were it not for safety net program benefits included in the CPM. The role of the safety net varies little across age groups. In some areas, such as the Bay Area, Central Coast, and Central Sierra, the safety net plays a slightly larger role for families with elementary school-age children, but differences across age groups are small compared to the regional variation.

As Figure 5 shows, the protective role of the safety net varies substantially by region. Safety net resources play the largest role in the central and northern portions of the state. For example, in Northern counties, child poverty rates would be more than double were it not for the safety net. The safety net plays a similarly large role in Central Sierra counties. In the more populous coastal areas of the state, the safety net plays a smaller role. Child poverty in Los Angeles County-the area with the highest child poverty rate-would be 15 percentage points (or 50%) higher if not for the safety net. In the high-cost Bay Area and in Orange County, poverty would be 7 to 8 percentage points higher if not for safety net resources-this reflects a reduction of roughly a quarter to a third.

It is difficult to disentangle the interrelated factors that drive these differences. Variation in the accessibility of the safety net, willingness to make use of safety net resources, and eligibility for safety net programs (which are based largely on official poverty thresholds and earnings) all play a role.

The Role of Policy

Our research shows that safety net programs can be a policy lever for reducing child poverty, even though poverty reduction is not the only (or even the primary) goal of these programs. For example, a primary aim of the CalFresh program is to alleviate food insecurity. By participating in CalFresh, families gain resources that contribute to meeting basic needs. The same is true for housing subsidy programs, which are aimed primarily at easing overcrowding and homelessness but which also free up family resources to meet other basic needs. Programs like the Earned Income Tax Credit are designed to alleviate need by making additional cash resources available to families while incentivizing work.

There are certainly opportunities to increase the impact of these and other safety net programs on child poverty. Federal, state, and local policymakers routinely debate policy options such as increasing participation among eligible families, expanding eligibility criteria, raising benefit amounts, and creating new programs.

But poverty in California is greatly impacted by economic factors. The Great Recession serves as a reminder that family circumstances are inescapably shaped by economic conditions. More generally, the cost of living is high for most families in the state, and work income makes up the largest share of resources for all families-including those in poverty.

Moreover, there are enduring policy complexities. Programs will continue to have multiple aims that may conflict with each other in terms of poverty reduction. For instance, families are more likely to make use of a nonrestrictive food assistance program, but policymakers might seek to incentivize healthy eating by excluding certain types of purchases. Doing so might undercut participation. Second, programs designed to bolster families’ efforts to achieve self-sufficiency in the long run-by, for example, incentivizing work and education (and penalizing non-compliance)—might also be less likely to reduce poverty in the short term. Third, California’s regional cost of living variation raises thorny questions about whether uniformly scaled safety net benefits are equitable. Finally, it is important to consider various ways of assessing progress, including not just reduced poverty rates but also movement up the income ladder and reductions in the amount of time children spend in poverty.¹⁴

Policymakers engaged with the goal of poverty reduction will continue to grapple with the complex issues we have touched on. However, successful policies can improve the lives of a substantial share of the state’s children and contribute to their long-term success.

Additional tables are available on the PPIC website at www.ppic.org/content/pubs/other/914SBCDR_appendix.pdf.