Summary
California is slowly pulling out of a long recession and years of budget turmoil. Social services have been cut and many families have been struggling. In this context, an accurate assessment of the depth, breadth, and location of economic hardship in the state is especially important. To help policymakers and stakeholders determine whether programs aimed at reducing poverty are reaching those in need, we introduce the California Poverty Measure (CPM).
A joint project of the Public Policy Institute of California and the Stanford University Center on Poverty and Inequality, the CPM is part of a national effort to measure poverty in a more comprehensive way. It incorporates the changes in costs and standards of living since the official poverty measure was devised in the early 1960s-and accounts for geographic differences in the cost of living across the state. It also factors in tax credits and in-kind assistance that can augment family resources and subtracts medical, commuting, and child care expenses.
The CPM illuminates the important role of the social safety net’specifically, CalFresh, CalWORKs, the Earned Income Tax Credit (EITC), and other means-tested programs-in moderating poverty. Our findings indicate that the programs included in the CPM-which comprise the bulk of California’s social safety net-cut the state’s poverty rate substantially. But our findings also suggest that the additional resources counted in the CPM are more than offset by necessary expenses (particularly for older adults, who may face high medical bills) and the higher cost of living in the most populous areas of the state. In particular:
- According to the CPM, about 8.1 million Californians-or 22 percent of the population-lived in poor families in 2011, over 2 million more than estimated by the official poverty measure. Across age groups, children had the highest poverty rate (25%) and adults over 65 had the lowest (19%).
- Refundable tax credits (including the EITC) played the largest role for children, cutting their poverty rate by 6 percentage points.
- CalFresh and CalWORKs each trimmed the child poverty rate by between 2 and 4 percentage points.
- Need-based social safety net programs dramatically lowered the number in deep poverty, defined as living at less than half of the poverty threshold. Together, programs like the EITC, CalFresh, and CalWORKs helped keep nearly 2.8 million Californians-or nearly 8 percent of the population-out of deep poverty.
Our estimates show that although many find it difficult to make ends meet, Californians-particularly children-would look strikingly more impoverished without the assistance provided by safety net programs funded at the federal, state, and local level. A companion publication, A Portrait of Poverty within California Counties and Demographic Groups, summarizes demographic and regional differences in California poverty. Together, these reports provide a richer framework for understanding the social safety net and introduce a valuable resource for policymakers seeking to address material deprivation with constrained public resources.