October 30, 2009
Last month, we reported that California’s poverty rate jumped from 12.7 percent in 2007 to 14.6 percent in 2008. That means that 5.3 million Californians – nearly one of every seven – were officially considered to be living in poverty last year.
New data from the US Census Bureau suggest that many more Californians may be in poverty. Many experts believe the official poverty rate is deeply flawed, and the Census Bureau has designed several alternative poverty measures that may reflect families’ spending and resources more accurately than the official poverty numbers do now.
The official poverty rate is based on family spending patterns in the 1960s – specifically, on data showing that families at that time spent one-third of their income on food. The original poverty “threshold” – the line that separates poverty from non-poverty – was determined by multiplying the cost of a minimally adequate food plan by three. (Different thresholds were calculated for families of different sizes and ages.) That original threshold is updated for changes in the cost of living each year. Now, however, only about one-seventh of families’ income goes to buy food, so multiplying food costs by three may not be enough to cover families’ living expenses. The official measure also overlooks some essential spending – for health care costs and work-related expenses, for instance – while ignoring some important resources, including refundable tax credits such as the EITC and housing subsidies.
The Census Bureau’s alternative poverty measures adopt several recommendations from a National Academy of Sciences research panel. The alternative measures calculate a poverty threshold based on a minimum budget for families’ essential food, housing, and clothing costs, adding a bit more for miscellaneous essentials.
To illustrate the impact of these alternative measures on our picture of who lives in poverty, one of the alternative measures sets the poverty threshold for a family with two adults and two children at $24,755 in 2008 – nearly $3,000 higher than the official poverty threshold of $21,834 – while another assumes that this family would need an income of at least $29,654 – nearly $8,000 higher than the official poverty threshold. One definition leads to a poverty rate that’s 2.5 percentage points higher than the official national poverty rate of 13.2 percent, suggesting that 7.6 million more Americans lived in poverty in 2008 than the official poverty rate shows. Some of the other alternative rates are nearly the same as the official poverty rate.
The fact that it is hard to pin down a precise definition of poverty suggests that the official numbers may not measure all the Californians who are struggling to make ends meet.
– Vicky Lovell
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Posted by cbporg
October 27, 2009
A recent editorial in the San Jose Mercury News shines a much-needed spotlight on payday lending, a topic that we blogged about in June and that was the subject of a 2008 CBP report. Pulling no punches, the editorial concludes that ”predatory payday lending … can destroy the lives of the most vulnerable [and] it should be banned.”
The editorial cites a new report published by the Silicon Valley Community Foundation (SVCF), which calls for continued efforts to impose interest-rate caps on high-cost payday loans “or other controls to protect consumers.“ The SVCF report also cites the CBP’s own payday-lending study, stating that “the California Budget Project provides a compendium of alternatives to payday lending that should be considered as potential content for a financial education course designed to help consumers avoid payday borrowing.”
Although evidence against payday lending keeps piling up, meaningful payday-lending reform remains elusive in California. In fact, the major payday-lending bill that the Legislature considered this year (AB 377) actually would have increased the size of payday loans that Californians could take out – a change that would be a boon for payday lenders, while leaving more Californians mired in even more payday-loan debt. AB 377 passed the Assembly by a wide margin, but stalled in the Senate Judiciary Committee in July. The bill remains on life support and may be revived in 2010.
– Scott Graves
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October 23, 2009
State budget cuts appear to be taking a toll on workers in the public education sector: As California’s students headed back to school this fall, thousands fewer school employees returned with them. The number of jobs in public educational services – which includes jobs at public schools from the elementary to the university level, as well as jobs at the California Department of Education and California State Library – fell by 12,100 (1.1 percent) between September 2008 and September 2009, according to the latest Employment Development Department data. This drop reflects a loss of 15,200 jobs in “local government educational services” – primarily jobs in K-12 public schools and community colleges – offset by a gain of 3,100 jobs in “state government educational services,” which includes jobs in the California State University and University of California systems and at the California Department of Education. The recent decline in public education employment comes after a modest gain of 8,300 jobs (0.7 percent) between September 2007 and September 2008.
