California's extreme economy creates a new class of 'poor'
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| LOS ANGELES
Only in California, it would seem, could聽Muhammad鈥檚 way of life be considered 鈥減oor.鈥
His monthly income is $4,000 to $5,000. But in聽San Francisco鈥檚 Ocean Beach neighborhood, he needs every penny. The rent for his聽one-bedroom apartment (for three children and his wife) is $2,200, and聽Muhammad has to take every job that comes his way, often working 12- to 15-hour days.
鈥淚 think I鈥檓 one job away from what people would consider poverty,鈥 says Muhammad, who asked that his last name be omitted. 鈥淏ut yeah, there鈥檚 an underlying feeling of being impoverished.鈥
The struggles of working families to make ends meet amid rising housing and child care costs is well known. The Census Bureau has even put a name on it: the supplemental poor. And California has a supplemental poor problem.聽
The Golden State's supplemental poverty rate sits at聽20.6 percent 鈥 more than five percentage points higher than the traditional poverty measure. That's the biggest difference for any state in the country, save Hawaii.
It is the product of a situation that is particularly Californian, but which holds lessons for other states. Call it the extreme economy 鈥 a聽high concentration of Silicon Valley tech moguls and millionaires help drive up the costs of living on one end, creating challenges for a disproportionately large population of supplemental poor on the other.
Few states can replicate both California's soaring wealth and deep poverty. But the pattern of an economy amplified at the extremes is not a uniquely California phenomenon. From New York to New Jersey to the District of Columbia, high costs of living have driven up the ranks of the supplemental poor, leaving an economy where even a middle-class income is now barely enough to get by.聽
鈥淚 don鈥檛 think [the trend is] unique to California,鈥 says David Grusky, director of the Center on Poverty and Inequality at Stanford University. 鈥淭here are other zones in the country that are experiencing very high housing costs and the same sorts of effects can be expected.鈥
California vs. Idaho
Unlike the official poverty standard, the supplemental measure 鈥 which the Census Bureau began calculating in 2009 鈥 takes into account more than just a family鈥檚 pre-tax cash income and the minimum it would cost to provide a healthy diet for each family member. It includes expenses like housing and child care, as well as resources such as food stamps, housing vouchers, and other cash and near-cash transfers.
The US poverty rate was聽聽in 2015; the supplemental rate was 14.3 percent.
In some places, such as Idaho, Indiana, and Maine, the supplemental measure shows a lower poverty rate than the official standard.
But the opposite is true in many places throughout the United States, where the 聽shows a different picture of poverty,聽according to the latest Census data, released this month.
California is a window into the trend. The average monthly rent in California is $1,250,聽聽as the national average. A home in the Golden State costs about $440,000, compared with about $180,000 nationally. 聽
鈥淚n California, the cost of living is sharply higher once we take housing costs into account, so extra resources from tax credits, housing, and food assistance don鈥檛 stretch far enough to move residents above poverty,鈥 writes Caroline Danielson, a senior fellow at the Public Policy Institute of California, in an email.
$700 for child care
Child care is another big factor, and one that is not necessarily concentrated in major cities.
When Shawna Pollard learned this month that her husband, Robert, now makes too much to qualify for low-cost day care, the couple found themselves in a bind. They had relied on subsidized day care 鈥 at $246 a month 鈥 for their two young sons after Robert was laid off. Now, they're faced with full-time day care costs that聽average about聽聽in Butte County, where they live.
Her husband's $33,000 income is not enough, she says.
Pollard has considered dropping out of college, where she is a full-time student working toward a degree in office administration, to care for the kids. But the move would be counterproductive. The reason she went to school was to find a higher-paying job.
鈥淚f we can鈥檛 afford child care, I鈥檇 have to quit school. And it would hurt a lot of things,鈥 she says.聽
Pollard is currently appealing the decision and has only good things to say about the program that provided her the subsidy.
鈥淭hese programs are designed to help you, and they鈥檝e been a great help,鈥 she says. 鈥淚 don鈥檛 know what we would have done without them.鈥
What the supplemental measure shows is that the definition of poverty is changing in some states, says Michael Herald, director of policy advocacy at the Western Center on Law and Poverty, a nonprofit that advocates for low-income Californians.聽鈥淭here鈥檚 a whole group of people we didn鈥檛 really think about being poor before, but are just as poor in many cases as those below the poverty line.鈥
[Editor's note: This story has been corrected to note that Hawaii has a slightly larger difference between its supplemental poverty rate and traditional poverty rate than California and to clarify the trends in the supplemental poverty data.]