Authored by Ryan McMaken via The Mises Institute,
Earlier this week, the LA Times reminded its readers that California has the highest poverty rate in the nation.
Specifically, when using the Census Bureau's most recent" Supplemental Poverty Measure" (SPM), California clocks in with a poverty rate of 20 percent, which places it as worst in the nation.
To be sure, California is running quite closely with Florida and Louisiana, but we can certainly say that California is a top contender when it comes to poverty:

This continues to be something of a black eye for California politicians who imagine themselves to be the enlightened elite of North America. The fact that one in five Californians is below this poverty line doesn't exactly lend itself to crowing about the state's success in its various wars on poverty.
Many conservative sites have seized on the information to say "I told you so" and claim this shows that "blue-state" policies fail. One should be careful with this, of course, since there are plenty of red states in the top ten as well. Moreover, some blue states, like Massachusetts, are doing moderately well by this measure:
In the realm of political punditry, though, it matters a great deal whether one is using the regular poverty measure, or the SPM. For one, in the regular poverty measure, California ranks better than Texas, and leftists love to use the standard poverty rate to talk about how truly awful Texas and other red states are. The Supplemental Poverty Measure allows Texans to talk about how awful California is.
If we're going to use census data to guess the prevalence of low-income households, though, the SPM is greatly superior to the old poverty rate. There's a reason, after all, that the Census Bureau developed it, and the Bureau has long warned that poverty rates using the old measure don't make for good comparisons across state lines.
The old poverty measure was a far more crude measure that did not take local costs into account, did not include poverty-assistance income, and basically ignored what can be immense differences in the cost of living in different locations. Many commentators often love to note how the median household income in many red states are below the national average — but then conveniently ignore how low the cost of living is in those places.
The SPM, on the other hand, takes into account the costs of "food, clothing, shelter, and utilities, and a small additional amount to allow for other needs" It includes government benefits, but also subtracts taxes. (A full explanation is here.)
The end result shouldn't really be all that surprising: once we take into account the actual cost of living, including taxes, we find that poverty is actually quite high in California.
How to Alleviate Poverty
There are only two ways to reduce poverty and increase the standard of living:
- Increase household income
- Lower the cost of living
Poverty can be alleviated by simply increasing income. Or it can be done by simply reducing the cost of living. Ideally, both things happen at once, and fortunately, that's usually how it works.
The greatest reductions in global poverty have come about due to the spread of capital and industrial production methods. This is because better and more widespread use of capital leads to two things:
1. It increases household income by increasing worker productivity. That is, each worker can produce more stuff of higher value. This means each worker can take home a higher income.
2. When we produce more stuff more quickly, that stuff becomes more affordable. Thanks to labor-saving and more efficient machinery, for example, fewer people can make more cars more quickly. In turn, more people can afford more cars because cars are more plentiful, and less expensive.
Over time, more people can buy more stuff at lower prices, thus increasing their standard of living. Even better, thanks to modern capital, those people can also produce more during the hours they work, making it possible to buy even more stuff. Both pieces work together to increase living standards.
One of the biggest problems California is facing right now, though, is that government interventions in the marketplace are making it harder and harder to produce more stuff, thus driving up prices.
The end result is a higher cost of living, and thus more poverty. Kerry Jackson at The LA Times notes:
Further contributing to the poverty problem is California’s housing crisis. More than four in 10 households spent more than 30% of their income on housing in 2015. A shortage of available units has driven prices ever higher, far above income increases. And that shortage is a direct outgrowth of misguided policies.
“Counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings,” explains analyst Wendell Cox. “Middle-income households have been forced to accept lower standards of living while the less fortunate have been driven into poverty by the high cost of housing.” The California Environmental Quality Act, passed in 1971, is one example; it can add $1 million to the cost of completing a housing development, says Todd Williams, an Oakland attorney who chairs the Wendel Rosen Black & Dean land-use group. CEQA costs have been known to shut down entire homebuilding projects. CEQA reform would help increase housing supply, but there’s no real movement to change the law.
Extensive environmental regulations aimed at reducing carbon dioxide emissions make energy more expensive, also hurting the poor. By some estimates, California energy costs are as much as 50% higher than the national average. Jonathan A. Lesser of Continental Economics, author of a 2015 Manhattan Institute study, “Less Carbon, Higher Prices,” found that “in 2012, nearly 1 million California households faced … energy expenditures exceeding 10% of household income. In certain California counties, the rate of energy poverty was as high as 15% of all households.” A Pacific Research Institute study by Wayne Winegarden found that the rate could exceed 17% of median income in some areas.
It is increasingly becoming common knowledge that California is notoriously bad in terms of the cost of housing.
Every time a new "top ten" list of least-affordable housing markets is published, California cities often dominate the top of the list. In this list, for example, San Francisco, Los Angeles, San Jose, and San Diego are all in the top ten.