Recent job losses in California’s public education sector are part of a national trend. The number of US jobs in public education fell by 1.2 percent between September 2008 and September 2009 – the largest percentage decrease in the nation’s September public educational services jobs since record-keeping began in the mid-1950s. In contrast, the recent decline in California’s public educational services employment was only one-third as large, in percentage terms, as the drop in this sector between September 2002 and September 2003.
Employment in California’s private educational services sector has also started to diminish as the recession wears on. The state lost 700 private education jobs (0.2 percent) between September 2008 and September 2009, after a gain of 8,600 jobs (3.0 percent) in the prior year. Nationally, private educational services employment rose modestly – by 0.1 percent – between September 2008 and September 2009.
Some analysts speculate that the unemployment rate for women may start to “catch up” to the jobless rate for men if the private educational services sector and the government sector – which includes public education – continue to lose a large number of jobs, since women disproportionately work in the field of education. Thus far, the rise in unemployment for California’s men has outpaced that for women since male-dominated sectors of the economy, such as construction, have experienced the deepest job losses.
– Alissa Anderson
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October 22, 2009
As Congress continues to debate a range of proposals that could ultimately reform the nation’s health care system, a number of policy institutes have attempted to quantify the costs and benefits of the effort.
Health insurance reform explained: The Center on Budget and Policy Priorities released a number of studies last week related to the national effort. One of the studies explains how and to what extent the three main proposals moving through Congress could make health coverage better and less expensive for many people.
The upshot: People without access to job-based health coverage would generally be able to find better plans under each of the three main bills than those typically available for individuals to buy in the current “individual market.” However, this new health coverage option would still be less comprehensive than the coverage that many Californians receive through their employers today. Read the full paper here.
Status quo: Earlier this month, the Urban Institute released a study projecting trends in health coverage, as well as costs, 10 years out, assuming no changes to the current system. The bottom line is not surprising: More uninsured and a smaller share of workers obtaining coverage through their jobs – even under the rosiest of economic scenarios.
In California, under the worst-case scenario – defined as relatively high unemployment, modest income gains, and accelerated increases in health costs – the share of Californians who obtain health coverage through work would drop substantially, while 27.0 percent of residents would find themselves uninsured, compared to 21.9 percent now, according to the report.
The best-case scenario – which assumes relatively low unemployment, greater income gains, and slower increases in health costs – results in a smaller increase in the share of uninsured Californians (23.6 percent would lack insurance) and a smaller reduction in the share of workers without job-based coverage. Read the full report here.
Insuring the uninsured: Meanwhile, the passage of health reform legislation could extend coverage to an enormous swath of uninsured Californians. More than three out of five of the 6.4 million Californians under age 65 who were uninsured all or part of the year in 2007 could obtain health coverage under current proposals in Congress, according to the latest policy brief from the UCLA Center for Health Policy Research.
– Hanh Kim Quach
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October 16, 2009
California has passed the million mark. In September, the state was down by 1,002,000 jobs from the start of the recession, according to the latest Employment Development Department data released today. The number of nonfarm jobs dropped by 39,300 between August and September – more than five times the number of jobs lost between July and August (7,200). Yet the drop in jobs in September is an improvement over the more than 60,000 jobs lost each month from March to June of this year.
California’s unemployment rate held steady in September, but not because workers stopped losing jobs. The state’s jobless rate was 12.2 percent in September, down slightly from the revised August rate of 12.3 percent. But this decline reflects the fact that more Californians have given up their job search and dropped out of the labor force. (As we’ve blogged in the past, the unemployment rate counts individuals as jobless only if they have actively searched for work in the last four weeks. This means that the unemployment rate can decline if jobless individuals stop looking for employment.)
Although many experts believe the Great Recession has run its course at the national level, they also believe we’re in store for the weakest recovery in the post-WWII era. That means it could be a long time before those one million jobs come back.
– Alissa Anderson
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