For two years, researchers have both feared and expected that California’s poverty levels, annually the highest in the nation, would take off once the effects of pandemic-era safety net programs began to dissipate.
The numbers are in. If anything, they’re worse than expected.
The state’s overall poverty rate soared to 18.9% in 2023, according to research released this week by the California Budget & Policy Center. That’s up from 16.4% in 2022, but more significantly, it’s a staggering jump from the 11.0% rate that the center’s researchers had recorded in 2021.
“The key takeaway from the data is that poverty in California really rose to alarmingly high levels last year,” Alissa Anderson, policy director for the research center, said during a media presentation of the data Tuesday. “This points to the urgent need for policymakers to take action and adopt effective federal policy solutions.”
That the jump in poverty occurred over the past two years is no coincidence. The year 2021 marked the last time that a series of pandemic relief efforts ran concurrently. Those programs included expanding the federal Child Tax Credit and Earned Income Tax Credit, enhancing unemployment benefits, providing occasional direct stimulus payments, and pouring more resources into the SNAP food assistance program, known in California as CalFresh.
With those programs either shuttering or returning to pre-pandemic levels of support, and the cost of living in California continuing to spike, the effect on lower-income Californians — particularly those of color — has been devastating.
Among Black residents, the researchers found, the poverty rate increased from 18.6% to 22.3% from 2022 to 2023. Latino households experienced a rise in poverty rates of more than three percentage points during that time, to 25% statewide.
In all, the research showed that roughly 7.3 million Californians couldn’t meet their basic needs last year. As the budget center pointed out, that is more than the combined populations of Los Angeles, San Diego, San Francisco and San Jose, the state’s four largest cities.
The California Budget & Policy Center analyzed microdata from the U.S. Census Bureau, and the poverty rates are calculated using the federal agency’s Supplemental Poverty Measure, which researchers believe paints a more realistic picture than the standard poverty measure because it accounts for things like geographical differences in housing and food costs.
In California, those differences matter tremendously. The MIT Living Wage Calculator, a widely accepted model for estimating income needs in specific parts of a state or the nation, found that a single adult with no children in California would need to earn more than $56,000 a year to meet basic living expenses. For a single parent with one child, that figure soars to nearly $100,000. The median household income in 2023, according to the census data, was $89,300.
In addition to the disproportionate effect on people and families of color, the poverty rates reinforced a growing disparity between those with the most and those with the least. The Budget & Policy Center said the average income among the top 5% of California households was more than $660,000, and among the top 1% it was $1.2 million. That latter figure is 14 times the household median and 67 times the income of those in the bottom 20%, which earned $18,170 on average.
“What it means is that California does actually have the resources that it could invest in programs that cut poverty, through taxation, creating a more fair tax system,” Anderson said. “We know there are all kinds of tax breaks that go to people with extremely high incomes, and if we got rid of those tax breaks, we’d generate the resources needed” to enhance safety net programs, she said.
Federal policymakers hold the ability to effect change more quickly and comprehensively than do state legislators, since the federal budget is allowed to operate at deficit. Anderson said that expansion of the federal Child Tax Credit and Earned Income Tax Credit are two proven methods for alleviating poverty, both nationally and in California.
At the height of the pandemic, both the Child Tax Credit and Earned Income Tax Credit were expanded federally, and food assistance was enhanced. Those adjustments, Anderson said, resulted in record low poverty rates nationally and a 40% drop in poverty in California from 2019 to 2021.
Though those expansions have since been allowed to expire, they could be revived by Congress next year. And California lawmakers can act to strengthen the state’s own refundable tax credits and bolster the CalFresh program, two enhancements already proven to reduce poverty.
Where at least a quarter of Californians lived in poverty in the early 1990s, that figure has rested below 20% for most of the 2000s. Unless every single enhanced pandemic program remained fully in place, the rate was always certain to rise after dipping to 11% in 2021 — but the jump has been more dramatic than even some experts imagined.
Still, Anderson said, “Policymakers have proven tools to address poverty. This is a problem they can solve.” The futures of more than 7 million Californians, now living desperately, depend upon how seriously that problem is taken.