Housing is perhaps the poster child for the impossibility of getting ahead in California. Much of this is due to locally-based NIMBYism in which local governments actively intervene to reduce new housing construction for the sake of "preserving the character" of the neighborhoods. This is just another way of sawing: "rich people like things the way they are, so you poor people can just get lost. We're not building any more housing."
These same rich people then later pat themselves on the back for voting Democratic and "doing something" about poverty.
But it's not all just local regulations. As Jackson notes, environmental regulations are especially burdensome on businesses, thus driving up the cost of everything. This is especially true of housing which requires land, water resources, and visibly impacts the local environment.
These regulations, mind you, are all imposed on top of already existing federal regulations, and in addition to the environmental regulations that already function with a lower burden to business in other states. Coloradans, for example, aren't exactly living in rivers of toxic sludge, in spite of having fewer environmental regulations — and cheaper housing.
Nor is housing the only industry impacted by these regulations. Mountains of anti-business regulations in the state also make it harder to start new businesses, hire people, and cover the basic costs of expanding worker productivity. Fewer workers get hired. Less capital is deployed to workers. The end result is that worker productivity growth can't keep up with increases in the cost of living. Poverty results.
Recognizing this vise in which the poor are caught in California, the response is always the same: more rent control, more regulations, more more costly hoops for employers to jump through.
"We're taming capitalism!" the politicians tell themselves. Unfortunately, they've driven a fifth of the population into poverty in the process.
But don't expect things to improve for the poor in California any time soon. California is perhaps the single biggest example in the US of how stylish locales become playgrounds for the rich, and a treadmill to nowhere for everyone else.
In recent years, news outlets have carried a number of articles on how workers in silicon valley are living in their cars. Sometimes, the homeless even have jobs at the big tech firms like Facebook. Nearly all of these homeless people have jobs of some sort, though. Thanks to the ruling classes of California, though, a basic apartment is $3,000 per month, while food and gasoline aren't exactly cheap.
The well-to-do tell themselves that the high cost of living is simply "the cost of doing business" for living in such a wonderful place with so many enlightened, intelligent, and beautiful people. People can go to the beach whenever they want, and life is wonderful.
Of course, anyone who has actually lived in California as a non-wealthy person knows that one most certainly can't go to the beach "whenever you want." If one is working two jobs to pay the rent, a day at the beach — after sitting in traffic and paying for parking — isn't exactly a regular event. Moreover, the communities with non-sky-high rents are generally found well inland, and aren't exactly next to Malibu.
This may help explain why, as the Sacramento Bee reported last year, California is exporting its poor to Texas. The beaches aren't as nice in Texas, but many of these migrants are trading in the beaches — which they never see anyway — for an affordable apartment.
Comments
California Dreamin' on such a winter's day -- I wish they all could be California Girls -- Plenty of room at the Hotel California -- any time of year, you can find it here. You can come, but you can never leave. You can check-out any time you like, But you can never leave!"
Best propaganda ever designed -- have rock bands in the 1960s and 70s promote California like it's some utopian paradise!
Wow, did not know that. Times have really changed since it was Mississippi, West Virginia, South Carolina, New Mexico and Utah that were the poorest states.
Let's see where the productive in California go now. GTFO or shelter in place?
In reply to California Dreamin' on such… by YUNOSELL
As California GOES, so GOES the whole nation.
http://bipworldview.wordpress.com/2018/01/10/the-coming-financial-catac…
In reply to … by 38BWD22
"Why California Has The Nation's Worst Poverty Rate"
Simple - Lib/Socialism beliefs cannot beat capitalism.
Name one place in history where it has...
Russia, Venezuela, etc. etc.?
In reply to As California GOES, so GOES… by stizazz
Look at the population demographics of California vs Mass, VT, NH, ME those states all lack one thing in common that California has in spades in. Look at the population demographics of those states.
In reply to … by wee-weed up
Import 60 IQ Third World savages, lavish them with all of the taxpayer monies you can steal at gunpoint, and CA is what you’ll get.
CA is a stopped-up toilet, reeking unto the heavens above...
In reply to Look at the population… by JimmyJones
The poverty map kinda matches up to this map of the states with the most illegals.
http://www.pewhispanic.org/interactives/unauthorized-immigrants/
In reply to … by wee-weed up
Connect the dots...
In reply to The poverty map kinda… by Whoa Dammit
Build The Wall (around California).
In reply to As California GOES, so GOES… by stizazz
lol
Now, there's an idea!
In reply to Build The Wall (around… by Gap Admirer
Why? Circle the coastal plantations and treat em like a reservation.
In reply to Build The Wall (around… by Gap Admirer
Nope, not even close. the only blue areas in the state and country for the most part are the urban shitholes run by democrats for decades that dot the land. Trouble for normal Cali folks is that the urban centers are pretty fucking populated.
In reply to As California GOES, so GOES… by stizazz
The homeless gravitate to the warmer states when it starts getting cold and never leave.
In reply to … by 38BWD22
They're not all stupid. Warm sunny weather is a nice attraction.
In reply to The homeless gravitate to… by IH8OBAMA
And Kalifuckya continues to beg for more illegals to join the legions of the poverty stricken.
In reply to California Dreamin' on such… by YUNOSELL
Ask and you shall receive.
And we do.
In reply to And Kalifuckya continues to… by joego1
Millenial, there is more to Hotel California than your lack of observation.
HINT: This isn't the South Africans pushing a James Bond movie about diamonds.
HINT: Have a Cigar by Pink Floyd was sarcastic. Listen to Welcome to the Machine. Listen through that whole album. They were not the first or last band to do something like this
In reply to California Dreamin' on such… by YUNOSELL
Shithole, plain and simple.
Good Gawd Florida is even worse than I thought...3rd world Miami-Dade can't help much though.
Congratulations, commies and rent seekers. Way to go!
Poor people in Silicon Valley....I cry for them.
This place is a Shitmagnet
#BurnItToTheGround
In reply to This place is a Shitmagnet by Farmerz
If the poor migrate to Texas, who will serve me my wine and caviar.
plenty of illegals in Texas.
In reply to If the poor migrate to Texas… by JesseL
Hawaii made the dump list. Tough living scared in a sewer drain.
Let's say you were a house painter. You could brush or roll with two hands. However, to become licensed you had to sell a kidney in Hawaii or California or Washington or Oregon. So you live in a van because you can't afford a shitty studio apartment but get the odd job through craigslist or word of mouth.
These fucked up states demand a pound of flesh just to work for yourself and that is antithetical to capitalism.
Where does that fucking tax go? To the state. So your hard working boot strapping self employed creative people get fucked from day one to pay for some liberal niggers progressive policies and you are fucked.
I guarantee California is the most wasteful of all the states, has the highest fees, taxes and licensing restrictions, and the least amount of concern for letting in shit aliens to take your fucking job.
I'd rather live in a van on the beach in Hawaii than in LA or Sacramento or San Diego.
In reply to Hawaii made the dump list… by shankster
BS, this is all immigrants lying about income to get benefits. And if home equity is not included, these numbers are meaningless.
An important factor always seems to be ignored.
The unemployed (homeless) from all over the USA tend to migrate
to the the Southern (warmer) states where it is easier to survive
outdoors in cold weather.
Among the warmer states,California is generally reputed
to provide opportunities and be hospitable.
Well, it's just too bad that Guam, America Samoa, and Puerto Rico aren't on this list. I don't see DC either.
https://www.reference.com/government-politics/current-united-states-pro…
Let's just hope that California seceds and can handle it's own business. When that happens, you know all them Texas beach migrants will move back.
Good: give CA back to Mexico for all I care. Then just watch the poverty rate blossom. I hope Northern California has the balls to fight and break off. We could use that farmland. Also, thank god for Woofers.
To many people taking from the shitstem and not enough bleeding into it. Basically, niggerz and spics.
Florida is one of the addiction-recovery-industrial-complex states.
And they never really recover, but there is a lawyer on every street corner in Florida to lend a hand.
In reply to Florida is one of the… by black rifles a…
not ever going to happen....
Bad news for bus users, too...
https://www.reuters.com/article/us-apple-alphabet-buses/apple-alphabet-…
When nine hundred years old you become, look this good you will not.
20 in a one bedroom in Houston for $1300.00 a month.
20@ClownHouse
In reply to 20 in a one bedroom in… by shankster
Is this a trick question ? There's only one answer......Failed and fucked up liberal commie policies.
Because they are liberal.
Warning: Reading these comments has proven to be a health hazard in the state of California.
If you’d gone to Rite Aid and been vaccinated, you’d be able to read the comments without fear of falling ill.
In reply to Warning: Reading these… by shankster
This is modern communism where a very few aristocrats live in lavish luxury while they push communist poverty on the clueless masses who think they just got something for free
Mises LOL and going to texas LOL2x.
I went to visit a a remote fat wife's middle class relative who lives in a mobile garbage disposal with his mom, wife and kids in the middle of the god forgotten dust bowl around Dallas nothing but church , community center and miles of shit, stray dogs, dust, and misery. fucking Blair witch project. Then we continued to San Antonio to see another millennial prodigy. I had to check my google maps to make sure i am not in Baltimore. And we went to corpus Christi to visit someone who does really well and has a boat and shit. nice retired guy we went out fishing and all that. it rained every fucking day had to fish in rain jacket at 96 F . zero jobs only good for retirees. old people everywhere you look. no thank you.
id rather be homeless in Venice than live in fucking Texas. Whoever moves to Texas to save 300 bucks on rent is truly retarded.
btw adjust your data for age, you absolute shit without any context looks retarded.